Why demos without ROI are a waste of time…

Telling your finance director (the one who’s making your life hard right now) that a shiny new software will reduce admin, and errors and help the business grow is all well and good but how much by? It’s a pretty vague statement to justify so you need to calculate ROI and show actual savings in real money terms. If not, you’re essentially trying to champion a product without having any real data to back up your decision.

Emotion is a key motivator when it comes to making decisions, often driven by a need or a good feeling about the possibility of solving a problem. But when it comes to making decisions that are going to affect your entire business, it can’t be just about the nice-to-haves or the latest tech. Buying software for your service business really puts your neck on the line because if it doesn’t deliver then you’re likely stuck with it for a good few years. We all know how quick we are to complain when tech doesn’t work for us, so, you need to be able to justify your system choice and investment across the board. And this doesn’t just mean what features the software has to improve service levels…

 Before selecting a few software solutions to compare, you must first consider:

  • What are the core processes of the business and how do you want to improve these?
  • What are the pre-requisites, maybe the things your existing system does that you rely on or really add value already?
  • Is every department represented during the process because you can release more value if you improve more than just the service department?
  • What management information do you need to be better at what you do?
  • If this service management system is implemented, what is the estimated ROI? For this you will need to estimate how long certain tasks take to complete, hourly rates, the true cost of errors, average profitability per job etc (your supplier should be asking you about key areas to save time and money and supporting you to calculate ROI from the initial demo stage).

ROI; the true value of the project

If you’ve got to get final approval from other key stakeholders, you’ll need to show them more than just the technology features. You need to prove how the software will improve efficiency; how many hours will be saved and how much this costs. If you can identify, quantify and measure some of this stuff, the shiny new features will really just be the icing on the cake, because you will have the financial justification right in front of you. 

For example, showing you will save 50 hours per week in administration is great but what is the true value of those 50 hours? When you break this down between hourly rates of engineers and operational employees and multiply across a year, you’ll get a surprising figure and one your FD will likely be interested in.

Then consider how many more jobs your engineer could complete and what is the estimated profit on the jobs? These figures are just the start of showing a clear projection of the return to the business for the cost of investment. Making it much easier for you to justify the purchase to your board of directors.

As a software specialist, I’m not afraid to admit that sometimes when we’ve gone through this process with a prospect, the ROI has been less than we originally thought. And that’s ok because having real data enables us to work with the customer to ensure the software purchase is the right one. I’ve said it before and I’ll say it again, this whole idea of not trusting your salesperson is likely costing people. A buyer’s gut feeling about salespeople is that we’re just out to make a sale but this simply isn’t true when it comes to any SaaS purchase. We want customers to fully understand what they’re buying, the returns they will get and how long it will take to get them. Because at the end of the day, most businesses use a system for over 3 years before even considering a change. We’ll be working together for a long time and don’t want you to buy the wrong product just as much as you don’t.

Furthermore, if you do only focus on ‘wish lists’ and nice-to-haves, you’re probably going to struggle with the decision, which can be why 60% of all opportunities get delayed or don’t go ahead. Having a quantitative ROI gives you a greater deal of certainty when sharing information internally, making it easier to engage other people in the process.

So, don’t be afraid to ask your salesperson some difficult questions when it comes to calculating ROI and getting an actual financial estimate, because when I start hearing these questions – that’s when I know I’m talking to the right type of customer.