In a couple of weeks’ time, I shall once more be on a plane to San Francisco to join my Bonanza colleagues delivering financial acumen training at the SAP Sales Academy. I always look forward to these trips and the opportunity to work with their new sales executives from all around the world.
We start each course by asking participants whether they think understanding finance is important to their roles. I have yet to hear anything but a resounding Yes in reply!
Of course, viewing something as important does not necessarily engage everyone and I must say, I have probably always viewed sales and Finance at opposite ends of the personality spectrum! Asked what word springs to mind when thinking of Finance – the replies are predictably – ‘Boring’ or ‘Difficult’ (BTW I once generated a lead with a new client because they Googled ‘Finance boring’ and my company at the time came up first! That’s another story!) So our job is to dispel the myth of fiancé being difficult and boring and we need to make it easy and fun! Feedback would suggest we achieve this.
Going back to why I believe financial acumen skills are so important for sales professionals. We know that it so often comes down to relationships. So, if we are going to form a strong relationship with our potential customer or client, we need to understand their needs. Part of that is trying to put yourself in the other persons’ shoes.
Well let’s imagine you are in a meeting a prospective customer or client. Obviously you will probably be trying to ascertain information about their budget and you will also be ready with information relating to the Return on Investment that your product or service can deliver. However do you know whether your solution fits in with their key financial objectives – where you can actually add value?
- What are their financial pain points? For some companies this might be cash flow – sometimes measured using the term Free Cash Flow or it could be that they are actually making a loss due to lack of Revenue or poor margins.
- Could your sale be structured in a way that might make it more appealing to them?
- Could they capitalise all or part of what you offer and is that likely to be appealing? That ‘Capex versus Opex’ discussion – have I lost you here? Simply put if it is capitalised (Capex), it will not hit their profit immediately since it will be treated as an asset and depreciated over its useful life. Whereas if it treated as Opex – short for Operating Expenditure – it will be charged against their profits for the year in which they bought it.
- How does it impact EBITDA – a measure used by many companies – or for that matter – EBIT?
So, if they started talking about these topics, would you be able to confidently continue the conversation? We all know that to be successful in winning business, we need to engage our prospects in meaningful conversations. If your eyes glaze over if they were to mention any of these terms, it might not augur well.
Now whilst I cannot answer all these questions for you since these are things you need to find out, I can at least hopefully demystify the above financial jargon. Go to the Financial Glossary on our website which I hope will be helpful.
The fact is that the finances of one company can look very different from those of another. E.g. The Balance Sheet of a manufacturing company is going to be very different from that of a service company, so their pain points challenges and opportunities are also going to be very different. Understanding this and therefore demonstrating that understanding to your prospect is going to be key to your success.
