Some of the best resources from which to learn about your customer’s business are the various corporate reports that all publicly traded companies, and many private companies, produce and make available to the public. By reading key sections of these documents, you can get an overview of your customer’s business model, their high-level business strategy, their primary goals and objectives, and even some of the tactics they intend to employ to pursue these goals and objectives. The more you know about their business, the more likely you’ll be to ask intelligent questions that lead to productive conversations.
Not too many years ago, it took a fair amount of time and effort to find and review enough information on a company to provide a good understanding of their business. Today, it’s as close as your laptop. To make the most of this article, I’d like to encourage you to select a target prospect account, preferably one that is publicly held, so you can easily get plenty of information about the business.
If you sell only to privately held companies, see if you can find one of your prospect’s direct competitors that is publicly traded to use as your case study account. You’ll still be able to gather a lot of information about the market your customer competes in, as well as what particular challenges they are likely to face from their direct competitors.
Go to your target prospect’s website and find the Investor Relations section, which is usually under About Us. You’ll probably see subheadings such as Management Team, Mission, Frequently Asked Questions (FAQs), Stock Performance, Press Releases, and so on. All of them are worth review, but there are a few documents in particular that you’ll want to look at closely. Take a minute to download or print the following documents:
- The most recent Annual Report
- The most recent SEC Form 10-K
- The 3-5 most recent press releases
- The 3-5 most recent news articles
The Annual Report
An Annual Report is a collection of corporate information and financial reports that most publicly held companies release approximately ninety days after the close of their fiscal year. The first page or two of most Annual Reports features a ‘Letter to the Shareholders’ from the chairman of the board or CEO. This letter acts as an executive summary to the rest of the report and is a great place to start your research. In it, they normally provide a quick snapshot of the company’s performance over the past year as compared to previous years. It also often contains the outlook for the future and sometimes offers details about the company’s primary objectives, their plans for the future, and how senior management intends to carry them out.
Many companies’ Annual Report takes on the look and feel of a sales brochure. That makes sense, because its primary purpose is to educate and inform investors who might want to buy their stock. It can also be a great resource for the sales professional who’ll take the time to read it. You can normally learn about the relative performance of the various divisions or segments of their business, as well as some of their initiatives surrounding quality, safety, and corporate citizenship.
The Annual Report also contains at least the three primary financial reports: Income Statement, Balance Sheet, and Statement of Cash Flows. Learning to read and understand these key financial statements, as well as knowing exactly how you can impact your customer’s financial results, is a vitally important skill-set for selling business solutions.
In this blog, we will look more closely at how what we sell translates into economic business value.
If you have a financial background, or have learned how to read financial statements in college, you will have an edge on those sales-people who do not. Either way, don’t get bogged down trying to analyze all the numbers. Just catch the spirit of what is being communicated. As you browse the Annual Report, what you want to learn are the answers to several general questions:
- Is this company growing and investing for the future? Are they just trying to hold on? Or are they losing ground in the marketplace and/or downsizing?
- Is this company expanding into new product lines and new markets? Or are they divesting (selling off ) certain segments of their business to become more focused and streamlined?
- Are they making money and profit? Or are they losing money?
- If you owned or were managing this business, would you be excited and likely to embrace change and take chances on new ideas? Or would you be hunkering down, cutting back, and avoiding risk however possible?
- If you had some money to invest, would this be a good company to invest in?
The answers to these kinds of questions can give you an indication of how receptive your prospective client might be to the kinds of business solutions you bring to the table. It can also give you an idea of their appetite for investment in new business processes and technologies designed to support and propel growth, contain or drive down costs, or help them accomplish more with less infrastructure.
Don’t forget to look in the very back of the Annual Report, where you will normally find a list of the senior officers and the board of directors. This is a great resource with which to begin constructing an organization chart that shows the various people you will likely need to interface with during your sales campaign. Make particular note of any executive biographies that may mention where these executives used to work. They might have come from another company that has experience with your company, either good or bad. Also, note any members of the board of directors who happen to work for companies that might already be on your company’s client list.
The Form 10-K
An even better source for detailed corporate information than the Annual Report is a document that all publicly held companies are required to complete and file with the Securities and Exchange Commission (SEC) within ninety days of the close of each fiscal year. It’s what the SEC calls a Form 10-K. If for some reason your case study account doesn’t post their latest Form 10-K on their website, you can get it from the Securities and Exchange Commission website (www.sec.gov). You can query for it in the section called EDGAR (Electronic Data Gathering, Analysis, and Retrieval).
