Why Most Startups Selling to Cost Centers Fail, And What to Do About It


Although I strongly suggest selling to a profit center — Sales, Marketing or Engineering — with a hard value proposition — making money or saving money — not all startups will follow that model.

The problem with selling to a cost center like Human Resources, IT or Customer Support is that their work is mostly operational. Their responsibility is not to make money and thus there’s nothing forcing them to innovate. Their budget is set at the beginning of the year and they tend to do things the same way from one year to the next.

A soft value proposition is much harder to evaluate and invest in for businesses because the return on investment is often hard to quantify.

However, it is possible to build a business selling a soft value proposition to a cost center. The problem is that it typically takes more time and it is more difficult.

To sell a soft value proposition, you have to find ways to turn your soft benefits into a hard value proposition. In other words, you need to find ways to quantify the benefits of your solution.

What’s the ROI of higher employee happiness? Can you find studies that demonstrate that happy employees are more productive? (Note: you can.) Can that value be calculated? Can you convince companies of that return on investment?

Find ways to make prospects believe in your ROI story even if it has a soft value proposition.

As a rule of thumb, the harder and more demonstrable the value proposition is, the higher the price you can charge for your solution. That should be a good motivator!


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