Compensation plans for salespeople have a margin component in many cases, but sales goals largely remain top-line orientated - placing the focus primarily on revenue. I'm not here to refute the importance of compensating on revenue, but I believe that being single-minded about it can lead to less attention to both sides of the ledger and, therefore, a smaller perspective on the entire business.
Why business acumen is important
But what if I understand how the solution that I am selling will impact multiple departments? Or even all the departments and functions within that company—even if the organization is heavily siloed? A company is a holistic entity, and also with the strictest of siloes, a change in one department will eventually affect all the others. When you consider these more significant ramifications, your proposal can express both the solution and the potential ROI in more specific terms than "we can help grow your revenue" or "we can help reduce your costs."
Narrow, top-line thinking can have internal consequences. I've witnessed organizations that encouraged their sales teams to push operations to further and further limits to entice prospects to make the switch. I've seen these tactics bring in significant top-line revenue growth, and watched as the companies celebrated the win, complete with sending the leading salespeople off on a President's Club trip—only to find themselves with a severe profitability problem later. Sure, this "do whatever it takes" mentality might bring new customers or even double-digit revenue growth but at the steep cost of overruns and ongoing revenue leakage. That inevitably leads to financial disaster, followed by a massive restructuring to return to profitability—all while the balloons from the party have barely had time to deflate.
how does a salesperson increase their business acumen?
So, knowing that, here are a few ways you can quickly build up your business acumen and demonstrate more credibility to your clients.
- Pay attention to how HR, finance, customer service, operations and quality control impact the organization. Research the top trends and issues each function faces in an organization—not just the department you're trying to sell. Your research doesn't have to be exhaustive and can be accomplished with a couple of targeted Google searches or subscribing to a few relevant news feeds.
- Try to gain a rudimentary understanding of financial statements. What's the difference between a balance sheet, income statement, and cash flow statement? If you are speaking in terms of ROI with your clients, you should know the basics of these three fundamental financial statements. It's not as hard as you think it is; believe me, I have gone through this exercise myself, with no formal financial education.
- During the discovery stage, ask your client questions about the company outside of your product's apparent scope. Understand the company's priorities in operations, HR, quality accounting, and marketing, and strive to understand how these functions interact with and impact each other—because they certainly do. Prepare these questions in advance of your meeting. Uncover the gears your customer relies on to leverage volume versus yield or service quality versus productivity.
- Find out what technology platforms the company operates on, and try to gain a solid understanding of how they work.
- Ask your client how well aligned their marketing strategies and sales tactical plans are.
- Read a wide range of business publications, blogs, or articles outside of the industry you sell in. You will find that most of the fundamentals apply to all businesses.
- Learn more about your organization or employer. Spend time with your peers in other functions, and with front-line employees. Speak to your accounting team about the specific relationship and nuances between cost, revenue, and margins. The company you work for is a case study of a business that you have deep inside access to, so use it to educate yourself.
Activity metrics and a value-based sales process are critical. By adding this third element to your sales approach, you will demonstrate higher-level credibility to your customers and become a trusted advisor. That's what makes business acumen an essential building block of a master salesperson.
Photo by LinkedIn Sales Navigator on Unsplash
David Aplin Group is a private family and employee owned Canadian staffing agency founded in Alberta in 1975, recognized as one of Canada's most accomplished recruiting firms. Our mission is to positively impact lives. Blog author, Jay Edwards, is the Vice President of Business Development, based in Calgary, Alberta.