episode 20

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Epi 20: Quantify the Value of the Services You Provide to Close Sales – Michael Farber, CEO of The ROI Shop

Learn more about The ROI Shop at: https://www.theroishop.com/

Find Michael Farber on LinkedIn here: https://www.linkedin.com/in/michael-farber-9946281/

JC: Welcome everybody to another episode of the Future of BizTech. I am your host, JC granger. I have with me here, Michael Farber, the founder and CEO of The ROI Shop. Michael, thank you so much for coming on the show. Why don’t you tell the audience a little bit about yourself and what your company does?

Michael: You got it. Thanks for having me JC. So a little bit about myself and how the company started. I’ve been in software sales for the past 23 years. 15 of those years were for other companies, and now I’ve been selling my own company and The ROI Shop for the past eight. But I’ll tell you, I started The ROI Shop because through the 15, 16 years of selling for other companies, I just got tired of getting my ass kicked by the no-decision outcome. That’s what most salespeople face. They lose the majority of their deals to no-decision. One of the biggest reasons for it, is that reps do a poor job of articulating the value and prospects have a hard time understanding the value. As you know, companies make a purchasing decision for two main reasons, you’re going to make them money or you’re going to save them money. Yet 95% of salespeople don’t have any tools to engage in those kinds of conversations and leave it up to their champion to figure out and quantify your value on their own, and therein lies the problem. It’s an impossible ask.

JC: It sounds like this was kind of born out of a frustration, right? Which all good businesses are, as solving a problem that you probably personally had. But what kind of background do you have as far as, what made you want to create a tool? I get that you had the issue with salespeople not being good at selling the value or articulating it, but someone might say, well then, why didn’t you start a training for salespeople then? I guess what was it that brought you to creating a software tool versus an educational course, for example?

Michael: Gotcha. Well, how it really got started is… Where this brainchild happened was during my time at Concur Technologies, they sell expense software. I was with them for about five years, probably my second year in there during SKO, they introduced an ROI calculator for their sales reps to use. They introduced it on the second day of SKO, which is absolutely the worst day because everybody’s hungover and you don’t want to show an Excel spreadsheet at eight in the morning, but that’s what they did. Anyway, shortly after SKO, I was working with a company called Bacardi USA. Everybody knows Bacardi, and I was working with their controller. His name was Warren. And I remember this because it changed the course of my life.

Michael: He’s like, Mike, we want to move forward with your solution, but we are going to need a business case. And I’m like, oh shoot, Warren. Absolutely. We could build something like this. I’m scheduled to come down in two weeks. Let me get down there a little earlier. We’ll build the art business case together and then we’ll have the demo. So I frantically went to find this ROI calculator. It took me about two days before anybody could locate it and about a week for me to really understand it. So I went down there, had the call with him. I practiced enough where I was decent at it, but still wasn’t great at it. After the call, he goes, Mike, I got to tell you, this is one of the better ROI tools I’ve seen. So I’m like, all right. I didn’t enjoy doing it. I actually would have never done it unless the prospect asked me to do it.

Michael: But I thought, all right, maybe I have a competitive advantage. The next three or four deals I worked, I made sure I used it. By the fourth time I started getting really good at it, and it changed the conversation. I knew which prospects were kicking tires, which ones we’re going to buy. And it just got me off of the feature functionality talk. I left Concur and went to a company called Xactly Corporation. Yep. So there were only about seven enterprise reps. And first thing I did when I got there is I sent an email out to the reps and said, hey, who has an ROI calculator? Only three responded back, and they were horrible. And I had a big pit in my stomach.

Michael: So I went to the hiring manager. I just didn’t want to start building sales tools. So I’d said, Steve, I go, this is what we used at Concur. I go, I have a friend who’s a wizard in Excel. Can he build something like this for me? I just didn’t want to start doing it on my own in my second week there. He said, yeah. How much will he charge? He was going to do it for free, but I made him $3,000, but it got me thinking about, od! The five or six companies and software companies I worked from 2020… Not from 2020, from 2000. They were making 500 million in ARR. 40 million. It varied. And none of them had a very good way of showing value.

