Jack runs a $26M manufacturing and logistics firm. He was recently contemplating a high five figure software upgrade project. The upgrade would enable greater integration between his systems and his customer’s IT systems. That level of integration would be another layer of differentiation Jack’s organization would have over their competition.
Jack asked the software salesperson to prepare an ROI analysis on the software purchase. A relatively simple request; based on the cost, and the projected impact on my operations, how long would it take to recoup the expense of the purchase?
It’s almost a month later and Jack is still waiting on a response. For the software salesperson out there, if you’re reading this, you lost the sale.
This real story illustrates a large gap in the types of training that most salespeople receive. Often, there is little if any training on reading, understanding, and working with financials and financial statements.
On a basic level, every salesperson should be able to complete an ROI analysis for their products and services. Building on that, salespeople should be able to read and understand Income Statements, Balance Sheets, and Cash Flow Statements. They should know how to calculate a breakeven point. They should understand the impact on breakeven, gross profits, and net profits if any one line item increases or decreases. They should understand basic financial ratios and why they are important.
All of this matters because of how Jack and/or any decision maker thinks about buying decisions. When looking at a purchase, there are usually four questions a decision maker asks.
- How does your product work?
- What are the benefits?
- What’s the ROI and/or business case for me to buy this product?
- Why should I trust you?
The fact that question #3 specifically asks about the financial impact of a decision makes it mandatory that salespeople be trained in financials and financial statements. However, question #4 is even more important when it comes to knowing the numbers.
In a business context, one’s ability to build trust is directly related to the caliber of one’s communication skills, combined with demonstrable expertise about products, services, markets, industries, competitors, and most importantly, the customer’s business.
A decision maker takes all of these elements into account when deciding if they can trust the salesperson. They then factor all of the elements by their perception of the risk involved in the situation.
In other words, the higher the risk perceived by the decision maker, the greater one’s communication skills and expertise need to be. And part of that expertise is understanding the financial impact of a decision, and clearly communicating that impact.
So back to the training gap. Salespeople need to fully understand their products and services; how they work, how they work together, and the solutions customers realize through their use. If you do not understand the full scope of your offerings, you will lose more deals than you will win. If you cannot describe you product in terms the customer understands and needs, you will lose more than you win.
Training on financials is critical because products and services do not operate in a vacuum. They have value only when they are solving problems. That value translates to financial impact when your customer trusts you enough to fully share all aspects of their problems.
The Bottom Line – focus on relationships and build trust. Customers will share more, and you will understand things from the customer’s perspective (which is the only perspective that matters).