Why Business Acumen Wins More Sales

Today, customers get most of their product and application information from the Internet-meaning that selling is tougher for sales professionals, who must now add value to each customer’s business and must work with the selling firm to achieve mutual goals. Throw into the mix the need to assess customer strategy, create customized solutions and build synergistic relationships and that takes a special kind of business acumen.
In addition, over the past two decades, wholesale changes in the technology underlying business transactions have fundamentally altered the way that businesses operate with one another. Business-to-business communications have gone from episodic (telephone calls, memos and faxes) to instantaneous (email and instant messaging). Information about products and services no longer arrives in hand-delivered brochures but through ever-present Web pages. Interaction among customers has grown from user groups that meet once a year to online communities where every day brings a new complaint or opportunity. Simple supply chains held together with paperwork and corporate lore have been replaced by just-in-time inventories that squeeze both waste and cost from the entire system.

Nowhere have these transformations made a bigger impact than on the role of the sales professional. Traditionally, sales reps were the sole point of contact and the all-knowing purveyors of product information. They carried that information back to the customer, sold some product and then returned to their employer with the order. Sometimes, the rep would make an effort to ensure that the order was fulfilled and serviced correctly. But the main thing was to make the sale…and move on.

With the introduction of each new wave of technology into the workplace, that traditional role has become less necessary. Today, the customer can get product information beyond the “brochure level” with just a few keystrokes, and without having to sit through a sales presentation. In fact, a buyer might even be able to order the sales rep’s product right from the Internet, without any personal interaction whatsoever. The Internet has, in a very real sense, “dis-intermediated” the traditional role of sales professional to the point that, until quite recently, many business punditsn assumed that the job category would simply vanish into history.

That hasn’t happened. Instead, as the result of the complexities of the rapidly changing technological environment, selling has become more important than ever. Information overload is one unintended consequence of this continual change. While it’s true that buyers now have access to a wealth of information about products and services, they often lack the expertise necessary for appraising the consequences of their purchases on the company’s bottom line. As a result, customers now look to their suppliers to provide a new level of assistance so they are not required to be technical experts, financial gurus or industry consultants. For example, the challenge of comparing technology solutions often exceeds the buyer’s ability to assess the financial consequences of each proposed solution but a sales rep with business acumen can fill that gap. In short, the Internet has not only shifted the salesperson’s role, it has made the sales professional more, rather than less, important.

The burden of creating solutions and reviewing the financial consequences-using such tools as value comparisons, investment allocation, ROI (return on investment) and ROE (return on equity)-now falls upon sales professionals. Consequently, the selling function gradually has been transformed from a people-oriented job into a business-oriented job requiring strong associated people skills (including the ability to maintain long-term business relationships). Sales professionals are now expected to become trusted advisors who can work alongside customers to improve their businesses. In this new collaborative environment, selling means cultivating and maintaining a business partnership-not simply filling a customer’s immediate need.

“The traditional ‘informational’ sales call has become obsolete,” explains Gerhard Gschwandtner, publisher of Selling Power magazine. “Customers now want sales reps to be trusted advisors who will help them sort out specific problems and determine specific solutions that can be implemented quickly and cost-effectively.” Gschwandtner points out that customers want sales reps to provide unique expertise and perspective in order to solve their problems or help them to achieve business goals. “This is only possible, however, when the sales rep has a strong understanding of the customer’s business and of the rep’s own company as well,” he explains.

The Importance of Business Acumen

It is impossible to become a trusted advisor without a deep understanding of the two elements of a business partnership: 1) the way that the customer’s business works, and 2) the way that the sales professional’s own business works. This understanding is only possible when a sales professional has what is called “business acumen.”

Business acumen goes beyond basic financial literacy, which is the ability to interpret the numbers on a financial statement. It incorporates an understanding of how corporate strategy impacts those key numbers. Business acumen provides sales professionals with deeper insight into customer needs, and makes it easier for reps to strategically position products and services. Armed with business acumen, a salesperson can find ways to make positive changes in the customer’s financial picture-and in the seller’s position too.

Here’s an example. Imagine three sales reps (A, B and C) from three different plastics suppliers, all vying to become the replacement vendor to a manufacturer of printed circuit boards (PCBs).