Michael: So I realized there was a huge void in the marketplace. So what I really started out was just building Excel spreadsheets. I had my first meeting when I started the company, a local company here in Atlanta. I went in there, I opened up my computer, pulled up an Excel spreadsheet and almost got laughed out of the room, like we could do this. So I felt really small, and on my way out, I called my business partner. I go, we got to get out Excel. We got to start putting it on the web. So I don’t know if that answered your question, but that’s really how it all came about.

JC: Well, it’s funny. I didn’t tell you this in the pre-interview, but so I created one for myself in Excel, of course. Google sheets. Okay, fine. Same thing. And I did it because I couldn’t find any good tools online myself, at the time. Now one thing, I’m going to give you my feedback of what happened when I did this and how my sales processes went, and I want to know from you how you’ve seen the feedback based on your tool with this. So you are right. It does change the conversation because I know that when you start from a point of view of like, before we even go anywhere, how is this… If we do well for you, what’s the real effect? What’s the real ROI here? That is a whole different conversation versus… That’s the conversation, what’s great about it, is that it talks about the prospect.

JC: It puts it in their court. Like this is about them, not me. And I like that. I talk a lot, but I really do, I listen. I like to know about the other person. That’s why I like podcasts. I mean, I get to hear about you and your company, but when I… So it did change the conversation. Here’s what I found that happened with me though, and I want to know how you came over to this hump or what you suggest to the audience. When I started doing that, I found that my prospects did not have these answers almost at all. It’s almost like they literally had not done this exercise for themselves, in fact, and they weren’t like upset or mad. It’s like, they would just have this reaction, like, wow. We really don’t know. Because I would ask questions like, okay, so what’s your average sales cycle time?

JC: What is your LTV, the long-term value of your clients? Just on average, a range, nothing specific. It was shocking to me how many prospects didn’t have those answers, and we’re talking to top level. We’re talking to CEOs, CMOs, CTOs, things like that, had no idea. And they said, well, we’ll have to get back to you on that. So I guess my question to you is this, when someone has enabled with such an impressive tool like yours, how do you get around the human factor of, if the prospect doesn’t even have the answers for you to put into the tool to begin with?

Michael: Yeah. And trust me, you’re not alone. It’s amazing how many prospects have no idea what their data is. I realized that. I built it by a salesperson for a salesperson, so everything you’re saying I’ve experienced. So what we’ve done is, one obviously, you have to have some kind of industry averages. With our tool, you can have infographics. It’s really a website. So for people who think about ROI, they’re always thinking in the four walls of Excel. Throw that away. It is a very interactive experience, like almost a personal website, if you would. So you can have videos that talk about what is the industry average, infographics, all the great things marketing might put together to help them come up with an answer, but keep in mind that when you force an industry average on them, they might not be comfortable with it because they don’t know.

Michael: Is this something the vendor’s telling me, which is going to skew the ROI so the ROI looks great? But what we’ve done is, we have a conservative factor. So, when you plug in an industry average and then unlike Excel where it says, hey, you’re going to save $53,000 in productivity benefits or error reduction. We have a conservative factor that says, hey, are you comfortable with this JC? Is this something you believe in? If you’re a wishy-washy, like the prospect is because they don’t know it, here’s your chance to say, let’s be conservative. Let’s dial this thing up to 70% conservative. And if you only realize 30%, is that something you can still believe in? So the conservative factor really allows them to buy into a number even when they don’t know their information.

JC: Yeah. The one thing that was good about going through the exercise though, is that because they didn’t have their numbers, just the act of us going through that exercise, it gave them their numbers. So I would ask things like, okay, well, if you don’t know what your average ROI is, well, let’s talk about this. Tell me about your average client. I would tell them, I’d say, I don’t want to hear about the top 20% or the bottom 20. I said, give me the average of the middle 60. So, I don’t want to hear about the best giant, big client you have. I don’t want to hear about your tiny guys. Just give me the middle section and then give me the average of that. That was my way of going conservative because the average of the middle is only going to be… That’s going to be a far cry away from their really big clients.

