How to Show Buyers That Inaction Has a Price

It will come as no surprise to B2B marketing and sales professionals that sales cycles are getting longer. In the 2017 B2B Buyer's Survey by Demand Gen Report, 58% of the respondents said the length of their purchase cycle had increased compared to a year earlier, while only 10% said the length had decreased.

Other findings from the survey explain why the buying cycle has gotten longer:

• 52% of respondents said the number of people in buying groups had increased significantly.
• 77% agreed that they conduct a more detailed ROI analysis before making a purchase decision.
• 78% agreed that they "spend more time researching purchases."
• 75% agreed that they "use more sources to research and evaluate purchases."

I don't doubt that these factors are playing a role in lengthening purchase cycles, but I also contend that other factors are contributing to longer buying cycles, stalled deals, and the dreaded "no decision."

Today's business buyers are incredibly busy, and like the rest of us, they spend most of their working time dealing with issues or problems they perceive to be important and urgent. If they don't see a problem as both important and urgent, they won't give it much attention. And if the financial ramifications of a problem aren't visible, buyers won't be likely to see the problem as urgent.

In addition, psychologists have found that we humans have a natural desire to avoid or delay making difficult of complicated decisions. These factors explain why the status quo is usually your toughest competitor. In most cases, doing nothing is the easiest choice your prospect can make.

The key to breaking the grip of the status quo is convincing your potential buyers that the problem your product or service will solve is worth their time and attention. In essence, you must help your potential buyers answer two questions:  Why is it important for me to address this problem, and why should I deal with it now?

One of the most effective ways to demonstrate the importance and urgency of a problem is to make the cost of inaction visible to your potential buyers. That's why I include a cost of delay calculation in every ROI model I develop. Most ROI estimates focus on the traditional ROI metrics - the basic ROI percentage, the payback period, net present value, and possibly internal rate of return. These metrics should be included in any ROI estimate, but they won't necessarily communicate a sense of urgency to your potential buyers. That's what a cost of delay calculation does really well.

The basic cost of delay formula is:

Average Solution Benefits - Average Solution Costs

When calculating the cost of delay, you can use daily, weekly, or monthly average values. I typically choose the unit of measure based on the size of the benefits and cost values. The larger the values, the shorter the unit of measure.

To illustrate how the cost of delay calculation works, let's assume that for a particular prospect, you've determined that your solution will produce total financial benefits (cost savings, cost avoidance, etc.) of $115,000 during the first twelve months after the solution is implemented. The annual cost of your solution is $75,000, and you will need one month to implement your solution for this prospect.

Based on these facts, the monthly cost of delay would be calculated as follows:

Monthly CoD = Average Monthly Solution Benefits - Average Monthly Solution Costs

Monthly CoD = ($115,000 / 13) - ($75,000 / 12)

Monthly CoD = $8,846.15 - $6,250.00

Monthly CoD - $2,596.15

To make the cost of delay even more compelling, I will typically include a cumulative cost of delay chart somewhere in my ROI calculator. For this example, that chart would appear as follows:

Making the cost of delay visible to your potential buyers won't cure all of your sales cycle problems, but it can help create a necessary sense of urgency.

Top image courtesy of Predi via Flickr CC.