Cost of Status Quo is the most important information you can capture when you are prospecting. Why? Most people will NOT make a decision to change if they don't quite understand the cost of the problem. Yes, your solution is important, and yes price is probably important too, but until a prospect agrees they have an issue, and they understand the cost of the issue, you will likely not sell them a thing.
How do you approach the subject of Cost of Status-quo? I am glad you asked.
How do you approach the subject of Cost of Status-quo? I am glad you asked.
First, be sure you get agreement from your prospect that a problem does in fact exist. Without this buy-in the rest of your sales approach is a waste of time. Given that you have the agreement of your prospect that they do have a problem, then begin your discovery questions by breaking down the components of the issue into monetized pieces. For example.
If your prospects problem is they are spending too much time on a particular task like support calls. I suggest you ask the following questions:
Armed with these numbers you can calculate the cost of the support calls.
People x Time x Cost = Cost of status quo.
For example: If you had one (1) person spending 40 hours per week on support calls, and they make $25 per hour. The math is quite simple: 1 person x 40 hours x 52 weeks = 2,080 hours, x $25 per hour = $52,000. The cost of status quo is $52,000. You can take this scenario further by asking how many calls on average are taken weekly.
By knowing the total number of calls you are able to calculate the average cost per call: For example if this person took on average 75 calls per week x 52 weeks = 3,900 calls per year. Divide the total cost, i.e. $52,000 / 3,900 = $13.33 per call. There are ways to get more granular if you want however, the point is help your prospect realize the cost of doing nothing. Break it down different ways if it helps.
Once you are able to determine the problem and the cost of the problem you should then move on to proving your value by demonstrating the solution you have to offer.
Remember, the cost to do nothing is rarely calculated. This technique can be leveraged to perform other calculations like, cost of decision delay.
If your prospects problem is they are spending too much time on a particular task like support calls. I suggest you ask the following questions:
- How many people take support calls?
- How much time do they (on average) spend on support calls?
- What is the annual FTE (Full Time Equivalent) cost of these people that take the support calls?
Armed with these numbers you can calculate the cost of the support calls.
People x Time x Cost = Cost of status quo.
For example: If you had one (1) person spending 40 hours per week on support calls, and they make $25 per hour. The math is quite simple: 1 person x 40 hours x 52 weeks = 2,080 hours, x $25 per hour = $52,000. The cost of status quo is $52,000. You can take this scenario further by asking how many calls on average are taken weekly.
By knowing the total number of calls you are able to calculate the average cost per call: For example if this person took on average 75 calls per week x 52 weeks = 3,900 calls per year. Divide the total cost, i.e. $52,000 / 3,900 = $13.33 per call. There are ways to get more granular if you want however, the point is help your prospect realize the cost of doing nothing. Break it down different ways if it helps.
Once you are able to determine the problem and the cost of the problem you should then move on to proving your value by demonstrating the solution you have to offer.
Remember, the cost to do nothing is rarely calculated. This technique can be leveraged to perform other calculations like, cost of decision delay.
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