Breaking the Financial Justification Logjam

Does your sales force seem to be treading water on certain sales opportunities? Is the same information coming to you each month when you ask penetrating questions about prospects? Does it appear progress moving an account to closure is bogged down? You say ‘there must be a way to break this logjam.’ You feel just as stymied as your sales representatives. You wonder what moves to make and how to do them. Maybe a new (or revisited) approach is in order and an additional step or two needs to be taken.

Try to remember how many proposals you have submitted that just seemed to go nowhere. They died a slow death. You know they were well received; yet they fell on the shoals of inaction. There is a reason that proposals get stuck somewhere in the approval cycle. Here’s why it happens and what you can do to break the logjam.

When times were good and capital was readily available, we had a tendency to feel that the merit of the product alone was so overwhelming that our prospect would make a decision based on the sheer magnitude of the obvious. These days justification for any capital or expense purchase is under enormous scrutiny. Just like you, your accounts may be receiving fewer orders with less revenue associated with them. Also, like you, they are being more cautious and judicious about where and when they spend their own monies.

Today decisions are being driven by financial impact on the business. A proposal that assists your prospect appreciate how and why the product not only pays for itself, but also actually pays dividends back to the purchaser, is what gets executive management attention these days.

What you can do to break the logjam and make your proposal leap out from the rest is to do a Financial Justification and Return on Investment. You make them part of the sales process. You include them in the proposal.

The subtlety is in the quantification of the financial benefits to the firm – the benefits to them. These are stated in their language in their context and make it a fact-based discussion that leads to a logical conclusion. However, identifying and quantifying financial impact takes a set of skills that your sales force may not have been exposed to previously. It requires them to think like a financial person – not an easy concept, especially if they have come out of the technical ranks. This involves understanding how their prospect evaluates buying decisions, what is the competition for these financial resources (the so called alternatives) and when monies are available for expenditure. They need to know if funding can be found to make the buying decision easier and faster, solidifying and validating the purchase.

Invariably creating interest and identifying need are accomplished with the beneficial user of the product. These may be the plant manager, operations director, manufacturing manager and safety officer, to name a few. Most likely your sales team has made calls on one of more of these people and come away confidant the account will order the proposed product. When your sales team has come from the technical ranks they are quite comfortable calling on those most like themselves with engineering and manufacturing backgrounds where the representative does the traditional education of features, advantages and benefits. However features, advantage and benefits are not enough to carry the day anymore. Still to be accomplished is to have your sales team feel comfortable calling on and presenting their products to financial management.

Try this if you are currently stuck in an account and unsure of your next step; yet want to be proactive with your prospect. This process will help clarify where you are in any sales campaign and indicate if it makes any sense at all to even go forward presenting a proposal. It begins with an art that is slowly becoming extinct. It is the art of the analysis.

Here’s how it works.

oEvaluate your prior sales calls. Determine who these were made on, what the objective of each call was at the time and if the objectives were accomplished.

oGet confirmation from the beneficial users that your product is a sound improvement over what they are currently using; that your product is a significant advancement over current capabilities. Clearly, by doing so, you have solidified their affirmation about your product.

oNow openly admit you know how difficult it is to get any funding approved and that choices are constantly being weighed and alternatives examined for financial impact within every company. Openly ask your user if they are convinced of the improvements your offering gives them. If so would they introduce you to the financial authority in your prospective account? If the users indeed feel strongly about your proposal, they will assist in getting a meeting set up with the financial people. They are looking for ways to get their item approved too. The meeting with finance is crucial, as we will see.

You may need to coach the user with how to present information in a manner financial people will listen to and want to hear. In other words, help your user enough so they can be comfortable approaching a financial person and understand what to say once they have their audience with the intention of getting you yours. Admittedly, this can get tricky; it needs to be verbalized tactfully and with sincerity. Yet without knowing you can gain financial approval, you may set yourself up for unrealistic expectations. If your relationship with the user is sound, they will be inclined to make this meeting happen.

oIn your meeting with the financial people ask several questions. They might sound like the following: under the current conditions that exist in the company, what data is needed to support a favorable decision to purchase capital products? Ask which method of depreciation they use, is there any depreciation left on the product being replaced, if this item would be considered an expense item instead. Ask them what is the required rate of return, return on capital, return on assets and what other relevant financial factors are considered when evaluating financial alternatives. Is there a new award about to be given that requires updated and more productive products to return the profitability expected from the order? Be aware, however, this is just the starting list of questions that should be asked.

