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Loss Calculator

Loss Calculator content enables buyer to quantify the losses due to a problem

As a general rule, customers will take action when they experience the status quo as more dangerous than making the needed improvement: buying your offering and solving a real problem. Now grounded in neuroeconomics, top sales producers know that loss aversion exerts a much greater influence than the prospects of gain.

This is why a Loss Calculator, which draws a crisp and vivid contrast between an attractive Future (achieved with the removal of the problem) and a negative, unwanted Present (resulting from the existence of the problem), is an essential sales enablement tool to accelerate the sales cycle.

The collaborative preparation of a loss calculation with the customer builds additional trust, earning your sales executive wider access to the customer organization and their influencers.

The process of building a personalized Loss Calculator gives your sales executive the “keys to the elevator”, earning the right to interact with affected stakeholders and laying the foundation for a proper business case and organizational change-management plan.

What is a Loss Calculator? 

A Loss Calculator aggregates the organizational losses of not making a needed change. It presents a vivid depiction of the negative consequences for the company and each stakeholder group.

A Loss Calculator uses internal company data to induce a needed shock to the customer, quantifying its current cost of doing business as usual —“We’re losing $15,000 per month the current way.”

It also uses verbatim anecdotes from affected stakeholders to personalize the need to solve a now Important AND Urgent problem, emphasizing the human costs and potential repercussions of inaction.

Loss Calculators combine quantitative data and qualitative user stories and anecdotes:

  1. Quantitative data might include portions of direct and indirect spend of an organization, defect rates, or cycle times for lead to sale or quote to cash. This also might include lifetime customer value, churn rates, or net promoter scores
  2. Qualitative aspects of Loss Calculators tell a human story of pain, frustration and resentment about the current way of getting things done.

These aspects come from interviews and focus group discussions with affected users and stakeholders. 

Depending on the nature of the problem and its organizational context, collecting these qualitative aspects may include interactive surveys, questionnaires, or workshops.

From there, the customer and sales executive will begin sketching user stories that start with a job position or Role as your hero or protagonist. User stories then frame and name Indications of Pain as suffered by a particular stakeholder or group, introducing the villain or antagonist as the personification of the Root Cause of the problem. A crisp focus on the antagonist in each user stories enables you to paint a picture of negative Consequences to the Role and the organization.

At each step of the User Story, use anecdotes and verbatim passages from your interviews, workshops or surveys.

When do you use a Loss Calculator?

Your sales executive needs to influence a larger group of affected stakeholders and decision influencers beyond the prospect who initially contacted them.

The necessary first step starts with their solidifying an effective collaborative relationship with the prospect through Teasers and Explainers and by confirming that their organization has specific Indications of Pain, symptoms of a deeper problem that your product can solve. In addition, the prospect may have delved into your Guided Tours, confirming the relevance and consequence of one or more use cases. They have confirmed that your type of product can solve the problems that they have identified as worth solving.

Once these conditions are satisfied, it is a good time for the salesperson to introduce the concept of a Loss Calculator to the prospect.

The results of the Loss Calculator strengthen a Business Case to justify and procure budget for acquiring your offerings. Hence your salesperson should advise the prospect and other  stakeholders to collaborate on building a Loss Calculator before they approach executive management to to procure funding for acquiring your offering.

Key components of a Loss Calculator

  • Trigger list of questions to ask various stakeholders who may experience one or more indications of pain
  • Spreadsheet that names, frames, and quantifies
    • Areas of money leakage, defects and waste
    • Baseline costs of doing business today with actual customer data of time, money, and full-time equivalents
    • Aggregate total of losses from current operations
  • Presentation with vivid datagraphics of two to five user stories, depicting the negative consequences of the current way of doing business on specific stakeholders and the organization as a whole

Best Practices for Loss Calculator?

  1. Loss Calculators should focus only on the facts. Use best available company data and verbatim anecdotes.
  2. Loss Calculators should quantify the losses in a simple to understand spreadsheet. It should be possible for decision-makers to easily extrapolate the sample data to estimate enterprise-wide losses.
  3. Loss Calculators should be a collaborative effort involving multiple stakeholders and decision-makers. This is essential both for ensuring comprehensive coverage of losses as well as to accelerate buy-in from the relevant stakeholders.
  4. Loss Calculators should focus on the company’s value gap due to the absence of your solution. It should not speculate on the benefits your solution will deliver.

To learn more about other engagement objects, please see “9 Engagement Objects that fuel B2B Sales Enablement“.

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