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Sales

The Most Important Source of Customer Information You’re Probably Not Reading

By Jack Malcolm / 1.4.2012 / No Comment

Dig a little deeper and you will be rewarded

Most salespeople are well aware of the importance of reading their customers’ annual reports, but very few read beyond the Chairman’s Letter. As a result, they often miss one of the most important sources of information in the entire report: Management’s Discussion of Results.

If you wanted to assess the quality of a sports team, would you rely on the head coach’s plans and predictions for the coming season, or would you look at his explanation of last season’s results? That’s the difference between the Chairman’s Letter and Management’s Discussion.

The rationale for reading this section is quite simple: as a consultative salesperson, your principal purpose in life is to help your customers improve their business results. Every “to” goal requires knowledge of the “from”, and this is the section with the most complete information about the starting point.

This section is required by the SEC, so it is not written by the public relations department. By law, management is required to report on results of operations, capital resources, and liquidity and to discuss conditions and uncertainties that may materially affect their business. That means that you will typically find more “hard” information about business operations which can be useful in understanding the issues the company faces.

Better information will help you be a better consultant by making you more credible, improving your questions, and helping you identify more business improvement opportunities.

Here are some of the categories of information found in this section:

Major Business and Financial Events Both in the Past and Anticipated for the Future

These business events are discussed in more objective language than in the chairman’s letter, usually with explanations tying these events to the results shown on the financial statements that follow. For example, revenue increases (or declines) will usually be explained in terms of different product lines, price increases or volume growth, or geographical expansion. Often, when adding up all the revenue increases discussed, you will find that they total more than the total revenue growth. This can only mean that other areas not discussed had declines. That’s a way to read between the lines to find areas where there could be room for improvement or concern on the part of the company. If it is your job to solve problems for your customers, that job sometimes means uncovering the problems that they will not readily acknowledge.

Acquisitions and Divestitures

When evaluating revenue growth or decline, you must be aware if any dramatic changes in revenue are the result of fundamental changes in business operations, or merely the result of new companies having been acquired or divested during the year. If the change is due to acquisition, it may suggest a possible new source of business for you within your existing customer. If the change is caused by alterations in the company’s strategies, its execution of those strategies, or its markets, you can be sure these conditions will be uppermost in the minds of your customers, and you should be aware of them.

Business strategies

The CL often discusses business strategies, and the MD provides measures of progress toward achieving them. Since individual businesses or strategies will not show up in the consolidated financial numbers, this section is often the only place to find information about specifics. For example, I recently worked with a company that has proclaimed a very ambitious revenue target by a certain date, and by close reading, I was able to discern that they are highly unlikely to reach the target without making significant changes in their current sales practices.

Explanation of operating results

The final numbers you read in the financial section are very general summaries of literally millions of transactions, decisions, and business processes which occurred during the year. The explanation of operating results will help you understand the main factors which impacted revenue growth. For example, in a retail operation, was growth caused by opening new stores, or more productivity per store? Did its revenue grow more or less than its competitors’? How was revenue growth impacted by acquisitions or divestitures? Did growth come from shipping more units, charging higher prices, or some combination?

Details of operating results by geographic segment or business unit

Except when dealing with the most senior level management, most of the individual buyers you will work with are concerned with their particular patches. Management’s discussion frequently provides the detail that is not discernible in the consolidated numbers.

Key Business or financial measurements

One of the best ways to show that you’ve taken the time to understand your customer’s world is to use their own company-specific measurements. These often have more meaning to your buyers than goals over which they have little control, such as earnings per share.

In a competitive arena such as complex system sales, the winners are those who are willing to go just a little deeper and work just a little harder than their competitors. Read the Management’s Discussion section to get a leg up on your rivals.

Presentations

Do Billionaires Need to Learn How to Speak in Public?

By Jack Malcolm / 1.2.2012 / No Comment

The face of the franchise

Stephen Ross, the billionaire owner of the Miami Dolphins, proved yesterday that you can be successful without being a good speaker, but also that it’s not a good idea.

Ross delivered a statement honoring retiring Dolphin Jason Taylor yesterday before the start of the game against the Jets. After fifteen spectacular years in the league, Taylor was playing in his last game, and fans were asked to be in their seats early to witness the tribute.

The “tribute” was underwhelming at best in both content and delivery. The words seem to have been put together from some prepackaged corporate template, as if all some anonymous staffer had to do was consult a checklist, fill in a few blanks, and remind Ross how to pronounce his name.

