In previous stages of our journey together to sell with a buyer’s perspective, we noted that the key drivers for change fall into two categories: risk and opportunity. In both cases, we said to highlight quantifiable impact as this transforms theoretical debates into real-life business concerns.
Key to this transition is getting comfortable with the skill that no one likes to discuss: “Business Acumen”.
Traditionally, sales success hinged on behavioural traits like confidence, “the gift of the gab”, and product expertise. But high performers possess a more distinct trait: “business smarts”. They understand customers on a deep level, identifying the business motives behind purchasing decisions.
High performers put themselves in the mind of the business decision-maker, (or economic buyer as some like to phrase it). They look beyond the features and associated benefits that the technical buyer focuses on, and ask a simple question: What is the financial reason for buying this? Does it save money or make money?
So how do the rest of us become competent at “talking business”? It all comes down to having business acumen.
No need to panic — it’s not about becoming an accountant. Instead, it’s about facilitating conversations that assist economic buyers in building an internal business case to change based on specific solution criteria.
Now you could “fake it ’til you make it” by learning the jargon and sharing industry trends (without actually understanding them), you could talk about needing to grow profit (without understanding how this could be achieved), or just by generally mirroring the language of industry analysts. This may work occasionally, but if you aspire to be seen as someone who always adds value to every conversation, you must generate some original thinking and not just parrot others.
So, how do you ensure you have business acumen?
- It all starts with understanding how businesses work, please note I am not just saying financial acumen.
a) Understand the implications of what is driving the business, is it:
- Pure growth, which is all about increasing revenue, number of users, ARPU (average revenue per user)
- Is it profitable growth, where the company needs to make a profit on each transaction
- Is it purely profit, i.e. how can we do things cheaper to make more profit? Etc.
b) If profit is important, do you understand their target gross profit margin?
- Do you know what impacts gross profit margin?
- Have you considered the impact of gross profit margin on pricing strategies and also growth strategies?
c) If growth is important, do you understand (especially in terms of how long the money lasts):
- Their burn rate?
- Their lead to cash cycle?
d) Their routes to market:
- Who are they selling to?
- How do they make the sales?
e) Their supply chain:
- What do they need to buy in to be able to deliver their end product?
- How do they deal with returns?
2. If you understand the generic nature of how a business works, then you have to align that with situational knowledge:
a) What is happening in the industry and geographies the customer operates in:
- At an industry level, it’s all about technology trends, sustainability, customer experience
- At a geographic level, it’s all about, specific legislation, political climate, economic climate
- At a company level, it’s all about their strategy, operational issues, financial challenges
b) How do you translate these into insights that identify risks and opportunities?
3. Align your financial acumen to your situational knowledge to build a business case.
a) Let’s define a simple business case structure
- Start with your insight based on your situational knowledge…
- IF… the company takes a specific action…(using both financial acumen and situational knowledge)
- THEN … there will be this impact — be sure to include the numbers (using your financial acumen and link it to your situational knowledge)
- BASED ON…the numbers you have calculated (using your financial acumen)
b) Here is an example of creating a reason for change:
A good insight for a coffee company might be: ‘There is a growing consumer demand for sustainable organic coffees grown by small farms with a focus on wellbeing and fair price, particularly from African countries.”
The supporting business case would be:
- IF…Café Charisma imports sustainable organic coffees from Kenya and offers this on their improved website…
- THEN… this can be worth potentially €1.3 million in additional revenue, over-achieving your revenue growth target…
- BASED ON… a 20% increase in eco-conscious customers within 18 months. The calculations are: 30 x orders per day at a basket value of €85 equals €76,500 per month times 18 months.
To summarise, why is business acumen important to building a business case?
Financial Acumen + Situational Knowledge = Quantifiable Business Case to support change
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