When we talk to salespeople about finance, we like to start the conversation with the question “How many of you took finance in school?”
Half the people raise their hands. Then we ask, “How many of you liked it?”
Every hand goes down.
If you don’t love finance, you’re not alone. Yet, managing financial performance is one of the most important responsibilities of executives. That makes finance important for you to know, too.
The good news is that what executives want to know during a sales meeting often has little to do with what you learned in class. Whether you love it or hate it, learning about finance from an executive’s point of view will cure you of any “finance fears” and introduce you to powerful insight.
Why You Need Financial Insight
Maybe you’ve avoided the subject of finance until now, but if you aren’t making it a part of your sales approach, you’re holding yourself back. Financial insight into your customers’ performance provides crucial benefits.
First, it helps you think like executive buyers do, seeing their needs and your offering from their perspective. It highlights the strengths and weaknesses of your customers’ financial performance so you can better identify their pain points and areas of opportunity to improve. Finally, it provides insights into where your solution potentially adds the greatest value.
Your customer is driven by revenue growth, profitability, and utilization of assets—all of which has to do with finance. As a result, insight and being able to talk about their financial performance are critical to selling up the ladder. In fact, embracing finance could be the single most powerful step you will ever take in advancing your selling success.
Learn to Speak the Language of Finance
Once you’ve decided it’s worthwhile to overcome your fear of finance, what’s next?
You can start by learning the language of finance, which in turn is the common language of business.
Think about it this way: People in product development have to explain to senior executives how a new product impacts the top line and how it meets needs in the market. Marketing wants to spend hundreds of millions, if not billions, of dollars on coming up with clever campaigns.
In order to justify that investment, they have to explain the impact on revenue and profit. IT wants to migrate to the cloud, which has technology benefits, but at the end of the day, they also need to explain how doing so reduces costs, supports growth initiatives, and ultimately increases revenue.
The list goes on and on and on. Each line of business has its own metrics and language, but when they all get together in an executive meeting, they’ll speak in the context of finance: grow the top line, better manage expenses, and get better utilization of assets. That’s how they communicate with each other, and when you communicate with them, you also need to be able to explain how your solution will enhance overall financial performance.
In other words, if you’re working with businesses, no matter what kind, you have to be thinking about money, because that’s what it’s all about. You can talk about all kinds of solutions, but if they won’t help grow revenue, increase profits, or result in higher utilization of assets, you won’t find much interest.
Get Fluent on Your Customers’ Financials
Hand in hand with learning to speak about finance, you’ll want to get to know your customers’ financial situations.
Start by identifying the three things the buyer cares about the most. You’re essentially answering the question, “What are the two or three areas of performance that drive the majority of the company value?” These measures vary by industry, but for all industries, a common key area is revenue growth.
How fast is the top-line revenue growing? For a manufacturer, you’d look at product price and service contracts. For retail, how much merchandise did they sell, and how much did they get in extended warranty revenue? Again, revenue growth, like many financial metrics, varies across industries, so get familiar with your customers’.
You’ll also want to be aware of your customers’ profitability. Profits are the amount of revenue that you have, less the costs associated with generating that revenue. When we look at profits relative to revenue, we call that profitability.
You have the revenue and profit pieces. But guess what? Companies need to invest in assets to generate revenue and profits. This investment is broken into two main categories: fixed asset utilization and cash operating cycle. Fixed assets include investments in IT assets such as infrastructure. A manufacturer needs production facilities and distribution assets. Retailers and wholesale distributors need distribution centers and, at times, stores. The cash operating cycle provides a measure of how quickly a company converts its investment in inventory into cash.
Becoming familiar with these finance metrics is critical to understanding your customers’ businesses, and by extension, what they’re interested in when buying a product from you.
Overcome Your Financial Fears
Ask anyone in sales and they’ll probably agree: numbers can be scary. But by learning to speak with executives about their business’ financials, you can overcome that fear. It’s well worth the effort because you’ll gain buyers’ trust and prove that you understand their concerns. More importantly, you can connect their concerns to the benefits of your solutions.
It’s also possible to have a financial or business conversation without talking about a number at all. Dropping in “fixed asset utilization” or “revenue growth” with the right person at the right time can suddenly get you an audience with the company’s alpha buyer, where you want to be.
Start making finance a part of your sales language now, and over time, it will become a normal, effortless part of your vocabulary.