Building block of ROI Value Matrix

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No matter what product or service you sell, a well-constructed ROI model based on an Value Matrix built solidly from your customer’s perspective is a tremendous tool for training your sales team, understanding your market, and qualifying the value you deliver to your customers. Creating why buy statements is the first step in building an ROI Value Matrix.

Why buy statements are phrases used to describe the emotional reasons people or companies buy products and services like yours. The why buy statement is a personalized expression that you craft strictly from your customer’s or client’s perspective. Your objective in writing these statements is to capture every reason someone would buy a product or service like yours and then gather these reasons into a coherent list. These statements fill the first column of the ROI Value Matrix and are the foundation on which the matrix enterprise data management is built.

When we conduct ROI workshops, many participants discover that this phase of the process helps them pull together information on their product and assess its potential values in ways they never had before. And creating effective why buy statements has customer value proposition beyond building the value matrix itself. By carefully crafting why buy statements for the value matrix, you will:

• Define the real reasons people buy products like yours.
• Better understand the emotion behind purchasing products or services.
• Appreciate and evaluate customers’ success stories.
• Gain confidence in the value your products are capable of delivering.
• Understand buyer and industry trends.

For example, we worked on attempting digital disruption with Oracle’s Application group for Web site commerce development. This group sells software, consulting, and other tools to companies that are trying to add commerce to their Web sites. We asked this question: “Why do people buy Web site commerce automation tools?” The Oracle team told us their customers would respond with answers like the following:

• “We are losing business [How will AI affect your business strategy]; we can’t get a transaction-based Web site live quickly enough.”
• “There are too many errors in product configuration when trying to order on our Web site.”
• “We want to be able to sell 24/7.”

Each of these answers became the basis for the digital transformation strategy of why buy statements Oracle used in its ROI Value Matrix.

In this post, you learn how to create effective why buy statements that will capture all of the emotional pricing strategy [How to fight a price war] reasons a prospective client might have for purchasing your products or services. You also learn how to use these statements as the foundation for the remainder of your ROI Value Matrix and as important tools for understanding your market and the many ways your products and services can meet the demands of that marketplace.

Value Matrix: Key Concepts and Guidelines

Why buy statements are a critical component of strategic pricing and the ROI Value Matrix and an important tool in understanding your company’s products, services, and customer base. Keep these key concepts and guidelines in mind as you craft your own why buy statements:

• Put yourself in your prospects’ shoes. As you create and capture your why buy statements, it is important to phrase them from your customers’ or prospects’ point of view. Understanding why people buy products or services like yours will help uncover the issues your company and product need to address in your solution. It is critical for the success of your retail pricing strategies and ROI model that you define each reason people buy products or services like yours from their (the buyers’) viewpoint.

 Personalize your statements. Use prompter words, such as these:

• I want to . . .
• I need to . . .
• We need to reduce . . .
• It is necessary for us to have . . .
• We need to streamline . . .
• I must eliminate . . .
• We must organize . . .
• We need to better . . .
• We want to improve . . . 

wile testing different pricing strategies, you are trying to capture an emotional response to this question:
“Why would I buy your product or service?”

• Focus on a product or service category. Focus on the category of product you sell, not the product itself. For example, imagine that you work for a company that sells laptop computers which is practicing penetration pricing strategy. Why buy statements for this company should express why people buy laptop computers in general rather than why people specifically choose Dell, IBM, or Sony laptop computers. By focusing on a category, you eliminate your product biases, which ultimately helps you create a more credible ROI model.

• Talk directly to the decision makers. When creating and defining your premium pricing strategy why buy statements, target them squarely at decision makers within your customers’ companies or businesses. It serves no purpose to define a reason to buy that is meaningless to the person who will buy from you.

• Don’t worry about measuring value here. At this stage of the value matrix building process, it isn’t  necessary to consider whether the impact of a why buy statement is measurable. As you build your value matrix, other stages in the process require you to associate quantifiable and measurable results with your why buy statements.

• Cast a broad net. Keep in mind [mindfulness in the workplace] this is a classic brainstorming exercise, so at this point there is no such thing as a “bad” why buy statement. The objective for this first step is to try and document any and all reasons people buy products or services like yours.

• Keep it simple. Each why buy statement must stand on its own as a single reason. Participants in our workshops often mix their thoughts by combining what are really multiple why buy statements or issues into one statement. By including only one reason in each why buy statement, you’re better able to address the specific business issue, desired outcome, stakeholder, solution, and so on for that specific reason for purchasing your product or service.

 Understanding How to Create Powerful Why Buy Statements

It is important to understand the people and companies that make up the correct price optimization mechanism for the market in which you’re selling. When listing all the reasons your customers buy products or services like yours, be sure to capture the issues your buyers face every day whether you have a solution for them or not. Always try to use easy-to-understand language when entering data into the Why Buy? column of the ROI Value Matrix table. For example, in Figure 2.1 you see sample data from a Why Buy workshop on a sales training program similar to Solution Selling. Let’s take a look at how each of these why buy statements was created and how well it fits with the fundamental concepts of and guidelines for creating these statements. 

