With today’s frugal business environment, it’s almost impossible to secure approval for purchases without a robust, financially justified business case.
This was clearly proven in a recent Gartner behavioral survey involving 3,000 top-ranking business leaders spanning finance, human resources, marketing, sales, customer service & support, and the pivotal supply chain. The results were striking. An overwhelming 98% of these leaders indicated that they quantified the impact of their unit’s tech purchases before making the investment.
According to Gartner, this is “Reconfirming again, that you need to understand the business case – the ‘why’ – for your offerings when selling to business buyers (or convincing business stakeholders)”.
Compiling a business case isn’t a solo effort – it’s a collaborative venture. According to the survey, half of the respondents revealed that business unit teams jointly developed business cases with their technology liaisons, leveraging these tech experts to pull together the essential use cases and benchmarks. Additionally, 32% utilized Central IT and a common ROI evaluation framework, while 16% entrusted Finance with the task of tallying the business value figures and ROI.
The key driving force behind software purchases in 2023 for the business, and a key component in the financial justification? Boosting productivity, is cited by 37% of business leaders. Following closely are outgrowing current technology (32%) and concerns over security and cyberattacks (30%).
The Implications for You as a Solution Provider and Seller
A recurring challenge faced by business units and decision-making teams is the lack of immediate resources – knowledge, tools, benchmarks, and metrics – to efficiently compile the business case for financial justification. Often, they are given an ROI framework by finance or central IT, which although useful for crunching cash flow metrics, leaves the task of identifying and totaling savings, business benefits, costs, and risks to the purchasing team.
These decision-makers grapple to comprehend the correct use cases, potential KPI impacts, benchmarks, and calculations. This can lead to an extended period of several weeks to months for the team to independently develop a compelling business case. The repercussions? An unnecessary burden of additional work for the purchasing team and an extended sales cycle for you, the solution provider.
Therefore, aiding your customer in building their business case is crucial. This involves helping the purchasing team in the following areas:
- Identifying Strategic Initiatives and Pains
- Determining the use cases for your solution and the KPIs to be impacted
- Gathering “As Is” metrics and estimating the cost of maintaining status quo to amplify urgency
- Specifying potential benefits and totaling business impacts
- Calculating the required investment to set realistic expectations for effective solution implementation.
- Providing case studies to prove these results are achievable.
Notice how these items go beyond just a simple presentation of a magical ROI percentage. As a solution provider, you have to collaborate on and present a complete business case for proper solution consideration, covering: the pains and impacts, painting a solid vision for the future, and providing credible proof points for assured success.
There is a potential additional pitfall when your customer creates their business case on their own. Often, your unique advantages, value assurances, and proof points are overlooked, making you vulnerable, particularly when financial justification escalates to higher decision-makers and executives.
A business case devoid of differentiators and compelling storytelling can invite questioning of your premium prices, and push them towards cheaper alternatives. By not understanding your unique value proposition, risk avoidance and ROI your buyer may be sent scrambling by executives at the 12th hour looking for alternatives and justifying you as their choice.
The Bottom-Line
Business units are required to provide financial justification for executive review and approval. This happens in 98% of all your deals.
Unfortunately, only a small subset of deals, usually the largest, receive business value analysis. This leads to your customers grappling with business cases on their own, resulting in extra work, frustration and delays for them, and sales cycle extensions, stalls and competitive threats for you.
Across all your opportunities, consider the value of advancing 1 to 2 months of deals forward into this quarter or year. Or avoiding last-minute delays or competitive replacements with cheaper alternatives at the Nth hour. Collaborating with your customers on their business case requirements for every deal embodies more wins and accelerated revenue for you..
This is the undeniable power of creating compelling business cases for not just the biggest, but for every deal.
Sources:
GARTNER: Do You Want to Know What Matters To Business Buyers of Tech – https://blogs.gartner.com/derry-finkeldey/2023/02/15/do-you-want-to-know-what-matters-to-business-buyers-of-tech/
GARTNER: SaaS Marketers Lack Visibility Into B2B Software Buying Journey, Gartner Digital Markets Reports –https://www.businesswire.com/news/home/20230202005121/en/SaaS-Marketers-Lack-Visibility-Into-B2B-Software-Buying-Journey-Gartner-Digital-Markets-Reports