If you’re going to tell someone you appreciate them and will miss them, make it personal. Tell them specifically what you appreciate about them; don’t say something like, “you were an integral part of this organization.” (I don’t remember the exact words—and that’s the point.) Instead, tell a story about something that person did, that exemplifies a special quality they had. Or talk about what would have been different if that person had not been there.

Don’t say, “You will be missed.” Besides sounding like the most overused cliché at a funeral, it’s about as passive and impersonal as can be. Say something like, “Next year, when our defense is backed up to the goal line in a tight game, every one of us in this statdium will look for old number 99—that’s when we will all miss you.”

The only thing worse than the wording was the delivery. Ethos is the special quality of a speaker that adds or detracts from the power of the message. Ross owns the team, so he has the right to speak, but based on the jeers that followed his introduction, maybe someone more respected should have spoken. The perfect candidate would have been Zach Thomas, Taylor’s long-time teammate and brother-in-law. And if you’re going to speak from the heart, don’t read from notes. If it’s important enough to say, it’s worth a few minutes of your valuable time to rehearse and remember.

Does any of this matter? It absolutely does. Let’s look at it from a strict dollars and cents point of view. A sports team derives its value from the loyalty of its fans, those like myself who have bought season tickets for almost thirty years, and who tune in to watch the games even when the team is hopelessly inept. That loyalty is heavily driven by attachment to specific individuals who represent the organization. For the Dolphins, those individuals included Don Shula, Larry Csonka, and Dan Marino. At this moment, there is nobody associated with the team who comes anywhere close to that stature. In today’s era of interchangeable players and rotating coaching staffs, the owner may be the only enduring face of the franchise.

It would help if he could learn to speak in public.

Expression - Persuasive communication

Less but Better

By Jack Malcolm / 12.22.2011 / 2 Comments

Today is the shortest day of the year, so let’s take a quick look at brevity.

German designer Dieter Rams, who inspired Apple designer Jonathan Ive, believed in the idea of less but better. What works in the design of products can also apply to communication.

In today’s era of gnat-length attention spans, brevity is even more important than ever, but simply shortening your message without improving it will fail. (Sometimes less is less.) In telling stories, one vivid detail trumps a lot of boring detail. In selling, one unique differentiator that the customer values will trump a long list of features. One well-designed chart can replace several minutes of explanation.

Just a few words can pack a tremendous punch. Supposedly, Hemingway was at lunch with several writers and claimed he could write a short story in just six words. Bets were made, and Hemingway scrawled on a napkin:

“For sale, baby shoes, never worn.”

Sales

Slowing Down Solution Selling

By Jack Malcolm / 12.20.2011 / No Comment

Sometimes we focus too much on the wrong thing.

It seems like everyone has been beating up on solution selling recently, so I’d like to join the fun and kick it while it’s down.

That may not sound fair, but I have good reason to dislike the phrase. The idea is a good one—but most salespeople hear the cliché and forget the true meaning behind it.

Those who view it most superficially fall into the trap of thinking don’t realize that calling your product a “solution” does not automatically make you a solution provider. I once saw a sign above the door of a deli in New York which touted its “lunch solutions.” Believe me, it did not make the lunch taste any better. Salespeople aren’t the only ones guilty of this; it also seems to have infected everyone who writes marketing collateral.

Those who sort of get it are a little better. They know they have to ask questions to understand the customer’s problems, probe further to get the customer to understand the implications, and then help the customer arrive at their true needs. The only problem is, they tend to view questions as a means to make a hole to shove their solution in. Once they have reached a sufficient size hole that is close to the right shape, here it comes, ready or not.

Those who truly get the idea of solution selling also probe to understand needs, but they don’t stop at the surface. When the customer describes a problem that appears to be a fit for their solution, they make the effort to go deeper, because they know that in the long run, a band-aid solution that merely covers up symptoms is going to lead to problems down the road, for both the seller and the buyer. Rather than focusing immediately on implications, they drill down into diagnostic questions, to make sure they understand the root causes of the problem.

Sometimes they don’t get the answer they want, and lose the immediate sale by telling the customer that their own solution is not the right one for them. Sometimes, their diligence is rewarded by uncovering a larger and more significant opportunity.

Either way, they gain respect and trust that pays off in the long run. More importantly they maintain their own self-respect as professionals who have the customer’s best interests in mind.

Sales professionals know that the true spirit of solution selling requires them to slow down, worry much less about getting to the solution, and focus more on the problem. They know that if the diagnosis is correct, the prescription follows naturally.

Ironically, slowing down often results in faster sales, because when the buyer sees that they are sincerely focused on understanding the right problem to be solved, their trust and comfort level go way up.