Wait, what! You may be shocked to see a CFO making a mockery of a ROI calculator. The fact is, I don’t know anyone who made a purchasing decision based on a proprietary calculation done by a biased software. In fact, outside of consultants, academics or other market prognosticators devoid of reality, no one thinks ROI calculators are very valuable. At least not the other CFOs I talk to.
So, when our Marketing group asked me to write a blog on the use of ROI calculators, I said “Hell, no!” Instead, I would write a blog saying why you should not use them.
As I have said above, ROI calculators are full of underlying assumptions that are architected algorithmically to support the software company’s position. There is no objective investigation of these assumptions and many of the assumptions are, dare I say, rigged.
The next major flaw of a ROI calculator is the incorrect assumption that buyers will always buy the cheapest option (or highest ROI). We don’t do that in our personal lives, so why do we think we will do that in our professional lives? For example, studies have indicated that the cheapest wine on the list is a very low seller and that restaurants include them as an “anchoring effect” for buyers to purchase more expensive options.
Let me be clear: I am still strongly suggesting that buyers do their own detailed calculations on the financial benefits of making any software purchase. All enterprise buyers are sophisticated enough to compute the hard and soft (hidden) costs – and should require all necessary information from software companies in order to do those calculations themselves.
Read any respected business psychologist or behavioral scientist’s work and I challenge you to find advocacy for a ROI calculator. Instead you will find endless other reasons why people buy. For example Shari Levitin (author of Heart and Sell: 10 Universal Truths Every Salesperson Needs to Know) notes: “When companies connect with their customers’ deep emotional motivators, the pay-off can be huge.” Her book details some of the lessons she learned from many years of sales and leadership training, centering on the ‘core emotional motivators’ that companies must uncover in order to sell. Her number one reason why people really buy is Safety.
Here are my 10 universal truths for why I buy anything as a CFO:
- Trustful relationship – I want the confidence to know the person will make it right when the speedbumps in the relationship inevitably occur
- Pleasant to deal with – I want to deal with someone who is pleasant, interesting and human
- Give me options do not force things on me – I want to feel like you are thinking uniquely about my business, not that one size fits all
- Challenge my assumptions – be a problem finder before being a problem solver. Help me think about things I missed.
- Well prepared – take the time to research, learn, and understand me and my business along with the challenges I am addressing
- Consistent – different stories and facts at different times is a huge red flag for me
- Honest dialog free of jargon – be candid and speak simply
- Good listener – don’t be a blabber mouth. Shut your mouth and give your ears a chance. Ask good questions.
- Owns mistakes/will make things right – everyone makes mistakes, you can learn a lot about someone watching them deal with adversity
- Roadmap – have an interesting and thoughtful vision of what our relationship could look like in the future but don’t BS
I have never seen an ROI calculator that can capture any of these. So, I say, dispense with that tool and Rely On Interaction (ROI) around the topics above.< Back to Blog