Hi and welcome to this week’s issue of The Revenue Architect. If you’re a regular reader finding the content thought-provoking, please share it with your colleagues and if you’re landing here for the first time, trust me its worth subscribing!
With almost 5,900 publicly traded companies in the US alone, the likelihood of having one or more public companies in your sales territory is high.
At first glance, selling to a public company can seem daunting; lots of stakeholders, with different opinions and needs, across different teams, internal politics. It can be easy to waste time going down the wrong rabbit hole.
The key to overcoming this is research and preparation as the more you know what someone cares about, the easier it is to sell to them, because you can guide the conversation to surface their biggest challenges.
While private companies keep much of this valuable information close to their chests, public companies have to disclose it on a regular basis. Understanding what to look for in these disclosures helps give you a head start on your prep.
There are two key sources of information on a public company, both of which have gold for salespeople:
Earnings call transcripts
SEC filings
How to find the gold in an earnings call transcript
Every public company has to report their financial performance 4 times a year. Within an hour or two after releasing the information, they have an earnings call, where financial analysts who cover the sector ask questions.
The call usually starts with prepared statements from the CEO and CFO. The CEO usually talks about vision, strategy and customers, while the CFO highlights selected financial metrics. You can skip most of this.
The questions financial analysts ask are way more revealing because they invariably areas of concern that impact the long term value of the stock— how is that recent acquisition going, why is this metric not growing, when do you expect to be profitable. This is where it starts to get interesting.
The way the CEO answers the questions is where the gold is.
If they try to deflect the question or waffle on with very few specifics, it’s a sign that whatever they are doing about it isn’t working. As a salesperson this tells you there is a problem.
However, if the CEO provides more evidence and details, it’s a sign that there is a major initiative internally. As a salesperson this tells you that there is money available if you can attach your sale to the initiative.
For a real world example, check out the earnings transcript from CarMax’s Q4’21 earnings call, in which the analyst questions surface the following problems.
A decline in the inventory of available cars.
Difficulty in sourcing used vehicles to bolster inventory.
Competing with auto dealers for trade-in inventory.
How to find the gold in an SEC filing
Every US public company has to file a quarterly report with the Securities and Exchange Commission (SEC) after reporting their earnings. The quarterly report is called a 10Q and the annual version is called a 10K. Both are easy to find online.
A typical 10Q/10K has shitload of information to sift through, which can make it a bit intimidating. However, the 3 things that matter to salespeople are:
Financial metrics — look for revenue, expenses profit and how they are trending over time. The trend is important because it gives you an idea of the company’s tolerance for spending money; a company with huge revenue, slow growth and thin profits is going to scrutinize major new expenses far more so than one with moderate revenue but high growth and solid profits. You can usually find this under “Selected Financial Data”. To stay with our CarMax example, you can find this on page 25 of their 10K report.
Lines of business — this is important because it helps you understand the silos and decision-making autonomy inside the organization. In our CarMax example we can see two “business segments” listed on page 5 of the 10K; Sales Operations and Auto Finance, which will clearly have very different goals and margin profiles.
Company vernacular — this is important because the more you can frame your value proposition in the language your customer uses internally, the faster they will take to it. An effective way to understand the vernacular is to look for the words your customer users to describe their own value proposition. This information is often also found in the Business Overview section of the 10K. In the CarMax example we can see how they use terms like “No-haggle pricing”, “Buy on your own terms” and “Sales commission aligned with buyer”.
I’d love to hear what other nuggets you look for when preparing to sell to a public company!
Thanks for reading! If you found this email useful, please share it! And if you got forwarded it, please consider subscribing! I write weekly about the common sales, marketing and leadership issues holding back startups from growing faster.