Suppose at the next sales meeting, you gave this quiz to the sales team to measure their Financial Sales IQ.
How well would they score?
1) Describe how the products you sell make or save the customer money?
2) What is cash flow?
3) What are the five elements of a great business case?
4) How would you use Internal Rate of Return (IRR) to help close a deal?
5) How does risk analysis speed up the sales cycle?
Research has shown that budgets are moving from the IT organization to lines-of-business leaders. Gone are the days of “pitching” products. Business leaders scrutinize investment decisions and requiring sales teams to show how their offering makes or saves the company money.
Product focused sales teams are doomed to compete on price and survive on low margins. The future belongs to those sales teams who can apply a product portfolio to solving business problems and express the benefits as financial outcomes. The beauty of this approach is three fold:
- Products come and go, but financial sales skills are timeless
- It aligns the seller with how the business leader makes investment decisions
- If focuses the seller on what executives are really buying — low risk cash flow
So, what’s the Financial Sales IQ of your team?
About the Author
Mike Welch is the CEO of Welch Global Consulting (WGC). WGC’s Sales Performance practice is dedicated to improving the sales effectiveness of enterprise sales teams by enabling sellers to express the business and financial impact of their offering to close more sales.
1) It is foundational for every seller to know how their products make or save the customer money. For sales teams with large complex portfolios, it can be challenging to define benefit areas. WGC created a methodology called Portfolio Mapping that defines “impact areas” — areas of the business where a portfolio can make a financial impact. The Portfolio Map is a seller’s roadmap to unlocking value in the customer’s business.
2) Cash flow is money the customer pockets as a result of investing in the sales team offering.
3) The five elements of a great business case are: Net Present Value (NPV), Internal Rate of Return (IRR), Payback, Risk and Elasticity. See our blog post on Creating a Business Case http://blogwelchgc.wpengine.com/?p=56
4) IRR measures the total return (the efficiency) of an investment and it is used to compare alternative investments. When a seller can show there is a greater IRR for their offering versus other options, the purchasing decision is much easier.
5) Executives making investment decision worry about risk i.e. what if the projected benefits (cash flow) don’t happen as expected? If the risks are perceived as high, the investment is put on hold or canceled. Sellers who take steps to reduce risks and ensure that cash flow benefits will happen as projected, remove a huge obstacle in accelerating the sales cycle. See our blog posts on Reducing Risk http://blogwelchgc.wpengine.com/?p=41