Including Measurable Goals in Value Matrix

The first why buy statement, “I want to reduce our cost of sale,” is more than just an emotional reason for buying a product or service; the desired outcome is actually defined in the statement. “Cost of sale” is both measurable and quantifiable. Assuming reasonably good recordkeeping, you can evaluate the cost of sale for your fiscal or other reporting periods (e.g., this year versus last year). The difference between the two points in time provides hard data you can measure and evaluate for success and also adds to strategic business agility.

The first why buy statement in Figure 2.1 is well written because it is direct and simple and contains a measurable outcome, but it is not necessarily typical of all why buy statements. Not all why buy statements you gather at the first stages of this process are going to include measurable and quantifiable goals, but that’s OK. As we noted earlier, at this point in the process you are concentrating on why people buy the type of products and services you sell, so don’t worry whether the statement includes a measurable outcome. Say it, capture the statement, and move on! As the process unfolds, each statement becomes measurable or will be removed from the matrix.

Limiting Each Statement to a Single Goal or Idea

The next sample why buy statement in Figure 2.1, “I want to increase revenue per closed lead and reduce our cost of generating leads,” breaks one of our rules for building why buy statements by incorporating two reasons or goals (increase revenue and reduce cost) into a single statement. To craft the most effective why buy statements, you must break down your thought so that each statement contains just one, single reason or concept. Although the two goals in this example are related (and might be used together later in a Needs Analysis Questionnaire), it is important at this stage to deal with just one thought at a time. If you combine or mix goals or ideas within a single why buy statement, it becomes difficult later on to calculate specific costs and gains associated with a particular statement.

Writing Clear, Concise, and Personalized Statements

The last why buy sample statement in Figure 2.1, “Reduction in amount of time spent doing account debriefs,” is stated incorrectly. It is missing a strong personalization and defined audience for the goal. It might be better stated as, “I want to reduce the amount of time spent conducting account debriefs with my sales team,” which presents the statement much more directly from the stakeholder’s personal point of view. To be successful at building high-quality and objective ROI models, it is necessary for you to be the customer. You need to feel your customers’ pain and live their everyday experiences and frustrations. When you are using phrases like “I want . . .” and “I need . . .,” you are forcing the creation of objective and credible why buy statements that can be felt as an issue, problem, or goal by your prospect’s stakeholders.

With the changes we made to the statements shown in Figure 2.1, our value matrix table now looks like the one shown in Figure 2.2.

Improving Sample Why Buy Statements

Let’s look at another example of a why buy value matrix table, this time for talent acquisition and/or recruiting software. Try to correct the way the why buy statements are phrased in the examples shown in Figure 2.3.

The first why buy statement in Figure 2.3, “We want to improve the talent acquisition process for selecting candidates so it costs less to hire them,” is wordy and runs right into the perceived value or outcome the customer is seeking. There is no need, when creating why buy statements, to extend the phrase to include what the prospect expects as a return. Better stated, this example would read, “We want to reduce the cost of selecting and hiring candidates.”

The second example in Figure 2.3, “Eliminate the need to manage multiple job boards,” is an easy-to-measure why buy statement that only needs to be personalized. Simply add the phrase “We want to . . .” at the beginning of the sentence, making it “We want to eliminate the need to manage multiple job boards.”

The third example in Figure 2.3, “Web site is not current,” is stated in a way that is not personalized, doesn’t express a goal, and is too general because it does not refer to a particular section of the prospect’s Web site. Because this particular example is intended to refer to the career section of the prospect’s Web site, the why buy statement should make this intent clear. It is important that you understand a prospect’s issue, pain, or goal when creating why buy statements. By changing this statement to read “We need to keep the employment opportunity data [big data in retail] on our Web site current,” you are stating a clear goal for the organization. In addition to referencing a goal, this why buy statement now expresses an implicit requirement for definition and measurement of what the word current actually means. The time frame expressed by the word current must be defined to be measurable.

As you build your value matrix and define the other elements of the ROI equation, many of the outcomes arising from your why buy statements are driven by time saving. It will become critical to define the time period for the assessment to prove its value. For example, if a job opening is filled but the career section of your Web site is not updated, the person managing the résumés will waste time (human capital cost) sorting through them to weed out those sent to apply for the filled position. The old adage, “Time is money,” is true when it comes to dealing with value estimation.

Finally, the last why buy statement in Figure 2.3, “We want access to more candidates,” needs to be a little more specific—clarity is critical when creating why buy statements. By making this statement more specific, it will be easier to define the goal’s starting and ending points for measurement. Also, this why buy statement as phrased could be hiding multiple needs. If we added a phrase to the statement—for example, “. . . [more candidates] from our help-wanted advertising program,” or “. . . [more candidates] from our college recruiting talent acquisition pool” we are then able to help the prospect measure the results from each program.Crafting the statement with this level of detail should help you better understand your prospect’s needs in each area of recruiting. Therefore, we suggested that our client create a separate line item in the value matrix for each of these why buy statements.

Figure 2.4 displays the corrected why buy statements from Figure 2.3.

Figures 2.5 and 2.6 illustrate additional why buy statement samples from other industries. You may want to reference these examples as you begin building your own why buy statements. Figure 2.5 includes why buy statements designed for advertising programs.

Figure 2.6 is from one of our many Rockwell Automation workshops; in this example, Rockwell’s sales force was creating why buy statements for the sale of extended warranties and ongoing maintenance contracts to their manufacturing customers.