The old-schoolers know it as pencil selling. My business education taught me to call it return on investment (ROI) analysis. Whatever you know it as, this method takes your prospective customer through the math involved of the cost of their sign purchase versus the return.
Take, for example, the purchase of an LED sign. Buying a digital sign is a sizable investment, but it definitely carries a great return. That equation just might be what you need to help your customer get over the “sticker shock” they experience when they see the price tag on an LED sign.
Getting Started with ROI
The first step in convincing your customers using the ROI analysis method is knowing their business and developing a relationship with the customer. This is done by spending time with them, asking questions and understanding the business. Once you have that info you can present a proposal that accurately justifies the cost and increases your odds of sealing the deal.
If your customer has already agreed to a pre-qualified price range, you can’t use the ROI method. Also, be careful not to give your pitch too early. The pitch is best presented when the customer is staring at the price, perhaps mouth-agape. This is when they need to know that what they are about to spend is justified.. And in doing so, avoid technical jargon like “due to the ROI analysis” and opt for common language like “this is how the product can pay for itself.” You’ll find your results much better.
What You’ll Need to Know
- The total cost of the LED digital sign you’re selling.
- The average daily traffic past their location, which can likely be found online or from the city.
- The customer’s average sale amount (Total annual sales/number of sales) If the customer doesn’t know their average, play the high-low game with them until they feel you both have the correct average sale amount
- The company’s annual advertising budget and where it is spent (direct mail, magazines, TV or cable, off-premises billboards, newspapers, etc.)
- What response rate do they expect from the forms of advertising they are now using?
- Out of that response rate, how many were actually converted into customers?
Keep phrases on hand like “Rather than go with a sign that doesn’t work for your business, wouldn’t you feel better knowing that the right sign for your business would actually pay for itself?”
When placed in a high traffic environment, EMC’s compete very favorable with other more traditional forms of advertising. IF you can help the customer see that an EMC sign is just a new advertising medium, that can actually be more cost effective in the long-run you will have a better chance of making the sale.
Method 1: Use the average daily traffic (ADT) count when the customer has a high one. The formula to use is:
Annual Traffic Count x Response Rate x Conversion Rate x Average Sale
Method 2: Shift some of the company’s annual advertising budget to pay for the EMC and show them the return on their advertising investment.
Annual Number of Impressions x Response Rate x Conversion Rate x Average Sale
Method number two works well, since you’re not actually asking the customer to spend more money than they have already budgeted; they are just shifting funds from one division of advertising to another, and you are showing them the return they can receive for it.
Remember, learn about the business, pitch the analysis at the right time and have the hard data to back up your claim.