Persuasion Power: Building a Strong Business Case

Building your business case can achieve skyrocketing persuasion results.

It all begins with such quantitative actions as doing due diligence, then measuring return on investment and knowing how much you need to sell. Then, you must create positive emotional links.

Finally, put everything together to create both real and hypothetical case studies to make your point. To best convince others that your business case is relevant and powerful, consider these six techniques:

1. Draw from other industries.

Demonstrate how and when your idea has worked elsewhere and why it’s likely to work in this situation. In other words, show precedence.

2. Provide relevant examples.

They should that either support why quick action is necessary or why a more measured approach is appropriate.

3. Create “positional critical mass.”

This means that you’ve focused your early arguments on the movers and shakers — people who can champion your cause and best rally support. It also helps when formal (hierarchical) and informal (popular colleagues) individuals support the position you espouse.

4. Cite and utilize experts (living and deceased).

They can be leveraged to help cut through uncertainty. If I were attempting to persuade about technology, I’d likely cite Walt Mossberg, former Wall Street Journal columnist and co-founder of the AllThingsD, Recode, D & Code Conferences. But if my persuasion priority involved organizational strategy, I’d reference the late management consultant Peter Drucker.

5. Provide validation and verification.

Citing the right metrics (quantitative help) will justify and validate your persuasion priority. For example, if you have 20 percent more clients six months from now than you do today, you’ll know your organization’s referral initiative will have been successful.

6. Argue against yourself.

People routinely write books on both sides of an issue. Academic debating requires the ability to take either side of an issue and prove or disprove it. Make the anticipated arguments against your own case and rebut them, so that you’re prepared for the crucible.

Remember: There are quantitative and qualitative aspects to any persuasive argument. Not only can’t you afford to omit either dynamic, but you must appreciate the supporting role they play for each other.

Mastering that synthesis is the key to becoming a powerful persuader.

Persuasion Power: Creating Emotional Links

There are quantitative and qualitative aspects to any persuasive argument, and you can’t afford to omit either dynamic.

In previous posts, I wrote about the importance of building your business case. It all begins with such quantitative actions as doing due diligence, then measuring return on investment and knowing how much you need to sell.

Mastering that synthesis of both quantitative and qualitative reasoning will place you far ahead of the other persuaders at the table and down the block.

In this post, I’ll focus on the importance of qualitative reasoning. As a result of your persuasive efforts, will your  organization establish higher morale, for example? Or will communication be enhanced and problems more easily solved? Will silos disappear or at least be altered? And might the organization’s image or brand also be enhanced?

Get In Touch With Emotions

Qualitative reasoning is much harder to measure and report than quantitative reasoning, but it’s worth the effort. With a bit of cognitive effort, practically any element of qualitative reasoning can be constructed to present meaningful numeric data. Two of the most common types of such data are customer and employee satisfaction indices.

Every organization — public and private, large and small, product or service — seeks the following if it is of sound business mental health:

  • Sustained high morale
  • Efficient and effective teamwork
  • Rapid and accurate problem-solving
  • Positive repute and community “citizenship”
  • Decreased distraction and disruption
  • Accurate and unbiased communication

These “emotional” factors (sometimes referred to as “soft factors”) are usually the most important when it comes to presenting your case and persuading your target. Because, as you already know, logic makes you think and emotion makes you act. All the new plant cost calculations in the world are useless unless current customers are providing the repeat business and referral business to drive the expansion.

Thus, your emotional appeals should deliberately and fastidiously involve soft factors, without exception. (Steve Jobs adamantly mandated that Apple’s engineers and software experts accommodate matters of style and design. I’ve seen million-dollar construction vehicles, capable of traveling at speeds up to 1.5 miles per hour, with rounded and streamlined sides! Why? Aesthetic appeal, of course!)

Determine which emotional factors best appeal to the other person. Don’t attempt to please yourself or choose to fulfill yourself and your needs, quantitatively and qualitatively. Rather, ensure that you address the other person’s emotional needs and push the appropriate visceral hot buttons.

This is not manipulative; it is the essence of sales and persuasion.

Persuasion Power: Know How Much You Need to Sell

In previous posts, I began explaining how to build your business case to achieve skyrocketing persuasion results. It all begins with doing due diligence and then measuring return on investment.

Another step with which you should be familiar when building a persuasive business case is the break-even calculation, which answers the question: “How many units do we need to sell to recoup our investment?” It is primarily used for product sales and can be determined in two easy steps.

Step 1:

Calculate the gross profit margin for selling one unit by taking the revenue derived from selling one unit at full retail price and subtracting the cost of goods sold for one unit. That equals the gross margin per unit.