Rep A is an old-school “order taker.” To get the account, he offers the customer a 10 percent discount below what its current supplier is charging. Unfortunately, this rep doesn’t realize that the cost of the plastic represents only a tiny fraction of the manufacturing cost. In fact, it’s probably going to cost the PCB manufacturer more money (not to mention paperwork and hassle) to change suppliers than will be saved through the discount.

Rep B has some business acumen. He consults the PCB manufacturer’s SEC filings and discovers that one of its strategic goals is to reduce inventory cost by 20 percent. He learns that the manufacturer is currently renting a warehouse full of plastic so it will be ready when the big orders come in. To get into the account, he proposes to eliminate that level of inventory through a just-in-time delivery scheme that will reduce the customer’s inventory cost by 3 percent-helping it to work toward an important corporate goal.

Rep C has even more business acumen. She performs the same research as does Rep B and leads with the same type of just-in-time delivery scheme. However, she knows that her own company has one of the best inventory control systems in the plastics industry, and that the system has significantly affected her firm’s profitability. So she offers not just to be a plastics supplier, but also to help the PCB manufacturer incorporate her own company’s successful inventory methods. Her sales proposal quantifies the value of that knowledge by showing how it will likely achieve at least a 20 percent reduction in inventory cost. As a result, she gets the order.

More important, Rep C has now forged a long-term partnership between her firm and the PCB manufacturer, a relationship that will be mutually profitable for years to come. That collaborative relationship protects her firm from being easily replaced. In short, this sales rep has created a partnership situation out of what could have been a profit-killing price war.

Approaching a sales situation with business acumen changes the dynamic relationship between seller and buyer. It creates situations in which the seller’s specialized knowledge and perspective become a strategic part of the buyer’s long-term success.

Consider this real-life example. The author’s company, Paradigm Learning, recently was involved in a competitive sales presentation directed at 40 executives from a major player in the aerospace industry. While the competition focused its presentation on its own products and services, Paradigm’s executives highlighted initiatives taking place within the prospective customer’s business, to show how Paradigm’s programs could add strategic value. At one point, the customer’s head of training interrupted the Paradigm presentation on the grounds that the presenter was covering proprietary information. However, it turned out that the so-called “proprietary” content had come from a thorough analysis of the customer’s own annual report. Paradigm’s greater business acumen provided a clearer focus on the customer’s needs, while the competition was merely touting the features and benefits of its own product offerings. It comes as no surprise that Paradigm won the company’s business.

As this anecdote illustrates, business acumen gives salespeople a major competitive edge in business-to-business sales environments. Unfortunately, business acumen remains relatively rare. In fact, studies show that only 10 percent of salespeople understand financial statements and can articulate their customers’ key financial drivers. While there have always been sales professionals who have managed to acquire and use business acumen, companies have lacked a practical and simple way to develop such knowledge among large numbers of sales personnel.

Not anymore. A new training methodology is making it easier and quicker to address business acumen and to propel salespeople to the next level of effectiveness.

Developing Business Acumen Efficiently and Effectively

Business games and simulations have been used in a variety of situations to educate corporate learners, especially over the past decade. They present a fun, fast and effective way to impart new knowledge and enhance existing skills. Research strongly suggests that hands-on learning provides a shortcut for learners, engaging their senses and allowing them to be active participants in their own learning. “Discovery learning,” as such simulations are known, accelerates learning and makes it stick.

Only recently has this approach been used with sales professionals to develop the business acumen skills they need to truly achieve “trusted advisor” status.

Classroom-based simulations and business games provide a fast track toward the learning and retaining of complex subject matter, according to Ken Jones, author of Games and Simulations Made Easy. He writes:

Games and simulations are powerful tools. They are based on learning from experience… Games and simulations confer power. The participants “own” the event. They have the power to make decisions, including the power to make their own mistakes. Sometimes the participants are so involved to the point that their experiences are so memorable that they even can be recalled in detail, days, weeks and even years afterward…Games and simulations are about people. They are real, not theoretical.

Research also suggests that people retain information longer and better when the instruction takes the form of a classroom-based simulation or game, according to Simon Egenfeldt-Nielsen of the University of Copenhagen. “The increased retention over time of learning appears to be one of the most consistent findings within the research into the potential of games for learning,” he says. This is particularly true when the subject matter is complex, according to Brent G. Wilson, professor at the School of Education and Human Development at the University of Colorado. He writes:

When designed well, both simulations and gaming environments can facilitate students’ learning [both of] specific domain knowledge and concepts, and of several cognitive skills like pattern recognition, decision making and problem solving… Other educational strengths of using games and simulations include developing a variety of cognitive objectives, transferable process skills, student-centered learning, initiative, creative thinking, effective objectives, sense of completion and knowledge integration.