JC: So they would say, okay, it’s about this. Great, now we got a range. Let’s say, okay now, how often do they typically stick with you or what are the typical services that… And then I’d ask them too, and some companies were comfortable with this question and some weren’t, but I’d say, what’s your net on that? If you’re charging 10 grand, what do you guys actually make? Because it’s really easy in my experience to go after the gross amount. A lot of people say, oh, look, you’re making this, but that’s not how a business owner thinks. It’s not about the gross, but what do they have at the end of the day.

JC: If they’re grossing 10 grand and new cost five grand, but their margin’s three grand, they’re under by two grand, right? So it’s not a five to 10. It’s really a two and a five. That’s the issue. So the cool part about the exercise and what I think is really valuable about your tool is that, if the prospect doesn’t have their numbers, it sounds like someone using your tool interactively with the prospect, it could give them some of their numbers. It might be the first time they’re doing that exercise and they can come away with that realization. That happened to me a couple of times that I really liked.

Michael: Yeah. And one of the things that does is A, it makes you know if you have a real champion there. Can you go back and find that information? If they’re not willing to spend the 15, 20 minutes with you to build a business case, they’re not going to buy a hundred thousand dollar product from you. It also allows you to go deeper and wider because most set rail salespeople get single-threaded, they’re working with one person. But when you ask that one person some data, if they don’t know it, who might know it? Do you think you could put me in touch with them, who cares about this section? It just can naturally widen the folks that you’re talking with. So it does a whole bunch of things while talking value.

JC: I hate the COVID question every time, but it is such a big event. I am curious how has The ROI Shop done or in the ROI calculator itself, during COVID? Has that made it a more of a need, less of a need? Have you guys had to add on features because maybe the original version wasn’t covered? I mean, how’s COVID really even affected what you guys have been doing and how your clients and prospects have been handling it?

Michael: Really good, and I’m blessed to say it. It made our tool much more valuable because budgets have been cut and slashed, and not every company is doing great. So they’re watching every penny going out the door. Now people need to know if we invest, how much is this going to make us or save us? So projects, especially those that aren’t on somebody’s radar and most salespeople rely on outbound leads, not inbound leads. So if you generate an outbound lead, if you thought it was harder beforehand, it’s twice as hard now because you weren’t a budgeted project. So it’s actually made our tool a lot more valuable.

JC: Okay. Yeah, and I could see that. I was actually just talking on Clubhouse the other day about the ROI and how COVID has affected things, but you’re right. Budgets were slashed, I’ve found that prospects are finding two things that they’re really concentrating on the trust factor. One wants to trust that they’re spending every dollar… They’re being hawks, absolute budget hawks on every penny. The second one is they have to trust that the company they’re talking to is still going to be around in six months, you know what I mean? Now that’s less of a concern now, I think, of where we’re at. We’re recording this in February of 2021, whereas maybe like July of 2020, that was a huge fear. Now that vaccines coming out, things are going down.

JC: I think that if you’re still around, if you made it, you’re probably still… You’re going to be okay. So that part is probably going away, but people are still going to be watching their budgets like hawks. I can see what you’re saying and see how a tool like this would help them rationalize and make sure that they are going to get that ROI on there. How are you marketing your tool? I’m a marketing guy, we talked about this before. That’s where my experience is. So I always have to ask the question because it fascinates me and most of the audience are B2B tech people also. What are you doing? What kind of tips or tricks can you maybe give the audience on how you’ve gotten your software tool out there to the masses for people to know about it?

