Other Menus

280 Group Optimal Product Management Blog
Product Management Training & Consulting
42 Rules Product Marketing Book Cover

Product Marketing Rule #28: Help Customers Cost-Justify Your Product

Product Marketing Rule #28 from the best-selling book, 42 Rules of Product Marketing, was written by Rich Mironov, Managing Director, Mironov Consulting

An ROI calculator should show current costs and how your product/ service will directly save the customer money.

The market is full of customers who might be interested in what you’re offering, but don’t have the time or energy or focus to push themselves through the buying cycle. One place where they often stumble is in justifying the money they’ll spend on your solution. In most B2B markets, individual buyers have an approval process that demands some kind of justification, often with multiple levels of signoffs.

So important questions for Product Marketing are:

“How will the customer justify paying for your product?” and “What tools are you providing to make this decision easier?”

Easy to ask, but often hard to answer in practice.

Vendors are typically much more motivated to make a sale than customers are to buy, so you’ll need to do some of the thinking for your intended buyer. That suggests a very simple spreadsheet or “ROI calculator” to capture the essential value of your story.

For a B2B product, the intended buyer isn’t the CEO, but a line employee or manager. Sizeable purchases have to be explained / justified / “ROI’d.” So you need to help your target customer explain the specific savings that come from your solution. Part of product marketing’s sales enablement kit needs to be such a simple savings calculator. You should count only numbers and hard dollar impacts. Avoid “strategic value,” vague improvement, and handwaving.

Starting from the customer’s point of view, an ROI calculator should show current costs and how your product/service will directly save the customer money.

Or, alternately, how you will help the customer make more money (top-line revenue). All of the logic and numbers are from the customer’s side: their actual costs, quantities, numbers of transactions, which will be used to calculate the percent improvement, etc. Savings must be computed from as few inputs as possible, while still supporting your story. Neither the buyer nor the CFO wants to spend much brainpower on this exercise.

For example:

“Our super-special credit scoring application will reduce the number of outside credit checks you have to run. You currently do {insert number} credit checks per year at {insert price}. We’ll reduce that by {insert percentage} for a savings of {compute here}. We will only charge you {insert price} for a net savings of {compute dollars} and ROI of {percent}.”

“Our super-special cell phone gaskets protect cell phones from damage when your subscribers drop them into puddles or mugs of beer. You currently replace {percent} of subscriber cell phones every year for water damage, each of which costs you {dollars} in parts and support, shipping, and wasted time. Using our gaskets, you’ll reduce this by {percent} or {total number per year} for a savings of {dollars}. Gaskets only add {our price per widget} to the phone cost, which is an overall savings of {compute dollars} and ROI of {percent}.”

And so on. The details vary, but the approach does not.

Now go close some deals!

Product Marketing Rule #28 from the best-selling book, 42 Rules of Product Marketing

Download All Of Our Free Resources Here

Download Now

No comments yet.

What are your thoughts? We'd love to hear from you!