Knowing this in advance will help you decide if going forward with a proposal is even justified. Why? If the gains expected will not measure up to your prospect’s criteria you will have gone through the effort of an analysis (and probably a proposal), yet never understood if the justification was high enough for approval.

oIf the preliminary data suggests justification can be made, go forward and perform the actual analysis. In it you gather irrefutable evidence that you have compared the present capabilities with those expected of your product. These data could be efficiency gains, productivity improvement, scrap reduction, higher quality, less returns, fewer job reruns and improved safety, to name a few. The point is look for the impacts and implications your product affects because each and every one of the impacts and implications has a monetary value associated with it. Calculate the appropriate monetary value efficiency, productivity and safety gains make after installing your product. Contrast the present environment and monies with expected financial gains by quantifying these detailed improvements in financial terms.

oOnce this comparative data is complete, do a preliminary review with your user before you commit to formal written pages. Why? If the numbers are not accurate, the justification not realistic, and do not pencil out for the user you can bet they will not in the financial ranks either. If the user acknowledges them, they will be more convinced than ever thus becoming a stronger advocate.

oIdeally the final written proposal should be presented to the financial people and your users at the same time. In doing so, the bulk of the questions that affect your proposal will be tendered in that meeting.

Benefits – Here’s Why it Works

Creating interest and identifying need with the beneficial user may still be the strategy everyone else is using (and unfortunately for that matter) you still may be using. A revised strategy and set of tactics will identify you as the competition -for both product and funding.

Knowing how decisions about large expenditures are being made assists you in determining if a proposal is appropriate and defines what justification elements need to be in it to clear the financial hurdle.

Getting acceptance at several organizational levels is not only wise in selling large ticket items, it is essential. Without buy-in from successive levels your proposal may never be forwarded up the organization. A sound financial justification/return on investment analysis uses your prospects data. You provide comparative information. That’s what makes this process so powerful. It is the prospect’s information fed back to them in a straightforward way compared to financial improvements your product gives them.

Taking the extra step by making timely and financially justified proposals establishes your professionalism and sets you apart from the competition. The effect is that your prospect views you as a consultant – assisting them in achieving the goals and objectives of their business.


Executives generally will not approve expenditures when those responsible for making the product successful are not totally invested in that success as well. To do otherwise courts having executive decisions sabotaged. That’s why calling ‘at the top’ exclusively typically does not work. Today’s executive makes final decisions based on fact, reasoning and logic, with emotion playing a small part in the overall scheme of things. They count on their staffs to supply the relevant information enabling them to form a conclusion. What is described herein is a way to get to the top in an orchestrated manner that avoids irritating all levels of management in the process while successfully gaining their approval.

So if up to this point your efforts were directed to the user, these probably were calls one and two. Now build preliminary justification with them. Get their buy in. Ask for their assistance in getting the justification information accurate. This will lead to a process that creates favorable acceptance all the way up the prospect decision chain culminating in successful proposal submission. And more orders for you.

Keep Your Team Focused On The Future With A No Self-Justification Ground Rule

If you ever find that your Executive Team has become “stuck,” it’s usually down to a small number of topics. One or two Directors may be holding onto some type of “baggage” from the past that somehow is taking their mind off the business future. This kind of topic can be difficult so you should remember the motto – “no self-justification.”

What you should do is establish ground rules as this can be very powerful in enabling your Executive Team to get rid of those old habits. “No self-justification” is a ground rule that can help resolve conflicts and steer away from issues that are too hard to deal with. When people are freed of the responsibility to either themselves or their closest colleagues to recall the way they see events from the past, we’ve got a much better chance.

This rule should also come into play whenever a team has to have a discussion about a difficult subject, one that is likely to bring up deeper emotions among some of the Executive Directors on the basis that they may have been wronged in the past. Perhaps they feel that a takeover was badly handled or they were treated badly by Nonexecutive Directors, or that things didn’t go very well during a merger. Grievances and resentments may be simmering under the surface, which can have a negative affect on key discussions if they are triggered.

