MyNextClient

Just cause you’ve graduated,

don’t think you should take exodus of the school library!

 

By Ellen Manzo-Ill

 

Would any of us ever want to have surgery with a doctor who starts off an operation with “Hold it a minute; I have to do some research on this procedure first.”?  Of course we wouldn't. 

Effective sales representatives are effective consultants.  The best of the breed are not only those who know the product or service their firm can bring to the table, but who also are superior at educating clients on how their product or service can help clients with their business.  To serve as an effective sales consultant then, it is imperative to first fundamentally demonstrate an understanding for your client’s industry and your client’s company.  Without that, you’ll be just another sales person rotating through the door.   

The definition of research in the broadest sense is the gathering of data, information and facts for the advancement of knowledge.  Many college students graduate each year, enter sales and forget forever more all that they’ve learned in conducting thorough research over their four year college career.  Of course they might have read up on a firm to represent themselves well in job interviews.  But how many take the research skills he or she mastered while writing college term papers to the next step in career progression? 

I have been fortunate to hire hundreds of new sales people, perhaps about a third of whom were right out of college.  Regrettably, I found that very few brought their extensive research skills to the sales table until realizing the value of doing so.  Once they did, the recent graduates were the best at conducting research.  Fortunately, given the incredible availability of information over the internet, one is able to perform most research without leaving his or her desktop which suggests all the more reason for this to be an easy task. 

I encourage all account managers to conduct extensive research on a client prior to stepping foot across the client’s threshold.  Just about every sales person knows to check out a client’s web site.  But often times that is where the research stops.  Consider becoming expert with the sources listed below.  Customers buy from those they trust and what better way is there to build credibility than to become an expert in your client’s industry and business.  As a byproduct, thorough research will not only educate you on your client’s business, it will prove to educate you on possible investment opportunities as well.  So after earning the rich rewards for your sales efforts, this exercise might help you invest those rewards for continued financial growth. 

 

Sources to Consider:

 

The client web site.  Client web sites are excellent at revealing the company’s mission statement, objectives, direction, product line, recent news, latest financials, and personal profiles of the company’s leadership.  The investor relations section will often contain the company’s annual report, 10K Forms and most reports that have been released to the Securities Exchange Commission.

 

If your client is public, a share of stock.  Purchasing a single share of stock from a firm, particularly one that doesn’t have a great deal of investment information publicized will confirm that you will become the lucky recipient of major documents that are submitted to the Securities Exchange Commission.  In all likelihood, you will receive the annual report as well as most 10K reports.  At minimum, you will receive an invitation to the annual stockholders meeting.  

 

Attendance at the annual stockholders meeting.  Want to hear about industry trends, your client’s business goals and objectives, competitive pressures and upcoming plans for the future?  How about learning about new compensation considerations for the executive team that you might be selling to?  Are you interested in learning about what the analysts are saying to your client? 

Attending the annual stockholders meeting is a great way to obtain information of this kind.  It will also expose you to the presentation styles of your client’s executive team.  Keep in mind however that one needs to be a stockholder to attend so go ahead and invest in that single share of stock!  Telling your client that you also care about his company’s success for the reason that you are a stockholder and have an investment in his firm allows the two of you to share a common interest. 

 

The annual report.  Company annual reports are full of information.  They typically contain a Chairman’s Message to Stockholders, the company’s mission statement and objectives, a review of major initiatives for the firm, objectives for the coming year, product introductions, geographic inroads, discussions on acquisitions and divestitures and the financials for the last fiscal year. 

If your client’s web site doesn’t contain an Investor Relations section wherein most annual reports are provided, one can contact the Investor Relations Department of the firm and request that a copy be sent.  I haven’t come across a firm yet that hasn’t been anxious to comply with this request.  Investor Relations Departments are anxious to attract investors and realize that your telephone call to them might be your first exposure to their company.  Alternative sources for annual reports are the investment firm that manages the client’s pension plan or employee stock holdings, your personal broker or through simply buying a single share of stock from the firm as cited earlier. 

I advise account reps new to any account, to review the last five years of annual reports for the company.  Why five?  Often times account managers only read the most recent published report.  Reading any annual report is certainly a step in the right direction.  And some might contend that the trouble of research is that it tells you what people were thinking about yesterday, not tomorrow.  That research is like driving a car using a rearview mirror.  And to that end, they would be correct.  Yet others may portend on the contrary that history repeats itself.  Whether you believe that research is like looking into a rearview mirror or a crystal ball, I can offer from experience that reading several years of annual reports gives readers an appreciation for trends, for where the company has been and where it is going.  Simply reading the chairman’s message alone over the last several years will deliver a greater appreciation for a company’s personality and corporate culture, a depth of understanding far greater than that learned from a single report read.  Finally, knowing the history of a firm is almost as important as reviewing the predictions one has for its future. 

 

Comparison of your client’s financials to that of their competition.  This idea blew the socks off of many of my fortune 100 clients.  Here is a typical workshop I ran with some of my account managers. 

At one point in my career, I led a sales organization that sold to the pharmaceutical industry.  We sold to and managed our company sales to many of the largest pharmaceutical firms in America.  I requested that my sales teams arrive to my internal workshop with five years of annual reports in hand.  Together we analyzed the company financials of six major pharmaceutical companies.  We took a look at company expenses of each firm for each year and determined what percentage each area of the business represented to the overall revenue stream for the business. 

