In Tom Peters’ The Little BIG Things, on Item #46, he makes the point that “Everything Passes Through Finance.” It’s such a important, yet too often ignored critical success factor for sales people. In virtually every situation, Finance is always somehow involved in the sale. Sometimes, it’s just paying the invoice; other times it’s issuing the PO; and very often, it’s approving the budget and providing the funding.
We all know this, but I am continually astounded by the sales people that neither know the key people in their customers’ Finance organizations, nor do they “speak the language.” It seems if finance plays such a critical role in most purchases, it would be critical for sales people to be “wired” into the organizations. Sales people should:
- Know the key people that may be involved in reviewing, approving, funding, writing checks for the things we sell. Develop relationships with these people, learn their hot buttons, how they perceive value, how you can help them. Likewise they should know the seller so that if they have any questions they know where to turn.
- Know the language of the finance people. For example, they talk in terms of income statements, balance sheets, cashflow, assets, liabilities, profit, loss, ROI, Payback, IRR and a whole variety of other terms. Great sales people understand how to read financial reports and analyze them, they understand how to determine the ROI or Payback of a proposal–they know which approach their customer prefers. As a side note, nothing drives me crazier than talking to a sales person who says, “Our proposal has a ROI of X years.” I’m sorry, ROI is expressed in percent and Payback is expressed in time. While it may seem picky, using the term incorrectly destroys your credibility with finance types.
- Know how they evaluate spending or investments in your types of products/services. For example do they have certain ROI or Payback targets, do they expense or capitalize certain capital equipment purchases, do they consider off balance sheet financing, and the list can go on. The more familiar the sales person is with the way they evaluate, justify, approve, and handle your types of transactions, the better you will be equipped to present the information important in getting their buy in and approval for acquiring what you are selling.
- Know whether they favor certain kinds of terms? Those can impact your pricing and/or how you might help them do a deal. If you are willing to offer more flexible payment terms, you might make it easier for them to buy from you.
- Know the mechanics of how they issue orders (sometimes this is a procurement function which in some organizations falls outside finance). Many of my customers don’t know the mechanics of actually “ordering” what I am selling. They will eventually stumble through the organization to figure it out, but if the sales person knows this process, they can help the customer accelerate getting the PO through. (This process also applies to the legal function for getting contracts approved quickly.)
In every organization, at some point in time, everything passes through Finance. As sales professionals, if you don’t “know” finance, your effectiveness, value, and impact is much lower than the competitor who does.
Dave: great topic. When I posted a question on LinkedIn earlier this year whether an MBA was an asset or liability for a salesperson, I was amazed by the reactions from some who thought that MBA holders were simply snot-nosed kids interested only in their next promotion (Imagine!). But what I was seeking to uncover was whether an MBA could provide strategy and financial competencies that many salespeople sorely lack. If the feedback I received reflects a larger community, salespeople will continue to be valued more for their charisma, “street smarts,” and persuasive skills. I think this is a mistake.
Most important, the failure to provide financially-literate salespeople will impact buyers in a negative way. This will create opportunities for financially literate salespeople–who are also street smart, charismatic, and persuasive. They will be more effective than their counterparts.