As the Director of Training and Customer Success at Vertical IQ, I love helping our clients maximize the benefits of Industry Intelligence. Our Industry Profiles cover more than 94 percent of the businesses that make up the U.S. economy, and each one has pages and pages of the latest industry research, so I often get asked by our bank customers how to “prioritize” all of that great Vertical IQ content. That’s when I share my “Strategic 4” — the four sections of the Industry Profile that I believe best support deeper conversations with bank clients.
The obvious…and not-so obvious…topics
For bankers, as well as many other sales professionals, one of the primary goals of using Industry Intelligence is to have better conversations with business owners. Doing your homework with Vertical IQ enables you to understand the ins and outs of that person’s business. In fact, I could make the case that every Industry Profile chapter has Industry Intelligence nuggets that can lead to better client and prospect conversations.
There are certain chapters or sections that, when you scan over their name or headlines, it all but has flashing lights saying, “This way to an industry issue that I can help you address!” Obvious examples are Bank Product Usage and of course Banking Solutions.
In other cases, the chapter name or its section headlines might mention topics that you read, and your initial instinct is to skip it. At first glance, you think, “That isn’t something that can be fixed by a banker.” However, if you give it more thought, you might just find it does indeed connect back to a banking solution. And perhaps even more important, these sections often offer gems of information that can yield those deeper conversations with business owners.
The Strategic 4
Let’s say you are a banker who is meeting with a brewery client. How do you prioritize the content on Vertical IQ with the goal of initiating a better discussion with that business owner? Here are the Industry Profile chapters I like to call the “Strategic 4” and how the content can result in a more in-depth conversation with that brewery owner.
1. Profit Drivers
Here is an example of a profit driver from the Breweries Industry Profile:
- Managing Supply Costs: The cost of grains and hops used in brewing beer can vary with growing conditions and market demand. The cost and availability of specialty ingredients used in producing craft beers can be particularly volatile, especially as demand for craft beers continues to grow.
Potential banking solutions and questions to explore: Line of Credit
Consider asking the business owner how they are impacted by the fluctuation in prices around raw materials and ingredients. If this is a primary concern, ask if they are using a LOC and if that line has the capacity to meet their needs.
2. Industry Trends
Here is an example of an Industry Trend from the Breweries Industry Profile:
- Craft Beer Continues to Grow: Craft/specialty beer continues to be a bright spot in the beer industry. Craft beer enjoyed a growth of 4.5 percent in 2020. Craft beer accounted for almost 24 percent of the total U.S. market share in 2020.
Potential banking solutions and questions to explore: Equipment Financing and Term Loans
Growth is a huge trigger event for businesses (trigger event being something that prompts you to revisit your banking needs). Growth can impact equipment, raw materials, staffing, and so much more! To determine the right solution, ask the business owner questions about their plans to increase production and if their equipment will need to be upgraded to accommodate the increased capacity.
3. Cash Management Challenges
Here is a common cash management challenge for breweries:
- Cash Shortfalls During Periods of Low Demand: Beer consumption is seasonal with higher demand during the summer and around major holidays. With high fixed costs, breweries can experience cash shortfalls when demand falls during the winter months. Breweries also must fund higher production costs to build inventories prior to peaks in demand.
Potential banking solutions and questions to explore: Payment/Treasury Services and Line of Credit
Managing seasonality can be challenging for even the most experienced and successful business owner. Payment/treasury solutions can provide much needed optics into working capital, and once you have your arms around cash flow, you can better determine the best products and services. You might ask the business owner to tell you more about how they monitor cash balances, the payment terms they have set-up with distributors, and if they rotate their beers seasonally to align with customer demand.
4. Credit Underwriting & Risks
The Breweries Industry Profile list several key risks that are impacting the industry, including:
- Ingredient Shortages: Breweries depend on consistent access to raw materials like two-row malted barley, hops, and water. The price of these agricultural commodities can vary considerably, particularly if bad weather impacts a harvest. Breweries often enter into contracts with farm collectives and suppliers to ensure an adequate supply of raw materials, but these contracts can often run higher than market rates. Smaller breweries that cannot enter into contracts may not have access to specialty ingredients.
- Competition from Wine, Spirits, and other Breweries
- Weak Marketing
Potential banking solutions and questions to explore: Line of Credit and Commercial/Purchasing Credit Cards
I would approach ingredient shortages much like we discussed above related to managing supply costs. Ask how they pay suppliers and if they are taking advantage of trade discounts to conserve cash. When it comes to competition and marketing, I think about how a brewery would maintain market share, and I would ask the business owner how much time and money they are putting into advertising.
Lead with industry-focused discussions, not product
In this particular industry example, breweries, we observed many clues pointing us to treasury and credit products, but the questions we ask can help diagnose and prioritize. These brewery data points and topics are great examples of how the Strategic 4 can help you have a deeper conversation with the business owner and then connect the dots between a potential industry issue and your banking products and services!
And here’s the best part about utilizing the Strategic 4 for your discussions: It’s win-win. Best case scenario, you will walk away with a better understanding of the business owner and what solutions you can bring to the table for them. Worst case scenario, you and the business owner talk through the topic, you sound educated and insightful on their industry because you know critical aspects that only insiders know, and you make strides in building that relationship.
Even though you are in sales, no one wants to feel product-pushy. By approaching your client or prospect conversation with the topics you find in the Strategic 4, you will get the buyer talking, have a more in-depth, focused conversation, and inevitably, that discussion will identify business issues that point to a banking solution you have in your quiver. When you effectively connect those issue-solution dots, you and the client will both win!
Photo credit: David Pisnoy on Unsplash