Remember That Because The Team Signed Up For This At The Start They Take Ownership Of The Ground Rule.

Interestingly, I noticed that those who might be carrying the most baggage are more relieved when they see that the ground rule was introduced, as they feel that they’re not going to be put into a position to put across their side of the story in relation to whatever it was that took place in the past. Do make sure that everybody agrees with the no self-justification rule before the discussion starts.

If you see that somebody begins to say something like “this is why I responded in the way that I did,” you need to step in and say “don’t forget that we don’t need to go into that, because we agreed not to.”

As the CEO, Focus On Looking Forward.

As the Chief Executive you can establish a positive angle to get what you want out of the discussion by outlining this ground rule at the start. You could say, “I’m just concerned that we look at the future of the business based on lessons learned from the past, whilst leaving what’s gone on in the past firmly there. It’s easy to slip into self-justification and I know that you agree with me that we’re not going to do that today.”

This type of ground rule can be very valuable. There is undoubtedly a lot to be learned from the lessons of the past, but occasionally we do need to find new ways of convincing us not to wallow in some of those self-justifying details.

Don’t Be Afraid to Help Clients Reach Financial Justification

Most sellers know the technique behind a conversation that will gather the needs required to make a strong solution recommendation. But, to be a true consultant to your clients and stop the competition in their tracks, the conversation must evolve into much more. It must build a business case for investing in your recommendation and providing the client with a strong feeling of confidence in the return on investment (ROI) your solution will bring.

Most clients struggle with getting to the “real value” of a recommendation. While they will quite possibly move forward with your recommendation, they tend to accept it at face value and stop short of understanding its ROI to their business’ bottom line. This results in a lack of financial justification in their own minds as they evaluate your recommendation.

Clearly, this lack of financial justification can hurt your chances of closing the sale – especially in today’s market.

Without a strong business case, your client may choose to evaluate competitive bids, do it himself, or do nothing at all. Your opportunity can easily evaporate into thin air.

Unfortunately, many of us are fearful of delving too deeply into our client’s business, either because the client may refuse to answer our questions, or he might become belligerent about why we’re asking for detailed, personal business information.

In reality, it’s our job to know – and help our client to understand – that asking detailed questions will help us both get to the root of the business problem. Failure to do so may result in a recommendation that the client won’t be able to justify financially, and have a negative effect on their confidence in us.

Pete, one seller I was working with, was trying hard to close a medical office on a solution that would allow the doctors to off-load their computer system responsibilities to his firm. No more unexpected computer system outages or interruptions to patient care. While the doctors recognized that they had a problem they needed to address, they weren’t looking at the full impact unexpected downtime was having on their practice. Consequently they couldn’t justify the added monthly expense of Pete’s solution.

The doctors were focused on their bottom line expenses, without seeing the hit they were taking to their top line revenue.

Pete had to build a business case by helping the doctors expand their thinking. Together, Pete and the doctors considered all aspects of the impact to their business from their unexpected computer downtime. The doctors discovered that they were experiencing a multitude of issues every time their system was inaccessible: patients couldn’t schedule appointments; same-day appointments dipped and revenue dropped; insurance billings were missed, and more.

Pete helped the doctors discover they were losing far more money than the solution he was recommending would cost, and the doctors immediately signed up.

How can you build a business case for your clients? Ask questions that will help them consider their issue from multiple perspectives. Delve into the financial ramifications of the problem on their business. Clients will answer your questions because they want to solve the problem.

In his discussions, Pete uncovered a wealth of information to build a business case the doctors agreed with:

The daily rate of the receptionists to determine their productivity losses

The value of an average appointment that went unscheduled

The number of appointments the doctors were missing

Pete helped the doctors understand why they should be willing to pay money to solve the problem, and what their ROI will be by removing the problem that was negatively impacting their practice.

As we question and help our clients better understand the situation being caused by their business issues, their respect for us will rise and our ability to make more informed and complete recommendations will increase. Clients will look to us to build their business cases and stop seeking competitive comparison bids. And isn’t that every sellers dream?