Michael: Oh, well. The first few years of The ROI Shop, it was just hammering LinkedIn. Reaching connections, sending emails, doing all that. What I started to do is just try to connect with people in different groups that I’m part of, like Revenue Collective and Modern Sales Pros, and where the salespeople are and just connect. Not solicit them, but I’m almost up to 16,000 connections on LinkedIn so I’m excited about that. And every Tuesday and Thursday, I put out a GIF or a post that talks about the ROI, the struggles of salespeople. So I’m not soliciting them in the connection. I’m not even soliciting the people I connect with after they connect with, but I know they’re going to see my feed. I’m just making a very strategic approach on who I’m connecting with. VPs of sales, the folks that are my buyers. Though when they go into LinkedIn and they see my feed, it will resonate with them because I know the problems salespeople deal with. It’s no decisions, too much discounting, not articulating value. That is the key reason, and that’s really what we solve.

JC: Yeah. You know, that’s really smart. LinkedIn, that’s where you got to be. Plus you can, like you said, you can laser-target exactly who you’re going after. I think a lot of people, they either underutilize LinkedIn or they misunderstand it, but you’re right. That more passive approach where… People don’t like to be sold too hard on LinkedIn. Listen, LinkedIn is a platform for people to get together and buy, sell, work deals, network, but there’s a… I made an analogy to someone once when I was explaining this. Have you ever done business in Asia by any chance?

Michael: No, I have not.

JC: Okay. So Asian business culture is very interesting. If you were to fly to South Korea or China or Japan or something, typically you go in, you bring a gift. That’s very customary to bring a gift when you’re going. The host will accept and you sit down and typically they will get to talk about anything they want other than business. It is considered rude to start talking business until they’ve opened that platform to do so. So what I find interesting about Asian culture is that there’s this analogous part of how LinkedIn works. No, it’s not that anyone is delusional about why they’re there, but they do respect a certain order of processes, right?

JC: It’s like, hey, connect with me. Make sure it’s a relevant connection. If you want to post things or give value, fine, but until it’s time to actually start the conversation, you don’t go in and go bang, bang, bang, pow, pow, sales, sales, sales. That’s the quickest way to get blocked on LinkedIn. So I commend you for understanding that because so few people do and they do it the wrong way. So out there outside of LinkedIn, are you supporting it with any kind of paid ads? Oh you’d said you were doing videos, is there anything else? Other advice you’d give any other tech, SAS companies right now, as far as how to help their growth outside of LinkedIn?

Michael: I do some Google ads and we’re now looking into LinkedIn ads. So well, we’re-

JC: That’s more expensive.

Michael: I’ll tell you. It’s funny, we actually started about a week and a half ago and made a video. My wife’s a video editor, she does social media. So it saves me… I can do that all day long and it saves me a lot of money there, thank God. So on a $3,000 budget, and I thought I came up with a really compelling ad and I’m like, perfect. Then I had it, if they click on it, it goes to our website. I didn’t have a specific landing page. I see you’re shaking your head.

JC: Yeah. It ain’t going to work. That ain’t going to work. There goes $3,000.

Michael: Yeah, no, but listen, this is good though. I listen to Gary V a lot. I don’t know if you listen to Gary V.

JC: Love Gary. Love Gary.

Michael: He is the best. So it’s like, don’t wait to be perfect. Go out there, do your shit. If it messes up, learn from it, do it again. So I wasn’t going to wait until it’s perfect. So anyway, the LinkedIn ad worked… They say 2.2, 2.5% click rate is incredible. It’s pretty good on a LinkedIn ad. We were getting 5.5%, but I wasn’t getting shit on my website. So I told my wife, let’s pause it. This is obviously working, now I’m in the process of building that landing page.

JC: Yeah. So you were getting the click-through, but not the conversion?

Michael: Right.

