Cost-justify business proposals: Persuasive Techniques, Part I

Mike Schmidtmann

Your MSP business proposals are perfectly crafted and cost effective, yet your prospect still needs to “think about it”. Many times, they will end up making no decision at all. Why don’t those customers recognize your wonderfulness and take action?

Your first mistake is probably assuming your prospects are rational and capable of making smart business decisions. Nothing could be further from the truth.

The same businessperson that nitpicks your proposal over a hundred lousy bucks is currently driving an expensive European luxury car costing a hundred times that amount. They’ve got plenty of money. They’ll splurge on fancy artwork and office furniture that doesn’t generate any business value at all. They spend thousands to mist the plants in the office.

The same person that baulks at your monthly fee is easily wasting many times that amount in their IT department. They just don’t realize it.

Think about it this way. What would a prospect say if you delivered a proposal for $1 million? They’d choke, right? Yet if they employ two mid-level techs in their IT department, they are already spending at least that same amount over five years. Do the math.

What does your prospect get for that million dollar investment? You know the answer, and it isn’t pretty. Those two techs might be good guys. More likely, they’re tumbling chimps.

shutterstock_163469630

"Your client's IT department"

Wouldn’t it be smarter for that business to invest that million with you?  Of course! Let’s figure out how to get them to happily take action on your proposal.

Let’s get two things straight up front: yes, they have the money, and no, their decision making is not very logical. Let’s turn these two facts to your advantage.

Comparisons
All cost justifications are based on comparisons:

  • Expenses now vs projected expenses in the future
  • Revenues now vs potential revenues in the future
  • Costs now vs costs after a potential catastrophic event

Untitled-1

Always present your offer as a comparison to something else. In the previous example, you might contrast your MSP package of $12,000 per month against the $1 million they are currently planning to spend for the Tumbling Chimps. (Make sure you factor in not just salary, but benefits, training, management overhead, recruiting expense, and office expenses into your calculations of their business expenses; $1 million over five years is conservative)

Big Expenses Small
Make big expenses look small with a “Reduce to the Ridiculous”.  Let’s take a sample $12,000 per month fee. You might say something like this:

“The $12,000 per month breaks down to about $110 per user, which is $4.00 per day, or less than 50 cents an hour.  You are probably spending that on coffee. Is that too much to invest for safety, security, and uptime for your network?”

You’ll notice we reduced the monthly fee to a per user per hour amount, then compared it to something trivial that they are already spending now.

Small Problems Big
Use the same tactic in reverse to make small expenses seem big. Large organizations often underestimate how small, annoying IT issues can add up to huge wastes of time.

“Our surveys found your users are losing an average of five minutes a day due to crashes, logins, and system updates. That might not seem like much, but 100 users at 5 minutes a day adds up to over 10,000 hours of lost productivity over five years. That’s the equivalent of five full time people!

“If we could reduce that significantly, we’d be saving your organization hundreds of thousands of dollars”

Now that you understand how to use comparisons to make your offers more attractive, we’ll move into another effective technique in part 2 of this article in the coming weeks.