In sales training environments, games and simulations are particularly effective because sales professionals are naturally competitive. They also tend to appreciate that discovery learning transfers knowledge more quickly than do other forms of instruction, because time spent training is time not spent selling.

Paradigm Learning has had enormous success in teaching business acumen with Zodiak®: The Game of Business Finance and Strategy for Sales Professionals. This one-day sales training program consists of a fast-paced, high-energy business simulation followed by a customizable session that zeros in on a company’s own selling issues.

The experience of Paradigm’s customers is that Zodiak creates, in a single day of fun learning, the kind of business acumen that can transform a sales professional from a mere order taker into a trusted advisor. To illustrate the power of this technique, let’s examine how Zodiak performed at International Paper, the world’s largest forest products company.

Building Acumen in a Real-Life Sales Situation

International Paper, like every other growing business, has gone through massive changes as a result of the Internet revolution. In this case, the transformation has involved repositioning paper from its role as a commodity product to one as a cost-effective alternative to electronic media. The company’s sales professionals, therefore, have been driven to move away from order taking and toward becoming solutions experts for the company’s customers. In other words, they’ve been driven by market forces to become trusted advisors.

One of the pioneers of this effort is Steve Sullivan, a customer value service manager at International Paper. As part of his sales efforts, Sullivan created what he calls Customer

Value Management (CVM), a methodology that helps sales professionals identify customer needs, create solutions that address those needs, deliver those solutions and manage the results. That methodology proved so successful that Sullivan was asked to train other salespeople throughout the company.

As he rolled out these concepts to a wider audience, Sullivan quickly realized that many sales professionals lacked the business acumen to be effective with this highly collaborative sales methodology. “When the customer started talking about finance and strategy, there was a tendency among our folks to go glassy-eyed,” he explains. “It wasn’t that they didn’t want to help the customer, only that they lacked the vocabulary and basic understanding to put the customer’s needs into the proper business context.”

So Sullivan worked with Paradigm Learning to adapt the Zodiak program to the unique attributes of International Paper’s customer base, incorporating the game as a key element of the larger CVM training curriculum. He added exercises that created a bridge from the classroom simulation to the International Paper organization, its customers and its specific sales challenges. The new training program focused on the impact that sales forecasting and price discounting had on the company’s financial measures; on how to create customer business and financial profiles to better position products and services; and on how to use business knowledge to interact more effectively with higher-level buyers.

The resulting program has had an enormous positive impact on International Paper’s sales effectiveness. For example, the company was awarded a 2007 Stevie® Award by Selling Power magazine for having the best sales training program of the 400 nominated companies. “The education of our sales professionals on the basics of financial literacy and business acumen was a big part of our winning that award,” says Sullivan. He also believes that International Paper has secured new business and renewed contracts as a result of the improved training.

Sullivan has used his own business acumen to estimate the value of this training initiative to his firm. International Paper benchmarks its success against 11 other companies in the industry, using a variety of competitive measurements, including ROI. Since the company began its CVM program, its ROI ranking has risen from ninth to second. “There’s no question that increasing the level of business acumen throughout the sales teams has contributed positively to our bottom line,” says Sullivan. “More important, it’s helped us contribute to the bottom lines of our customers and to their long-term success.”

Achieving the Next Level of Sales Success

There’s little question that the Internet will continue to drive the evolution of business-to-business relationships. Customers and prospects alike will increasingly insist that their vendors add value at every stage of the sales process. That kind of selling is possible only when salespeople have business acumen-the knowledge to understand the intersection of their customers’ strategies with their own company’s strategy and competencies.

As the “trusted advisor” status becomes the gold standard of customer relations, companies will inevitably need to incorporate business acumen training into their sales training repertoire. Research and experience both prove that classroom-based simulations and business games can build business acumen more quickly and more effectively than traditional training methods can. Discovery learning methodology thus provides a fast track for companies wanting to improve the business acumen of their sales personnel quickly and with ease, in a way that’s both fun and customizable. Sales organizations that embrace this new way of building business acumen will experience increased revenue and decreased costs, and will enjoy a greater strategic depth in their customer relationships.

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