We all know that understanding our customer’s business is a given. So why do so many sales people do such a poor job at it? One word: Laziness.
Making a little extra effort through smarter preparation can help you gain a competitive strategic advantage with your customers. If you sell to any company that is public, the way to do that is to learn how and what to read in a 10-K filing. All public companies are legally required by the Securities and Exchange Commission (SEC) to file an annual report that includes company performance, projections, and financial details. Because this is a legal filing requirement, the format and information that is filed is the same for all public companies. This means learning how to read one teaches you how to read them all (in the U.S.).
I can’t tell you how many times I have been in sales meetings with mid- to high-level directors at public companies discussing the financial and strategic imperatives that THEIR executive board of directors is demanding, and it is a complete epiphany to the entire room. Many times I have been asked “How do you know this information? “Who did you talk to?” Internally, I am sarcastically thinking, “I read your 10-K filing — you should try it sometime since you work here and you are in management.”
Of course, what I calmly state is that I read the most recent 10-K filing. Since the average 10-K filing is 95+ pages, it is unrealistic to try to read dozens of 10-K filings from cover to cover. Here is a list of the most important sections to read and what to look for as a sales person:
- President’s Message to the shareholders: This is usually a 1-5 page narrative on the previous year’s performance and the plans for success in the upcoming year. Here is what you need to look for in this section:
- Financial Goals: There will be some sort of statement about a desired growth goal around profit, market share, or revenue.
- Value Proposition: Look for a statement or explanation as to why this company has customers or business. They do something that the market values that they must deliver to succeed. This can be as simple as a low price value proposition or as sophisticated as creating a mood, feeling, or unique experience.
- Projected Activities: Look for an explanation of how they are going to reach their financial To simplify what to search for, the company will be looking to generate cash flows. Everything the executive communicates will revolve around the three areas that drive cash flows. All cash flows in any company are generated by:
- Getting new business
- Keeping existing business
- Controlling costs
As you look to understand the President’s Message in a 10-K filing, you should be mentally mapping how your solutions and services could be a driving force to help them achieve their financial goals, execute and / or accelerate their value proposition, and successfully achieve their financial goals.
There are many ways to learn more about your customer’s business to become a more effective salesperson. Look at the resources here and share your tips with us in the comments.
