We’re all interested in uncovering opportunities before our competitors.  But few of us have the bandwidth to process the ever-growing volume of information being pushed and pulled our way.  By way of example, Bank of America’s recent 10-K was over 750 pages.  And filled with mind-numbing language.  That’s why we recommend allowing someone else to do it for you.  Checkout www.footnoted.org.  

Required regulatory filings often harbor critical insights for uncovering strategic selling opportunities.  Yet, they’re commonly buried amid volumes of irrelevant information. 

While you may not have heard of footnoted.org – whose primary purpose is to help investors – it may be worthwhile to see if any of your accounts are covered.  The site’s operator, Michelle Leder, scours the volumes of such filings and publishes they eye-catching stuff many companies would rather not publicize.

You may unearth input for your sales campaign around executive compensation, strategic alliances or risks confronting your customer to align your value.  Conduct a search, register to receive email updates and put yourself a step ahead of the competition.

While you likely already read your customer’s annual report, specifically the Letter to Shareholders and MD&A, you may not regularly leverage management presentations to gain customer insight.   However, the increasing transparency of today’s corporate landscape has turned these presentations into highly useful sources of timely customer information.

Why This Information is So Useful

Presentations that management makes to analysts and the investment community are arguably even better than reading the Letter to Shareholders in terms of a quick, timely source for gaining customer insights. As you learn more about the information they provide, management presentations may become the first place you look in researching your customers and preparing for an executive engagement. Two strong reasons why the information you’ll find is so useful:

· Highly current information

Unlike annual reports and regulatory filings that have a short shelf life and may be dated at the time you’re doing research, management presentations are typically very current. In fact, companies often pull them from their Web sites within a relatively short period of time to avoid risks or exposure associated with changing market conditions and the company’s evolving strategic direction.

· Presented in executives’ own words

Management presentations enable you to learn what’s happening within your account directly from the executives you may be targeting to meet with as well as other key officers. The information allows you to clearly identify customer initiatives that will help you build business alignment with your solution. It also clearly identifies the customer’s priorities and gives you access to up-to-date financial metrics and business issues, clearly stated in the executives’ own words.

Using the Information

Having this kind of background on an account before making your first call puts you at an advantage. You’ll be able to demonstrate you’ve done your homework and thereby establish credibility. You’ll also be able to begin linking your solutions to the company’s issues and priorities – the ones that executive officers have identified as meaningful and top-of-mind.

Following are example presentation slides that illustrate the type of information you’ll gain access to.

In this presentation, Level 3’s CFO not only identifies cost advantage as a key initiative, but also discusses operational efficiency, potential M&A activity and maintaining financial strength. You can use this insight to develop a value proposition demonstrating how your solution drives cost savings, improves efficiencies, reduces time to integration for future acquisitions as well as improves cash flow – all of which, when quantified and linked to these initiatives, demonstrate your credibility.

In this presentation, Alltel’s Group President of Operations shares a host of potential points of alignment where your solution might help the company achieve its stated initiatives.

Accessing the Information

First, check your customer’s Web site. The presentations that companies make to analysts and investment communities on a quarterly basis can typically be found in the Investor Relations area. Often you’ll have a choice of viewing the presentations themselves, reading transcripts or listening to audio archives of Webcasts. Additional online resources include Earnings.com and Yahoo! Finance, where you can access conference calls by entering a company’s stock ticker symbol.

Tip: Subscribe to an e-mail alert service. Many companies offer this as part of their investor relations effort. You’ll know right away when new information that may identify a selling opportunity is made available.

One Stop for Valuable Insight

Management presentations offer "one-stop shopping" for obtaining timely account information that can give you the insight you need to establish credibility and identify opportunities. You may find they’re the best overall source for identifying current customer business issues and priorities.

What’s been your experience?

Download guide on which documents are most useful and which sections to read within those documents.

Research and preparation are critical for successfully engaging and selling with buyer’s side perspective.  Download this Finding the Information to help guide you on which documents are most useful and which sections to read within those documents.

