Step Two in our series of steps to becoming a B2B sales superstar is about Business Acumen. Many people ask, ” what the heck is business acumen?” Well, it’s a term used regarding your knowledge of business philosophy and how organizations survive or thrive. It all about understanding exactly how a company makes money. So how does business acumen impact a sales person’s success?
In the world of business to business (b2b) selling, it is one of the most critical factors for success. How well can you place a financial value on your product or service solution? Also, Return on Investment (ROI) is used by the customer as a tool to make a buying decision.
During a sales development workshop I was presenting, one of the top sales people in the room suddenly realized that his customers had been asking him for ROI assessments so the finance guys would sign off on several large contracts. Having come through the traditional sales ranks, he didn’t realize the importance of business acumen – the ability to figure and show financial results to a customer – for larger or major sales.
Taking this information to heart, knowing how an organization makes money can be a competitive advantage in the marketplace. Being able to show financial projections for a decision maker increases your chances of success.
A couple of additional factors involve business acumen. First, being able to speak in financial terms with high level managers, executives and true decision makers has advantages. It gives you confidence to deal with these higher ranking people without fear or frustration. Confidence gains results.
Second, understanding the process of business philosophy allows a sales person to be more creative in offering the correct solutions. Here’s an example: By understanding how cash flows through a manufacturing plant, a sales person may see opportunities to save a company money by reducing inventory, increasing turns of a inventory item, eliminating warehouse space using inventory turns (just in time delivery). In some cases outsourcing of certain types of work to a supplier or partner, allows the customer to increase productivity due to reduced manpower in certain areas or assigning their people to higher payback projects.
Finally, by understanding the philosophy of business, sales people become better negotiators. It is not just a price issue. There are many more important factors that lead directly or indirectly to financial return. The key is to be able to recognize those opportunities, place an fair value on these factors and negotiate from a position of strength. I see sales people with little understanding of business acumen, fold up at the first mention of price and start cutting their price and their company’s profits immediately!
Okay, so how does a sales person learn about business acumen? In my opinion there are three methods. The first is just experience over time. This could take a long time and opportunity costs are very high. The second is focused learning – reading books on finance, business, making a profit, accounting, and other business related books. This is better than the first method, yet, is still slow to completely master. Again, opportunity cost are high, yet, combining the reading with some focused training and the sales team will get better results.
The third method which I highly recommend is a business simulation. When made competitive and hands on, sales people respond quickly and learn the impact of decisions on the financial results of a company. When combined with good debriefing sessions, these learning exercises increase knowledge and experience at a rapid rate. I have watched the “light bulbs” go on in these environments and sales people make the connections between decisions, execution, supply chain and cash flow to financial results. With this new wisdom, they gain a competitive advantage in their marketplace.
How is your business acumen – understanding how customer’s make money? Contact us if you want more information about business simulation sessions for a sales team. Call us at 901-757-4434 and ask for Voss.