I’ve met thousands of B2B sales professionals in my training career, and I can confidently say that only a small percentage of them are comfortable with the language of finance. That lack of comfort causes them to shy away from using it in their sales approach, and that unfortunately means they leave a lot of value on the table—for both sides.
Here are at least seven ways that financial literacy will make you a better and more productive salesperson, and pay off for you, your employer, and your customers.
Speak the language
When in Rome, speak Italian. If you’ve traveled much overseas, you know how useful it can be to pick up some basic phrases. They don’t expect you to be perfect, but the locals do respond to the effort. It’s the same way as you travel those foreign lands in your customer account known as the C-Level. The higher you sell within an organization, the more likely it is that financial measures will enter into the conversations. In sales, you get sent to who you sound like, so if you avoid going where you’re not comfortable, you give up the high ground to competitors who are.
Control the story
Even if you’re not primarily selling at those levels, your lower-level contacts may need to justify the investment internally. If you can help them put together a business case, you can ensure that your story gets told on your terms—and they’ll thank you for it.
Know the score
While you may think you’re selling products, your customers are buying business outcomes. There are a number of ways that they measure those outcomes, but almost all ultimately connect to some financial measurement. Financial measurements are the scorecard use to guide their decisions, so you must be comfortable with how they think and talk about that scorecard.
Make you credible
Generic value propositions that sound like vague promises don’t get anyone’s attention. When you can express the potential value of doing business with you in financial terms, it makes it more concrete and more believable. It’s one thing to say you can increase your customer’s profits; quite another to quantify the improvement and express it in terms of ROI or EVA.
Spot opportunities for improvement
Familiarity with the language of finance will help you take advantage of one of the most overlooked tools for improving your high-level customer conversations: the “Management’s Discussion of Financial Results” section of the annual report. In addition, when you get good enough to compare your prospect’s financial performance to their peers, it’s like using an MRI machine to figure out what’s going on inside their business, and potentially uncover useful clues about specific needs you may be able to address.
Improve your questions
Financial literacy can definitely improve the quality of your questions. One time I was talking to a prospect in the copier industry, who was being very coy about admitting that his sales force needed to improve their sales approach. I tactfully noted that their gross margins had declined for three straight years, and asked him what that said about their ability to sell the value of their boxes. The minute I asked the question, it was like the ice melted and he opened right up.
Improve your negotiation position
Without financial literacy, you enter a negotiation in the position of a participant on the old “Let’s Make A Deal” game show, where the host knows the value behind every one of the three doors and you don’t. Financial literacy gives you a glimpse behind those doors in two ways. First, it enables you to better understand the true value of what you sell. Second, allows you to better understand the customer’s true needs so you can structure more attractive deals that work better for both sides.
What do you need to know?
Financial literacy as it relates to sales comprises three general areas:
Financial statement structure and terminology. You don’t need to take an accounting class, but you should be able to make basic sense out of the customer’s income statement, balance sheet and cash flow statement.
Financial ratios. You should have an understanding of financial ratios, so that you can gauge how they compare to their peers. General ratios include profitability ratios such as gross and net margin, asset efficiency measures such as return on assets or return on equity, and activity ratios such as days sales outstanding and inventory turnover. In addition, you should know the specific operational ratios that your offering impacts.
Investment metrics. Finally, understand the basics of how investment decisions are made, whether using payback, ROI, IRR or EVA. You may not even have to do the calculations yourself, but you should know basically what they mean. (So you don’t say something like “your ROI is six months.”)
It’s not that hard
Too many salespeople psych themselves out, thinking that it’s too difficult to become financially literate. Fortunately, it’s not as hard as you might think. To succeed in high-end B2B sales, you don’t need to go toe to toe with the CFO—in fact, I wouldn’t advise it.
I’m not talking about becoming a financial whiz; your day job as a salesperson is busy enough to make that difficult. But the good news is that you don’t have to be fluent in financial literacy—quite frankly, the bar is pretty low in your prospect’s expectations.
It’s pretty to educate yourself—there are plenty of books on finance for non-finance people. But there’s only one that’s written specifically with B2B sales in mind: Bottom-Line Selling: The Sales Professional’s Guide to Improving Customer Profits .