US Letter (PDF 1,389KB)
A4 (PDF 61KB)

TIPS TO STREAMLINE YOUR RESEARCH

1. Annual Report to Shareholders
   The principal document used by most public companies to disclose corporate information to shareholders, this single best source of information usually includes the Letter to Shareholders, financial data, market segment information, new product plans and information by lines of business.
2. Forms 10-K and 10-Q
   Focus on these sections:
   Item 1 Business Overview for an explanation of the account’s business.
   Items 7 and 7a MD&A where management is compelled to disclose market risks and address the tough question “What went wrong last year?”
3. Proxy Statement DEF 14A
   Focus on these sections:
   Report of the Compensation Committee -What performance metrics are used to compute executive bonus and incentive plans?
   Board of Directors - Are any board members also associated with another customer? How could this relationship be leveraged?
4. Analyst Reports
   Most public companies are followed by one or more financial analysts whose reports include the analyst’s opinion of the company and an outlook on future performance. Look for recently dated reports labeled ‘Initiating Coverage’ or ‘Reinitiating Coverage’ to identify more comprehensive reports.
5. Management Presentations
   Typically found in the Investor Relations section of a company’s Web site, these files provide a unique opportunity to hear customer executives talk about their business in their own words. Look for original files or transcripts with names like ‘Investor Presentations’ or ‘Analyst Call Q&A.’
6. Press Releases
   Focus on Earnings Releases (there are usually 4 per year), and any releases addressing management changes, strategy or current events.

Form 10-Ks offer highly useful information about your customers.  Here’s a summary of 10-Ks and how to quickly navigate to these four sections for insights most relevant to your sales efforts.

What is a Form 10-K?

It’s an annual report that publicly-traded U.S. companies are required to file with the U.S. Securities & Exchange Commission (SEC) each year. With some exceptions, it must be filed within 90 days after a company’s fiscal year ends.

Is the 10-K the same as the Annual Report?

No, what is commonly referred to as the "annual report" is a public company’s Annual Report to Shareholders. While a 10-K is also an annual report, its primary audience is the SEC. This separate document contains more detailed financial information and a more comprehensive description of the business and related business risks.

What information can be found in the 10-K?

Typically, the 10-K includes information such as company history, organizational structure, equity, holdings, financials, earnings per share, subsidiaries, etc. The 10-K also features more in-depth information about the company’s products, market segments, competitors and legal proceedings.

Where can 10-K forms be found?

The Investor Relations section of your company’s Web site or the SEC’s  EDGAR database. EDGAR is short for the Electronic Data Gathering, Analysis, and Retrieval system that automates the collection of forms submitted to the SEC.

If you could find out how a customer executive you’re targeting is compensated, would you? Of course you would.

An insider secret: Outside of the U.S., in many parts of the world, details regarding how and why executives are compensated are spelled out in remuneration reports.

Thanks to U.S. Securities and Exchange Commission (SEC) requirements that companies disclose more detail in their annual proxy statements, anyone selling to U.S.-based accounts can find similar information.

The requirement is designed to give shareholders more information so they can cast informed votes – but there’s no reason you can’t use it.

Harvesting Proxy Statements

It’s important to get in the habit of reading proxy statements for all of your prospective and current publicly traded accounts.

Proxy statements are filed annually with the SEC and provide important clues as to how you should quantify your solution’s value.

In these statements, companies are required to disclose:

• What executive compensation programs are designed to reward
• Each element of that compensation
• Why the company chooses to pay each element of compensation
• How the company determines the pay for each element

In other words, you will discover exactly what motivates your target executives and quantify the value of your solution accordingly.

Proxy statements can be long, confusing, and painful but if you focus on a few key sections, you can scan them easily. Ignore stock options, pensions, and use of the company jet (however interesting those things seem.)

Instead, focus on:

Compensation Discussion and Analysis:

This section tells shareholders how top executives are paid and why they’re paid in that way. But you’ll be able to see what goals have been set for top executives. Think in terms of these goals when you explain the value of your solution to your executive sponsor.

