That’s not actually how we buy!
Posted: Mon Jan 27, 2025 9:51 am
One of the reasons this is so perplexing is that in the business world, we are conditioned to expect every worthwhile investment to have a commensurate and measurable financial return. If that’s the case, then what measurable return does the 777 burger provide such that anyone in their right mind would order it? The flaw in that line of questioning points to one of the biggest mistakes sellers make when positioning their solutions. They confuse return on investment with value!
Forget Everything You Know About Value
Return on Investment (or ROI) is a statistic that describes the monetary efficiency of a particular decision. The purpose of calculating ROI as it relates to the purchase of a product or service is to directly measure the return of that investment relative to the investment’s cost. For example, if I invest ten thousand dollars in a software solution that saves me twenty thousand dollars per year, you would say that that solution has a strong ROI. A similarly priced solution that saves me one thousand dollars per year would have a poor ROI.
Buyers and sellers often gravitate to discussions cyprus telegram data about ROI because they believe it’s a surefire way of validating purchasing decisions about a product or service. Salespeople come to customer conversations armed with stories and statistics about the returns and benefits their best customers enjoy. These typically center around cost savings or increases in revenue. At the same time, customers are keen to understand and validate the seller’s ROI statements to understand if a sensible case to purchase the solution can be made.
The truth is, as buyers we value all sorts of things about the things on which we spend money that have absolutely nothing to do with the hard returns we derive from them.
Don’t believe me? Think about something you spend your hard-earned, discretionary money on. Perhaps you enjoy dining out at nice restaurants, playing video games, or collecting rare stamps. Perhaps you like having the latest gadgets and technology. Or perhaps you prefer to spend money on experiences like travel, music concerts, or the performing arts. Now tell me, what is the ROI of those spending decisions? Hard to tell I bet!
In all fairness, I suspect you believe these investments do have an ROI, and they likely do on some level. For example, plunking down your credit card to buy the latest smartphone with more storage and a faster processor may allow you to be more productive at work. And going on a Caribbean cruise during the snowy winter months may help reduce your stress level, resulting in enhanced creativity and longevity. But while buyers may certainly see value from in strong ROI, those reasons are rarely the primary motivators for those purchasing decisions.
Forget Everything You Know About Value
Return on Investment (or ROI) is a statistic that describes the monetary efficiency of a particular decision. The purpose of calculating ROI as it relates to the purchase of a product or service is to directly measure the return of that investment relative to the investment’s cost. For example, if I invest ten thousand dollars in a software solution that saves me twenty thousand dollars per year, you would say that that solution has a strong ROI. A similarly priced solution that saves me one thousand dollars per year would have a poor ROI.
Buyers and sellers often gravitate to discussions cyprus telegram data about ROI because they believe it’s a surefire way of validating purchasing decisions about a product or service. Salespeople come to customer conversations armed with stories and statistics about the returns and benefits their best customers enjoy. These typically center around cost savings or increases in revenue. At the same time, customers are keen to understand and validate the seller’s ROI statements to understand if a sensible case to purchase the solution can be made.
The truth is, as buyers we value all sorts of things about the things on which we spend money that have absolutely nothing to do with the hard returns we derive from them.
Don’t believe me? Think about something you spend your hard-earned, discretionary money on. Perhaps you enjoy dining out at nice restaurants, playing video games, or collecting rare stamps. Perhaps you like having the latest gadgets and technology. Or perhaps you prefer to spend money on experiences like travel, music concerts, or the performing arts. Now tell me, what is the ROI of those spending decisions? Hard to tell I bet!
In all fairness, I suspect you believe these investments do have an ROI, and they likely do on some level. For example, plunking down your credit card to buy the latest smartphone with more storage and a faster processor may allow you to be more productive at work. And going on a Caribbean cruise during the snowy winter months may help reduce your stress level, resulting in enhanced creativity and longevity. But while buyers may certainly see value from in strong ROI, those reasons are rarely the primary motivators for those purchasing decisions.