In which we learn to ask questions about four business drivers to understand our clients’ businesses.
As your clients are reviewing their plans and budgets for the year…. now’s the time to raise the level of your conversations with them to a level above “we’d really like the opportunity to work with you.”
All business managers work on four major issues, no matter what business they’re in:
1) Increasing revenue
(If your clients are not accountable for generating revenue, there is some other measure that represents the “top line” of their business, the objective function they’re trying to maximize)
2) Increasing productivity /reducing costs
(This could mean straight cost reduction, or it could mean increasing output per unit of cost. This also could include reducing the weighted average cost of capital for the company.)
3) Accelerating Cash Flow
Cash flow refers to money invested in inventory, buildings and equipment, and working capital supporting operations. Reduction may be considered on an absolute scale (total dollars) as well as a relative scale (per unit of output) to increase return on assets).
4) Reducing risk (volatility, the financial impact of unexpected events)
Risk here includes risks for which you can buy insurance. It also includes the uncertainty of revenues and costs relative to business conditions and market conditions.
In general, you can engage your clients with a conversation that flows along the following line (which is VERY simplified to provide a sense of flow):
First, ask a question to establish a focus, for example, “What are your most important goals for this year?” Then, follow that question with more specifics:
1. How are you planning to <<pick one of the four items from above, e.g. accelerate cash flow>>?
2. What are the most important challenges you will face as you do that?
3. What sorts of issues are you expecting to face as you address the challenges?
4. What approaches will you take to address these issues?
Go back to step 1, pick another item from above, and repeat the sequence.
In a conversation, you’ll ask follow up questions and make comments as you work through these five steps. For example, after steps 4 and 5 you could ask questions like:
What will have to change inside your company in order for you to make those changes?
If those changes occur, what related changes or challenges might come up?
What will happen if you’re not fully able to address those challenges?
What resources do you have internally to address these issues?
At what point will you need to consider taking action?
Many sales representatives are scared to ask these questions because they are concerned that (1) their clients expect sales representatives to be financial experts and (2) their clients expect sales representatives to know enough about finance to evaluate answers and DO something with answers, once given.
Yes, it helps to understand finance concepts and your clients’ financial issues, in particular. However, while client expectations vary by industry and the sophistication of the people you’re talking to, you can ask these questions in a fairly general way without much concern. Unless you’ve positioned yourself as an expert in one of these areas, your clients will not expect you to be an expert. If you don’t understand what’s being said, just nod, punctuate the conversation with encouraging smiles, take some notes, and do your research (afterwards) to find out what the terms meant.
Ask the questions and listen to the discussion expand.