Example: This General Electric proxy statement outlines a number of goals, including launching and improving products, attracting and retaining customers, and increasing productivity.

Demonstrating your solution’s benefits in these terms will increase your chances of success!

Executive Compensation Components:

You’ll find the Executive Compensation Components section under Compensation Discussion and Analysis where the company outlines specific goals it set for top executives. In the case of financial goals, it lists specific numeric targets. For strategic and operational goals, it mentions how performance in reaching them is measured.

Example: GE CEO Jeffery Immelt’s goals included increasing annual revenues to between $160 and $165 billion, boosting cash flow, driving 8 percent organic growth, and keeping GE high on the “most admired companies” lists from FORTUNE, Barron’s, and the Financial Times. At Gannett, the proxy statement shows executive pay is based on how well the company competes among digital media.

Ever use a proxy statement to assess your target customer goals? Share your experience and tips by commenting below!

If you regularly obtain your customers’ annual reports, you know that reading the entire document is impractical, if not impossible. Use the shortcuts below to help you quickly find the critical information you need.

Start with the Letter to Shareholders

The Letter to Shareholders is your best source of information about a customer’s business and written in straightforward language.

Look for the following:

• External factors: What are some factors outside your customer’s control that are impacting everyone in their industry? Which ones align best with your business value?
• Key initiatives: What strategic initiatives has the customer identified that align with your value proposition?
• Forward-looking statements: What insight can you gain into the company’s future objectives?
• Business metrics: Which metrics, financial ratios and prior-year successes are identified as important?
• Significant trends: Are any market, product or divisional trends discussed that align with your solutions?

Next, Search the Financial Statements

• Income Statement:
  • What was the company’s revenue trend over the past three years?
  • Did any significant product or service mix changes occur?
  • Did a significant percent of revenue change occur by region or business unit?
  • What was the company’s gross margin trend over the past three years? Did any significant year-over-year percentage changes occur by region, business unit or product segment?  

Areas showing a downward trend represent a selling opportunity.

• What was the company’s profitability trend over the past three years?
• Assess the percent of revenue for each major expense category: R&D, sales and marketing, general and administrative, and any others that apply.

Line items showing an upward trend also represent a selling opportunity.

• Balance Sheet:
  • Over the last year, did the company’s total assets grow or shrink?
  • Did any significant asset categories (accounts receivable, inventory, etc.) record a notable change in balance?

Any asset category (other than cash) that shows a growth trend represents a selling opportunity because decreasing non-cash assets improves cash flow.

Wherever you can correlate asset category trends to income statement trends there’s a selling opportunity.

Management Discussion & Analysis:
Whether you’re selling to a strategic business unit or looking to identify a SBU as a point of entry, the MD&A describes high growth areas.

Look for:

• The results of operations
• Changes in financial condition
• Risk management strategies

High growth areas represent a selling opportunity.

• Notes to Financial Statements:
  Look for references to relationships, contingencies or other factors that could enable you to build a strong business case and perfectly align your solution’s value.

Look for places where your solution aligns with the prospect’s key initiatives and business performance metrics – those are your best selling opportunities.

Any change in your account’s business performance or an unexpected market shift may signal a new selling opportunity. So how do you stay current on the latest challenges faced by your customer’s executives? Review transcripts from the company’s quarterly earnings calls. All it takes is three easy steps.

Step 1: Find your customer’s transcripts

Many companies make transcripts available on their Web sites. Also check third-party sites such as http://www.earnings.com. Be sure to also sign up for e-mail alerts so you’ll know when new transcripts become available.

Step 2: Start with the analyst ‘Question and Answer’ section

You’ll find the Question and Answer section at the end of the transcript. It’s the part of the call where the analysts who follow your customer year-round grill executives about underperformance or results that didn’t meet expectations.

Not only will you identify selling opportunities, you’ll also strengthen your credibility with your target executive by demonstrating your timely knowledge of the account and aligning your value to his or her most pressing priorities.

Three examples