The Important Difference Between ROI and COI
On the heels of last week's piece about problem-centric conversations, a dynamic young sales leader asked me a question about COI (Cost Of Inaction) calculators vs ROI (Return On Investment) discussions.
It led to a nice exchange about how to create tension in your sales discussions, what might be most effective, and what just feels like BS.
The truth, as you might imagine, is that there is value to both ROI and COI, but in very different ways. If you don't understand why, and you get them backward, neither of them will work.
COI and Emotion
As you dig into the problems you're trying to solve with your prospects, you need to go further with your discovery questions. Don't just ask about what's getting in their way. Ask about what happens if these issues go unresolved.
What happens in operations if supplies are delayed? Will you have enough work to avoid laying people off? How well can you communicate these gaps to other departments in the organization?
These are hypothetical questions, but they have emotional answers. Your prospect won't just answer them with what would happen, they feel the emotions that would go along with those answers. You're asking them to daydream a little bit with you, which is where good discovery always goes.
The problems that most urgently need to be solved in any business often come with frustration, uncertainty, and a pit in your prospect's stomach. It's tough to quantify these, but that doesn't matter. The cost of inaction is more effective when there isn't just a dollar amount attached to it.
ROI and Logic
ROI is a very straightforward measurement. As a result of this expenditure, you can expect this result. It's cold, emotionless, and the opposite of what we were just talking about above.
That doesn't mean it isn't important. When the math is there, it's really compelling! You just need to ensure you're bringing this point up when it will be most impactful, which is when your prospect needs to tell their colleagues.
The number one fear in the mind of any B2B buyer is, "Will I get fired if this decision goes south?" When it comes to making purchasing decisions, especially large ones, they need to believe that what they're doing passes some version of the say-it-out-loud test. That's where the ROI calculation has to be sound, but none of it matters until they've decided this is the choice they want to make.
I have two quick side thoughts about leading with ROI that will also take you down bad paths...
First, when building the business case, how much do you know about their internal numbers? It's really tough to be compelling when you rely on them to do so much of the homework.
Second, you're making it about money right away. It's difficult to sell at a premium when you're making a case about how much you can save them. I hate this. Why wouldn't they just take your business case and use your cheaper competitor? Sell the value first, and then show them how the math works.
The lesson
Remember that people make purchases emotionally first, then justify them logically before signing the deal. That's the buyer's journey you have to recognize and match.
COI helps people make the decision, while ROI helps them say it out loud.
Emotions create the necessary tension, and then logic provides the release. You can't have one without the other, and you can't get them backward.
If you get someone emotionally worked up about a decision but don't give them a way to resolve it, then you're not providing reasonable closure. You'll leave your prospect hanging in an indefinite state of fight or flight, and you're likely to lose the deal to no decision.
It's incredibly difficult to logically convince someone to make a decision they're not particularly emotional about. Those turn into arguments, or at the very least, poor buying experiences.
When you understand how these different calculators work, and work together, I think it helps you see the sales journey a little more clearly.
What do you think?
