Convince them that New Initiatives are worth the risk and better than the status quo.
“The biggest risk in the world is not taking any risk. In a world that is changing really quick, the only strategy that is guaranteed to fail is not taking risks.” — Mark Zuckerberg (2011).
Great CFOs Consciously Embrace Risk
“What is the primary job of a CFO?” A common answer to this question is: “Minimize risks.”
That’s wrong. Organizations that wish to be innovative and create value for their customers, employees and investors must take risks.
The primary mandate of the CFO is to determine which projects/objectives to commit to and which risks to take. Within the resource constraints of their particular organization.
In other words, the CFO must allocate the limited resources of an organization — financial capital and human capital (both cost of people and their time) — to the right mix of initiatives.
Conversations with CFOs are Usually About Problems
When time is scheduled on the CFO’s calendar the agenda typically consists of either securing their help to solve a problem or asking them to authorize additional spend (e.g. on new hires, for unscheduled raises, new marketing initiatives, new tools etc.)
No CFO has sufficient resources at their disposal to greenlight all spend. And all CFOs know that additional spend always comes with a risk that it may not be worth the time and money.
As a result, CFOs are trained to be skeptical of internal requests and untrusting of external requests.
Acknowledge Risk
To successfully sell to a CFO, you must get them to trust you.
One way to build trust quickly is to acknowledge upfront that you are asking them to take a risk. Our brains are trained to critique and focus on weaknesses. By putting potential risks or weaknesses on the table upfront, you may help calm the critical part of the CFOs brain which is always looking for the ‘hidden cost’ or ‘hole in your argument’.
Goals of the Conversation
By the end of the conversation your goals are to get alignment with the CFO on:
- Why “the problem” is a high priority item to address. Specifically, get to know what is wrong with the status quo and why it is painful, frustrating, inefficient etc.
- That the risks associated with your solution are both clear are worth taking; and
- How you are structuring the engagement to minimize downside risks.
Communicate Clearly
Selling to CFOs is no different than selling to anyone else.
The key is well researched, clear, concise, and emotionally resonant communication.
It requires really knowing your audience, which takes time and effort upfront. Invest time in the following:
Understand The Business Model
- Understand how the business makes money, and what behaviors their most valuable customers exhibit.
Also know where the company spends money. Understand the different buckets of spend including engaging with prospects, acquiring customers, serving customers, retaining customers, and running the business (product development and management costs.) - If the prospect / customer is a public company, listen to their earnings calls and read the investor materials. If they are private, do research on companies that are similar to them.
Figure out the Priorities for this quarter and this year.
- If you are selling something that does not directly relate to solving a company priority, the chances of success are minimal. No matter how good your product is. And even if you are selling something related to their priorities, if the impact is low relative to the effort then you will likely fail. So your solution needs to be both ‘timely’ and ‘valuable’.
- Remember that you are always selling against the status quo. If it isn’t totally broken, it is hard to convince someone to fix it. For enterprise sales (large dollar values) understanding the current process in detail is critical.
Understand the CFO mindset.
- Tailor your pitch to link your proposed solution with the identity and mindset of the CFO.
- Things that matter to every CFO include: (i) What is the RoI of this investment? (ii) What is the cost/pain to implement and the time to value? (iii) How certain am I of this RoI being achieved?; (iv) What can I do to reduce the risk of failure with this project / investment? And still insure it is value creating to the company, even if the seller delivers less than promised
- In addition, all individuals see themselves through particular frames or lenses. They come to their jobs hoping to have an impact, make a difference or be a positive influence on others.
- Figure out what that identity and associated phrases are for the individual CFO you are pitching. Review their LinkedIn profile, other public materials, and talk with their business peers. Which terms do they use most often in describing their role and what motivates them? Some examples might be: (i) customer focused; (ii) operational; (iii) data driven; (iv) process optimizer; and (v) value creator. Link these terms in some manner to the impact of your product or solution so that they can see their purpose come to life through buying what you recommend.
Be Concise and Simple
- Reduce your pitch to the smallest number of slides you can. The longer you talk the more likely the other side is to tune out.
- Don’t use jargon, unless absolutely necessary. Words that are confusing increase distrust.
- Make it memorable and easy to explain. Often the pitch materials you go through will be used later to explain the value proposition to others in the organization.
Encourage The Buyer/Approver To Speak
- Ask them what they would like the product / solution to be able to do? The amount of involvement by a buyer in the conversation is a direct indication of their excitement.
- Get objections surfaced. Encourage them to tell you other reasons not to engage in this project or explore this solution.
- Explore the problem more deeply. Use every conversation as an opportunity to figure out the problem in a more multifaceted way. People will collaborate and share much more when they believe you are helping them solve a problem. And this will build goodwill for the future, even if it does not lead to an immediate sale.
Link the Data / Numbers with Emotional Impact
- Even though CFOs understand numbers well, they are human too. All humans take actions because of the emotional impact.
- Convert the data (whether revenue increase or cost savings or time savings) into something tangible through an analogy that speaks to a shared life experience.
- Other ways to leverage emotional impact is to link your product to the impact on customers or employees (how it will increase happiness, satisfaction or create other positive emotions. CFOs know that satisfied customers and happier employees are tightly correlated with value increase.
Make It Easier for the CFO to Say ‘Yes”
- In an environment where capital is expensive and efficiency is valued, saying no is easier than saying yes. So every seller must convince the buyer that the risk associated with change is minimal and worthwhile.
- Demonstrate asymmetric upside. CFOs aren’t willing to invest for an RoI of 2x. Ideally your product needs to cost only 10-20% of the near term value created.
- Derisk implementation. Show them a detailed plan for how you will implement the product, with buy-in from others in the company. The fear of a long time to value can kill many new software sales.
- Make a case for “spend” your solution will replace. That spend could be time invested by people in the organization (i.e. opportunity cost).
- Offer downside protection or some sort of insurance for risk averse buyers who are close to signing. Offer a proof of concept period, ideally paid, so the incentives to collaborate on a fast time to value are more aligned. Consider offering a one-time early termination option, so they can cancel if things are not working out. Potentially even guarantee some minimum return / performance hurdle with the ability to get a partial or pro-rated refund on their payment if these hurdles are not met.
The Final Piece: Social Proof
If you think back to recent new spending (things you bought which you had not spent on before), there was likely social proof involved. Probably a strong recommendation from someone whose opinion you trust about the specific item.
With myriad Slack or WhatsApp communities targeting all types of professionals, buyers are seeking out feedback and recommendations from their peers. Ensure you have social proof. Make it easy for those who like your product or service to share their positive experiences.
Your job in selling to the CFO is to convince them that the reward will be worth the risk.