Step 2:

Calculate the break-even number by dividing the net initiative by the gross margin.

For example, let’s say you’re a manufacturer partnering with a software design company to develop a point-of-sale software program for your retail distribution channel. The software company is charging you $15,000 per copy for the software, and you’re going to sell it to your retailers for $20,000. Your gross profit here is $5,000 per copy. The software company requires a minimum purchase of 100 copies in order to complete the customization required. Your initial investment is $15,000 x 100 = $1.5 million

Now, divide that $1.5 million by the $5,000 gross profit, and your break-even for this product is 300 units.

Break-even calculations are valuable because they help keep an organization headed toward a recognizable goal. The problem here (at least in terms of making a financial decision) is that break-even calculations don’t take into consideration time dedicated to the project. For that, you’ll need to do more calculations.

Master the break-even calculation and other fundamental business measures and calculations that often arise in meetings and discussions, and you’ll be well on your way to becoming a professional persuader.

Persuasion Power: The Role Return on Investment Plays

In a previous post, I began explaining how to build your business case to achieve skyrocketing persuasion results. It all begins with doing due diligence.

The most fundamental financial measure is return on investment. Companies use this measure to determine if they should take action — or if the action they took was worth it.

The classic ROI Calculation is this: ROI = Net Benefit/Total Cost.

You want a positive number here, which is why some companies even have ROI minimums before they take on a project. If your ROI number is negative, your persuasion priority is no good for your organization, and you should reconsider — even if your persuasion priority works to your own advantage.

ROI can be expressed in dollars, as a percentage or as a ratio.

How much did you invest, and how much did you receive in return? Let’s say you invested $100,000 in a marketing campaign, which in turn reaped $1 million dollars in sales.

ROI in Dollars

To find your ROI in dollars, use this calculation:

  1. Begin with the total dollars garnered from your initiative: $1 million
  2. Subtract the cost of your initiative: $100,000
  3. That leaves you with the dollars returned: $1,000,000 – $100,000 = $900,000

Not including the cost of the initiative would be a gross overstatement. Some financial experts might even consider this entire example a gross overstatement, because it doesn’t account for the cost of goods sold.

Let’s say the cost of goods sold in our example is $500,000. Now you have sold $1 million in product, but that product cost you $500,000 to produce and get to market. Our ROI dollars calculation now looks like this: $1,000,000 Gross Revenue – $500,000 COGS – $100,000 Marketing Investment = $400,000 ROI. If you want to appear reasonable, conservative, and responsible to senior management, use the gross profit number in your persuasive efforts.

ROI as a Percentage

Expressing ROI as a percentage is even more common than expressing it as dollars. Again, let’s use the same example of investing $100,000 and garnering $1 million in gross revenue — which, by the way, would be a fantastic investment! To find this:

  1. Calculate gross profit:
    Revenue – COGS = Gross Profit —> $1 million – $500,000 = $500,000 Gross Profit
  2. Subtract your investment from the gross profit:
    Gross Profit – Investment —> $500,000 – $100,000 = $400,000
  3. Divide that by your investment amount to determine a factor:
    $400,000 / $100,000 = 4
  4. Then multiple that factor by 100 to give you a percentage:
    4 x 100 = 400% ROI

ROI Ratios

A ratio demonstrates the quantitative relationship between two numbers, showing how many times one number contains the other. The most elegant way to write this is with a colon. In our example above, our initiative has a 4:1 ROI ratio.

Typically when using ROI ratios, whatever you invest is always 1. So if the marketing campaign example above cost $150,000 (instead of $100,000), you would simply divide $400,000 by $150,000 and find the product to be 2.666; now your ROI ratio (rounded up) would be to 2.7. That makes your ROI ratio 2.7:1. Not as compelling but still not bad!

The challenge with return on investment calculations is what’s included and what isn’t, on both sides of the equation. Do you include the total cost for salaried employees to work on your initiative as a cost? Do you attempt to quantify improved morale as a benefit? With ROI, like all measures, it’s valuable to consider those inclusions and exemptions. Every company has different ways of looking at the numbers.

One final note about ROI calculations: If you are using these calculations to forecast anticipated ROI, you may want to run a few different scenarios. What if sales are off by a particular percentage? What if your cost of goods sold is higher than anticipated?

As I’ve mentioned in the past: Know this kind of stuff, and you’ll be well on your way to becoming a professional persuader — because you’re proving the viability of your ideas and initiatives to your targets.

Up next: The Breakeven Calculation