Companies tend to be far more forthcoming in the 10-K report than in the glossy Annual Report. They have to be. There is a standard format in which the SEC requires companies to disclose a broad variety of information to current and potential shareholders, which includes details about the company’s financial performance, all properties owned by the corporation, any pending legal actions they may be faced with, as well as any potential threats or exposures to risk that management believes could substantially impact the company’s ability to achieve its stated objectives.
This report contains a wide variety, and often an overwhelming quantity, of financial reports. Here again, don’t get bogged down by the numbers. Companies are given some leeway in the presentation of this information, but topics common to many 10-K reports include:
- Business Overview
- Business Strategy
- Industry Overview
- Business Operations by Segment or Division Employees
- Risk Factors Affecting the Company’s Business
- Intellectual Property and Licensing
- Products and Services
- Markets and Marketing
- Research and Development
- Competition
- Government Regulation
- Environmental, Health, and Safety Compliance
- Executive Officers of the Company
- Corporate Governance
Press Releases
Press releases serve the function of communicating information that the company wants the world to know. They often include:
- Quarterly financial reports
- The hiring or promotion of senior executives
- New product releases
- Announcements relating to mergers and acquisitions
- Major sales made to ‘household name’ customers
One effective strategy for finding new business opportunities is to monitor your prospective customer’s press releases. When something important happens-so important that your customer decides to issue a press release about it-this is a great time to initiate correspondence that mentions or relates to the press release you just read. Press releases almost always carry a quote by, or mention the name of, certain company executives or other personnel who might be receptive to hearing from you on a relevant topic. This also helps you further build your prospect list and organization chart.
We should also make it a habit to monitor our customer’s press releases any time we are engaged in an active sales campaign. Changes in company leadership, the announcement of an upcoming merger, or missing a quarterly earnings estimate can all have a major impact on the conditions of a sales opportunity. Always try to stay as up to date as possible to reduce surprises of any kind.
News Articles
News articles in which your customer’s senior executives have been quoted can also be very useful. Many of these kinds of comments tend to be forward-looking and may contain information about the outlook for their particular company or for the industry in general. They also frequently drop a few hints about their company’s plans for the future, using the opportunity to communicate to both existing and potential investors. This can help us keep abreast of what’s happening within our customer’s business and help us to prepare for an upcoming meeting or telephone call.
You will probably agree that this kind of information would be very valuable to know before you try to get an executive on the phone, or before you drive or fly over for an introductory visit. We don’t have to memorize the company’s entire 10-K report. All we are looking for are a few items of particular interest that we can use to ask questions that stimulate conversation and discussion. As you read through, be on the lookout for information you can use, such as:
- What is their business model? How do they make money?
- What different lines of business are they in?
- Are they diversified in many product lines or focused on one thing?
- What segments or divisions of their business are growing?
- What segments or divisions are underperforming?
- Where do they see the greatest opportunity for growth?
- What markets do they serve geographically, demographically, or by industry segment?
- Who do they see as their primary competitors?
As a general rule of thumb, we should never ask an executive, or any key decision maker, a question that we could have found the answer to on the company website. Instead, we should ask questions based on the knowledge we have acquired from the information on the website, as well as other sources.
There are a myriad of other resources available on the Web ranging from industrial-strength, subscription-based content providers to free research information on sites like Yahoo (www.yahoo.com) and MSN (www.msn.com). Some of the subscription-based services, such as Lexis-Nexis , serve the academic community, and most colleges offer access to their students and alumni. It’s worth checking with your alma mater to see if you can get free or highly discounted access to one or more of these resources.
With some general knowledge of our customer’s business, we can start to frame the questions we need to ask in order to learn even more. What we’re looking for in all of this is a deeper understanding of our customer. We want to understand their business model, which I define as ‘How a company uses its assets to serve its customers and make a profit for its owners or shareholders,’ or more simply put, ‘How a company makes money.’ We want to understand their strategy for doing whatever it is they do better than their competition. And we want to understand the goals and objectives they are currently pursuing, as well as the business problems that are keeping them from reaching those goals.