Reading Your Customer’s Annual Report (Really)


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There’s gold in those reports

It’s that time of year again: public companies with fiscal years ending on December 31 are issuing their annual reports. Like all good professional salespeople, you know you should get a copy and at least look through it, but honestly, how many of you have already done so?

If you have a hard copy of last year’s report in your files, pull it out and check to see whether the spine has even been cracked. Are sections highlighted, and do you have notes written in the margins? If not, you may have left money on the table this year. But don’t fret, because I’m going to tell you what to look for so you don’t have to read the whole thing and so you can actually get some use out of it.

Why should you even take the time to read it? Sophisticated sales professionals know that long term profitable relationships at high levels depend less on price and product discussions than on showing your customers high-level decision makers how you will help them meet their business objectives and being able to speak their language. You’ll find information about both in their annual report.

The key to getting useful sales information from your customer’s annual report is focused reading. If you know what to look for, you’ll know which sections to pay close attention and which to skip, and things will seem to magically pop out at you as you read.

Four main things to look for:

  • Where are they going?
  • What are their strategies and initiatives to get there?
  • How are they doing?
  • Key language and phrases you can use in your sales discussions.

Where are they going? Read the Chairman’s Letter first. This is the section in which the company is telling you where they’re going, what they most want you to know, and probably includes the major themes that senior level decision makers think and talk about in their daily work. Know what these themes are and you will speak their language. For example, GE’s 2010 annual report is titled: “Growth starts here”, and that’s how the Chairman’s Letter begins and goes on for several paragraphs. So what? Clearly this is a company that wants to focus on its top line, so if you’re selling solutions to GE you’d better at least pay lip service to the benefits your solution brings to the top line and not just how you’re going to help them cut costs.

What are their strategies and initiatives to get there? So, now that you know GE’s major theme is growth, it’s time to get more specific. Continuing on, they tell us their 6 Growth Imperatives, which is their way of saying how they’re going to get there, including launching new products, growing services and software, and leading in growth markets. Every one of their six imperatives has a two-page spread devoted to greater detail, and if you can tie your offering to one or more of them.

How are they doing? Interpreting your customer’s financial statement is far beyond the scope of this post, but you should have a general idea of how sales and profits have trended, as well as a general sense of how big they are. If you are determined or interested enough to really dig into the numbers, it’s a good idea to read Management’s Discussion of Financial Results, which is the story behind the numbers. It’s where you can find useful detail that explains their financial performance and might provide clues about specific needs you can meet.

You can skip most of the fine print in the Notes to Financial Statements section, although if you deal with just a specific segment of a company you might find it useful to see more fine-grained detail about their various operating segments in this section. Pay particular attention to recent acquisitions, which can be clues about the direction the company is pursuing and can be new markets for you within that company.

Key words or phrases. Speaking their language can get people’s attention. One way that I have used successfully to get appointments is to use company-specific phrases in your subject line when sending an email to your prospect. It shows you’ve done your homework and separates your message from the usual spam. Some of my students in my Executive Sales Presentations class have had success by pulling quotes from their customer’s annual reports to reinforce points in their presentations.

The most important thing about annual reports is, just read them. Every salesperson I know is aware that they should read their customers’ annual reports; very few actually do. If you take the time now you will definitely be ahead of your competition.[i]

[i] If you really want to be ahead of the game, read their principal competitor’s annual report also.

Republished with author's permission from original post.

Jack Malcolm
Jack founded Falcon Performance Group in 1996 specifically to combine his complex-sale expertise and his extensive financial background to design and implement complete sales process improvement initiatives at top national and international corporations.


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