For any small business that offers a product or service at the higher end of the pricing spectrum, the challenge of Return on Investment (ROI) invariably becomes a key operational issue. For start-ups, the challenge is even more acute: how can you successfully acquire new customers without credible proof that your product or service does what it claims to do? Too often, pilot or beta customers are wary of disclosing performance results or cost savings for competitive reasons, yet your ability to merchandise those results is absolutely key to building a strong pipeline of new customers.
What to do? While it’s a steep challenge, especially in the early phases of launching a business, there are practices you can implement that will incent your customers to provide ROI performance data. For example, let’s take the fictional example of an inventory management software application your business has developed. Based on your projections, you claim that within two years of implementation the solution will reduce inventory management costs by 60%. You’ve successfully managed to sell the product to two manufacturers: one a very established business, the other a start-up looking to streamline its inventory processes. How can you leverage this scenario to your advantage?
- Focus on the Emerging Customers: Emerging customers with urgent needs and fewer competitive constraints will usually be far more open to disclosing their relationships with vendors, including more sensitive ROI data. This is a perfect opportunity to work with your emerging customers to track performance and seek approvals for disclosure of ROI results. Remember, emerging customers are heavily motivated to invest in their success and promote it actively. As a result, they are far more likely to consider vendor endorsements that help them establish their own business credibility. Over time, this type of relationship can provide the basis for a powerful case study that you can use to demonstrate the real-world effectiveness of your product or service.
- Negotiate Contracts That Include ROI Disclosure: Again, focusing on an emerging customer relationship is your best bet here. Offer preferential pricing for customers that agree to engage in promotional activities, including support of your public relations programs (regardless of how grassroots they might be). While you might trade off a percentage of revenue for promotional benefits, you should come up on the winning end of the deal if you can successfully merchandise your customers’ results as you seek to acquire new ones.
- Focus on Aggregate Results: Some of your customers will be open to sharing ROI data with you, but don’t necessarily want that to be disclosed as part of a vendor endorsement. This is often typical when selling to established large companies, especially public ones who maintain multiple vendor relationships that might be competitive in nature. Instead, seek permission to publish aggregate ROI data results that represent multiple customer implementations without disclosing the identity of individual customers. This can form the basis of a compelling case study that’s representative of more than one customer experience. That’s a powerful tool to have in your arsenal when prospecting for new relationships.
When you have confidence in the effectiveness of your products and services, getting your customers on board in support of new customer acquisitions becomes a much less onerous task.