ROI: You’ve Got Some Explaining To Do!

Jack M. Keen
No one ever said explaining
was easy. As kids we had to explain why we ate that cookie before lunch.
As teenagers we had to explain why coming in an hour after curfew was really
okay. As adults, we still have to explain our reasoning to others so they
see things our way.

Explaining under
pressure has emerged as a key lifetime success skill. Yet, we rarely step
back to assess whether our “explaining skills” need a tune-up.

Take, for example,
the approval of ROI projects. In my opinion, management rejects more ROI
projects due to “poor explanation” than any other reason. Typically, the
needed resources exist. What doesn’t exist is managements confidence
in our proclamations about the project’s payoff potential.

Suppose we want to
justify a Windows 2000 upgrade for the laptop computers of our salesforce.
How can we best explain our ROI theme–the systems equivalent of a TV
sound bite–to decision makers, so that it indelibly sticks in their minds
and drives them to approve our project?

Let’s say on our
first attempt we come up with the following ROI theme: “We should invest
$105,000 for upgrading our sales reps’ computers to the Windows 2000 operating
system because it will increase productivity and help our bottom line.”

Do these words get
the job done? The language looks good on the surface–execs always love
money and business results–but fatal flaws abound if one delves deeper
into the explanation.

In order to be sure
you are saying the right things in your business case, try focusing on
these four areas that make our ROI explanations more powerful: clarity,
structured reasoning, credibility, and desire.

Clarity addresses
the listener’s admonition: “I must understand what you are trying to tell
me.” It is not easy to achieve clarity. English is an inherently ambiguous
language; more than 14,000 meanings exist for 500 frequently used words.
Busy executives have short attention spans for poorly worded ROI themes.

That’s why most first
attempts fail so miserably. We use technical words that may not be understood:
What is an operating system? What is Windows 2000? What is an upgrade?
Also, our benefit statements are too general.

To address these
issues, we research and revise our ROI theme to read: “We can save $140,000
annually by increasing sales productivity by 15% via improved software.”

In this rewrite,
terminology definitions no longer distract from the main business message.
The execs can be safely relegated to the technology-focused sections of
the business case.

Structured reasoning
tells listeners why it’s logical to accept our ROI assertions. Useful
guidance for this component comes from argumentation analysis, the analytical
method summarized so well in Robert Horn’s book Mapping Hypertext
(The Lexington Institute, p. 185): We divide our reasoning statements
into “claims,” assertions for which we wish to gain acceptance; grounds,
data that helps prove our claims; and “warrants,” or shared values held
by decision makers.

Using this approach,
we add the following to our ROI theme: “This investment in improved software
avoids lost revenues due to the sales reps’ lack of access to customer
buying histories (the claim). Sales Management magazine’s annual
survey revealed that 86% of buyers expect this data from their vendors
(the grounds). Meeting customer expectations has always been crucial to
our strategy for success (the warrant).”

This combination
punch of claim-grounds-warrant drives our ROI explanation home in a clear
and convincing way.

tells listeners what we are asserting is believable. So that our structured
reasoning sounds relevant, we must garner political support for our ROI
theme and ourselves. We must strategically spotlight subject-matter using
industry experts who are well respected by the decision makers and who
subscribe to our reasoning. Candidates for testimonials include bosses,
subordinates, partners, consultants, and/or industry analysts.

Desire tells
listeners why they should care about what we have to offer the corporation
with our ROI theme. Winning ROI explanations must hit at the heart of
a decision makers business concerns. And it’s our job to tell the decision
makers why they should care.

Back to our example.
Confirm that the interests of key decision makers are really about increasing
sales rep productivity, and not about other pressing issues, such as hiring
additional people or reorganizing the department. Since executive hot
buttons can change daily, we must be sure we’re up to date.

Like it or not, getting
our words right pays off in many ways, be it ROI project justifications
or why we ate two desserts last night. //

Seen examples
of ROI explanations you’d like to share? Explain them to me via e-mail
to [email protected].

Jack M. Keen is
founder and president of The
Deciding Factor, a Basking Ridge, New Jersey-based international
consulting firm specializing in the development of simple, but powerful
ROI calculation models, tools, best practices, and workshops for building
better business cases faster. A frequent guest speaker, Keen has advised
more than 100 organizations in 15 countries.