JC: And listen, you did it the right way. Just launch. Right? Just launch. I love saying it. Just launch, just do it because there is no way for you to know how it’s going to work until you just try it, but you bring up a good point. You can tackle and master or even get lucky, for example, on one part of the equation. You did really good on the first part, but people forget that there’s a lot of links in that chain and if any of them are broken, the whole thing falls down. But it’s good to though. I mean, you saw that you were crushing on your click-through rate, which means that your ads are working, but when you have no conversions on the website, that means it’s either the website’s problem or you’re targeting is the problem. But it’s good that you figured that out. It sounds like you obviously… I imagine you’ve fixed that by now and it’s working well.

Michael: We just started two weeks ago, a week and a half ago. I had my wife pause the LinkedIn ad on Monday, and now I’m working with a developer just to get me that landing page. And I spent all night working on, if my message resonated, then the next step of the message should be that. We’re going to have a little video and then we’re going to see how that works.

JC: Yeah. Then you’ll split test that for the next two years. I mean, you’re never done, right? You’re never done, but once you get to that point of ROI, there you go. Then at least it gives you that motivation and the budget to keep testing. The trick is to fail as quickly as possible so you can pivot and correct it. So that’s really cool. So the title of the show, the Future of BizTech, let’s go into that idea now. Where do you see your industry going? By your industry, I want to say specifically, let’s say that the sales tools. Let’s say ROI tools. So you have a very specific one that helps salespeople calculate it with prospects. There are other things out there, but where do you see the industry in, let’s say, five years? Other companies like yourself and your company. How do you see people using it? Is there anything new that you can think that, like the next big thing, that might be used as such?

Michael: There’s a lot of direction. There’s a direction we’re going with the product. I don’t want to share it, necessarily.

JC: Oh, come on. Can we get that preview, like a general idea? I would be remiss if I did not at least try for this on, literally the Future of Biztech. A little bit of the future. You don’t have to give away the secret sauce, but like generally speaking, what will be the benefit, let’s say, of this new tool or the new feature you’re coming up with?

Michael: All right. The benefit is that it addresses your problem that you mentioned when they don’t know the answers to their questions. They don’t know what is the average salary of somebody or the average time it takes to create an expense report or whatever it is. What we are planning on doing is, just through all the ROIs created and through reporting, and all the data that we’re generating, is really to be able to dynamically show the prospect, hey, in your industry, this is what the range really is. What are you comfortable with? So, really that because they don’t know it. So, that’s the number one-

JC: It sounds like you’re going to hook into more data insights from other platforms or data networks that gives the user the ability to now actually guide that conversation better basically. Right?

Michael: Absolutely. Yeah. Yeah.

JC: That’s awesome.

Michael: We’re going with a whole sales methodology. We’re not going to be sales trainers, but you know what? You can give a rep an amazing ROI tool, it’s so foreign to them. They don’t know how or where to even use the thing. It’s like giving somebody who doesn’t know how to drive a Ferrari, that doesn’t help them.

JC: Yeah. Here are the keys, don’t crash.

Michael: Yeah. Really the methodology on where and how to strategically place these calculators in the sales cycle, and they’re different for different companies. So that’s really the avenue that we’re going in now is, not only do they get the calculator, they get best practices, how to make it more digestible in little chunks. Because a lot of reps think, “Oh, shit. I got to build this whole calculator with my prospect?” No, you don’t. Not if you did good discovery and then tie discovery with the calculator. So it’s a different way of selling, but you’re talking dollars and cents, and not features. So that cuts-

JC: Can I ask you a question though? Do you have… There’s two things I’d be curious for, for me personally. So a lot of people obviously build out proposals and whatnot, are you guys going to help either a, create a backend API or an embed code so that salespeople can take the results of that and import it into proposals when they send those officially, so that it can become part of that proposal process to be signed off on?

Michael: Yeah. So we can do a couple of things. One is with a push of a button, our ROI tool could give you a PDF dynamically with the data you entered and if you had standard proposal language in front or behind, we can do that today. We do have a full integration with Salesforce. So if you need to get the data from our ROI tool into Salesforce and then Salesforce you have a proposal software, that could be done today.

