In the past few days, I’ve had several separate conversations with people, basically on business acumen. They were fascinating, but apalling. The lack of knowledge about things that seem so basic to engaging our customers in business relevant conversations is shocking.
One very talented Regional VP shared that as he is conducting reviews with his people, he asks a couple of simple questions, “How does this customer make money? How does what you are proposing impact that?”
The reactions to this question are fascinating. He’s says most of the time people look at him quizzically, seeming to be thinking, “Why are you wasting my time with that question, I’ve got to pitch the products to the customer!”
For years, I’ve been asking variants of these questions to sellers. Too often, the answers are, “They sell stuff to generate revenue…. They are in this industry and these markets,… This is what they do….” Sometimes the response is, “They grew their revenues a lot over the past couple of years….” or “They aren’t hitting their financial goals…”
But these answers don’t give a whole lot of insight, they are, basically, throw away phrases that apply to any business, but don’t get to the issue of how a customer makes money.
To answer this, one needs to get below, “They sell stuff to generate revenue….” One has to understand the business model, their markets, customers, the problems they are trying to solve for their customers. The challenges they have in doing this. They have to understand how the different functions in the organization interact to achieve the company goals. For example, the new product/services development process, the role of manufacturing and service delivery. Things like the pipeline for new offerings, the growth/contraction of their markets, regulatory issues that may impact the ability to execute their business strategies, positioning in the markets and with competitors, the basic market economies.
Then to engage our customers in meaningful ways, we have to be able to translate, “This is how what we do/sell helps you make money… This is how what we do impacts your ability to do the things that make money…”
Perhaps it helps them generate revenue and enables them to grow. Perhaps it enables them to reduce spending/costs, enabling them to drive higher levels of profitability. Perhaps it enables them to address a new opportunity, a new market, a new set of customers which drives revenue. Perhaps it solves a problem enabling the customer to improve revenue generation or reduce costs.
These are all basic fundamentals of how any business exists. They are why our customers have jobs–because in some way what they do helps their organization make money.
Too often, sellers don’t understand this and can’t describe how we help our customer make money. They can only describe what their product is, it’s capabilities, it’s features/functions.
Sometimes, our customers may not even be able to answer that question themselves. For major projects they can, for smaller, transactional purchases, they may struggle. But their managers will always challenge them with, “Why should we spend this money…” And if the customer cannot answer this, it will never be approved.
The Regional VP had a clever way of engaging his sellers in this conversation. He started by asking them, “Do you understand how we make money?” When he challenged the sellers to dive deeper than “getting orders,” they struggled. But he persisted, talking to them, getting them to understand their own business, the business model, how they made money. From there, they could begin to understand how the customer makes money.
Do you understand how your customers make money?