Next, we had a discussion to collectively determine and agree on the core competencies for success for any pharmaceutical company.  As example, we agreed that a critical core competency for pharmaceutical firms is research and development.  Pharmaceutical firms want to release the first cure in the market for major diseases.  In doing so, they are often able to patent their product and hold exclusivity in the market for a window of time (often seven years or more) over their competition.  As a result, R&D becomes a life blood for their business. 

The team next calculated what the R&D expense represented as a percentage of sales for each of their clients and then looked at the trend for each client over a five year period.  Was the R&D commitment increasing in a firm, decreasing in a firm or remaining status quo?  How did the R&D commitment of one firm compare to that of another?  Which firm had the highest percentage of R&D?  Which firm had the least percentage commitment to R&D? 

The results were astonishing.  There was one firm in the pack that year after year increased the percentage of funding they were pouring into R&D.  The increase was nearly a percentage point year over year.  Furthermore, the team easily detected that their dollar commitment to R&D was approaching the top of the accounts studied.  Based on these findings, the account managers made a projection on the firm whose stock was likely to increase over time on the basis of increases in R&D over the other five pharmaceutical competitors in the market.  Their philosophy was that the company that makes the greatest commitment to their core competency would likely become the winner.  In the pharmaceutical arena, the firm that rendered the greatest commitment to R&D today would be more likely to render better product sales tomorrow. 

One year later, we were able to congratulate one another on our predictions.  We nailed it.  We pegged the company that was likely to experience the greatest stock increase based on an increasing trend in R&D and surpassing competition by a percentage point across all companies in its commitment to research.  Two years later we saw our predictions confirmed even more.  Our company pick for the greatest stock gain was realizing increasing stock prices that left its competition in the dust! 

But the real payoff was the sales benefit from our research.  Following our workshop, each account team shared our research and their findings with their client in a biannual planning session.  Imagine how impressed their clients were to see our findings!  Our research bought instant credibility as we then together looked at applications that we could affect with our product line to help them improve their success.

 

Value Line!  Value Line!  Value Line!  My favorite of all resources.  Where can one go to obtain a fairly objective view of industry trends and company news and state of the union all in one place?  Value Line offers this and more.  Value Line is available in two forms – a hard copy paper version found in most library reference sections and is also available electronically through the library’s online subscription.  Updates to the publication are sent weekly.  I find that I can access this incredible resource at home through my library membership. 

Value Line prides itself in offering one of the most independent research staffs of investment analysts and statisticians in the world.  According to their web site, their research team tracks about 8000 stocks, 15,000 mutual funds and 80,000 options and other securities.  Value Line reports on each covered stock and industry every three months.  In just a page or two, one can learn about industrial trends, key players in the industry, the industrial leaders and losers, the industry timeliness compared to all other industries followed for economic growth and more. 

Value Line provides a full page write-up on the companies whose stocks they follow which shows a reader the historical economic data of the company, the financial estimates, the price/earnings ratio, and economic projections.  In addition, a summary of the company often references key initiatives such as new target markets of either geographic or product penetration nature, acquisition or divestiture plans, and potential events in the market which could be critical to the future of the company and more.  Investors will want to pay particular attention to the last paragraph in the Value Line one page company write-up which will always provide a condensed synopsis for the company’s investment potential to individual investors as perceived by the Value Line research team.   

 

Standard and Poor’s (S&P) – Excellent industry information, private company reviews and executive profiles.  So you’re handling the advertising agencies in your turf and you never came close to doing anything in your career in advertising.  Worse still, your idea of a great evening at home is watching Monday night football void of commercials!  You loathe commercials and now your future income depends on their success!  Where to begin? 

The Standard and Poor’s NetAdvantage product delivers excellent reviews of 50 of the largest North American and global industries and 115 sub industries.  S&P industry reviews cover essential topics and current environment issues of greatest importance to the market.  In addition, S&P provides an industry profile that educates readers on industrial trends, how the industry operates, key ratios and statistics and how to analyze a company in that industry.  S&P’s review includes a comparative analysis of companies in the respective industry along with industry references and a glossary of terms.  Where else can one become a quick study on an industry?! 

S&P’s NetAdvantage also covers information on private companies, for whom research is typically more difficult.   And as a real bonus, S&P supplies profiles and biographical data on hundreds of thousands of executives and directors of public and private companies.  Who knows, you might just find out that your key decision maker is a fellow alum, fraternity or sorority colleague!

 

Industry publications.  If your life blood is dependent on the actions of one account or one industry?  Is there any reason why you shouldn’t consider becoming an avid reader and subscriber to industry publications that discuss issues critical to your client’s industry?  Want to know which ones to invest your time and money in?  Simply look at the coffee table in your client’s lobby.  Staying up to date on client issues is imperative.  Keeping abreast of what keeps them awake at night will without question differentiate you as an industry expert who will be difficult to beat in the market.

 

Conclusion:  Do your research.  Do it early, before stepping foot in your client’s office.  Become familiar with the resources and exercise outlined above.  Stay on top of industry and your client’s business initiatives and issues.  The reward:  you will be viewed as a credible industry expert who is savvy to the issues for the clients whom you service.  You will differentiate yourself in the market.  The next time your client needs a consult, he or she will turn to you for advice, first, before your competition -- a perfect formula for success.