JC: Okay. Very cool. Yeah. I’m definitely… I was checking out before the show, but I’d love to have an offline conversation with you and I want to demo this a little bit, because we’re doing a big push into sales ourselves. Scaling, expanding and whatnot. We were lucky enough to not only survive but actually thrive through. I think honestly just for the… Because we specialize in B2B tech, like that’s one industry that actually ended up doing really well. So we kind of just were accidentally in that better space and not so many agencies were as lucky, but anytime we can get anything that can help that sales process, help decrease the sales cycle, increase the conversions, and it sounds like your tool does that. What would be the one piece of advice that you would give the audience based on your experience with your company? If you could just give them one golden nugget for people listening.

Michael: Most people, make it as simple as possible. If it’s not simple, your reps aren’t going to use it, and your prospects aren’t going to understand it. I’m going to give you a couple here, because there are so many mistakes that happened along the way. Two, is when companies are building their ROI calculator, they’re building it for their salespeople which is a mistake. You are building it for your champion. They are the ones that are going to get it. They’re the ones that have to look at it, understand it, and sell it internally. If they’re not comfortable with it, they’re not going to use it. Even if you-

JC: What do you mean by champion? You mean like your head salesperson or you mean like your best prospects? Who’s the champion here?

Michael: The champion is the prospect. So if I’m speaking to you and I build an ROI calculator with you, and then I give it to you to sell internally, if you’re not comfortable with it, you’re not going to bring it up to your C-levels to sell. So it has to be easy enough with the prospect and they’re not going to spend hours on it. They have to pick it up quickly. So, it has to be simple. Also, the one thing I always sell, is don’t boil the ocean. Don’t try to uncover every penny you save, there are two or three problems your solution probably solves well, and then there’s another six that are nice to have. Oh, we’ll save you some paper or some mailing costs or whatever it is, but just focus on the… What do most of your prospects gravitate to? Don’t build a tool that will address a hundred percent of your product.

JC: Services, offerings. Yeah, yeah. I love that term, I’ve never heard that. Don’t try to boil the ocean. That’s actually, that’s profound because that visual really reminds me a lot of situations that I’ve been in throughout my whole career. So yeah. Focusing on that one part first and the rest will work itself out once you could tackle that.

Michael: Yeah. At least you’re giving your reps something they can talk value about. That was better than nothing, even if it’s just two things. Then as the reps get more comfortable with it, they’ll come back and say, can we add this in? So, don’t build something, you’re not in the trenches. You don’t know what the reps go through.

JC: You can start with the MVP, right? That minimum viable product, and then let them give you the feedback to build on top of it, if needed then.

Michael: Yes, yes.

JC: Awesome. So how can people reach you personally, or the company, if they’re interested in the tool or if they want to connect with you for any kind of business things? What would be good information to give out?

Michael: No, please connect with me on LinkedIn. I live and breathe on LinkedIn. The company is called The ROI Shop. Don’t leave out the word ‘the’, otherwise, you won’t find us. I wanted to go with ROI Shop, but somebody had that domain and wanted to sell it to me for 95,000 when I’m opening. I’m like, that’s all right. I’m going to put ‘the’ in front of it and save myself. And you can get through to me. You send out… You fill out the form, it’s going to come to me. We’re a small company. I bootstrapped it about nine years ago, I went three years without a paycheck. I didn’t raise any money or anything. So, every one of our customers is important. We don’t have tens and millions sitting in the bank, and I live and breathe sales. I still do it. So it’s not like I’ve lost touch with that world, and we’re always evolving the tool based on what I’m learning every day out in the market.

JC: That’s awesome. Well, listen, Michael, thank you so much for being on this show. I’m sure everybody listening got great value out of it. I’m going to check out more in-depth on this ROI calculator as well, and thanks again for coming on.

Michael: Yeah. Thanks.

infinityadminEpi 20: Quantify the Value of the Services You Provide to Close Sales – Michael Farber, CEO of The ROI Shop