Revealing Cost: Questions to Ask a Financial Decision Maker
When you have an opportunity to work with a prospect to build a business case, it’s important to involve the financial decision maker to co-build the business case.
This is imperative to success because we have to let them do the math on the cost/benefit analysis. If they do not do the math, they don’t believe the math.
Most do not use any of the five standard methods cost/benefit analysis, they make up one of their own. You need to use whatever method they find believable. People don’t argue with their own data, so let them pick the numbers so that the cost/benefit analysis becomes their baby.
Your job in working with financial decision makers is to bring something to generate thought, like a cost calculator or a common list of cost elements. Remember that these tools should start the conversation, but you must let the buyer gain ownership by using their own methods and numbers.
It may help to come prepared with questions that reveal cost. For example, you might say:
“I do not fully understand your financial model, and could use some help. It sounds like there may be no cost associated with this initiative?”
(Pause and let them answer. If they need a little more help, proceed.)
“Typically, there are three areas to consider:
- Current cost that can be removed.
- Upcoming cost that can be avoided.
- Potential upside – revenue that could be created that is not today.
Would it be useful to briefly consider those, or is a business case not required for this decision?”
Take each point and turn it into a question.
- “In some organizations a factor we leverage is a current cost that can be removed. Examples might be man hours, infrastructure or fees paid for a higher cost alternative. I don’t know if that’s part of your considerations?
- “Future costs that can be avoided include fines or cost of litigation, in cases where compliance is important. But you have not indicated that applies in your case.” (Pause)
- “Some organizations factor in opportunity cost, in other words, revenue that could be produced, that is not currently produced, as one of many examples. But I, of course, have no idea where that factors in your personal considerations.”