Hunting For Sales Leads in 10-K Filings

Finding new leads is hard work. There is one technique guaranteed to help and it’s based on identifying customer pain points then offering solutions. Customers love vendors that do their homework and deliver pain relief. In this article we will uncover the power of the 10-K and how to use it effectively.

Why The 10-K is a Gold Mine

The best tool for uncovering pain points is the 10-K.  So much useful information is packed inside it’s amazing they are available for free. Don’t believe the hype that a 10-K can only be understood by an accountant. It takes practice to extract the Gold nuggets but here are some tips to help jump-start the process.

Find the section labeled ‘Item 1A. Risk Factors’ sometimes called ‘Business Risk’. This is where risks are disclosed that may negatively impact the business. Companies with lingering problems don’t prosper. As you read this section remember that every threat has been validated and is well known to senior management.

TIP: Wordle is a great utility to quickly summarize the text from ‘Risk Factors’. The biggest words often lead directly to qualified opportunities.

For example here is a section from the Mastercard 10-K describing the risks from cryptocurrencies:

Mastercard 10-K

Mastercard is nervous about new, de-centralized systems hurting their proprietary payment network. If you sell cryptocurrency products you’ve just found a potential lead with justification why Mastercard should take your call. Position yourself as a trusted advisor to educate on the positive benefits of cryptocurrencies that enhance, not threaten the existing platform.

FORE is a Power Tool

FORE stands for Friction, Opacity, Risk and Expense. Try searching for keywords that indicate friction with customers or suppliers using terms like ‘speed’, ‘slow’ etc. Look for statements that indicate moving slower than desired. All companies strive to reduce friction because it wastes valuable time and impacts customer satisfaction.

TIP: Use Excel to capture risks from the 10-K and automatically generate the FORE analysis.

Again from the Mastercard 10-K, searching for “slow” raises an interesting nugget:

Mastercard 10-K

The “merchant acceptance growth” rate is a vulnerability that might be addressed with better technology or improved marketing services. Next, search for terms relating to Opacity using keywords like “clear” or “unclear”. Opacity is another way of saying a lack of visibility or accountability into a critical area. Business Analytics and big-data products are a direct examples of tools that bring greater visibility. Expense and Risk are self-explanatory and can be searched directly.

Executive Compensation Influences Priorities

Ok, we’ve found a number of pain points, the next step is to target a C-level executive. Wouldn’t it be great to have inside information on what really motivates the CIOs buying decisions ? Luckily the DEF14A provides detailed data on executive compensation, a veritable blueprint to unlock the forces influencing buyer behavior.

For example, a CIO might have a significant portion of their compensation tied to cost-cutting one year but supporting new revenue the next. In either case spending priorities will be heavily influenced by the CIOs compensation targets.

Conclusion

The art of mining the 10-K for lucrative opportunities takes time to master but pays huge benefits. There are many more tips I’ll cover in future posts including ways to automate the risk analysis using Excel. Contact me if you want to learn more about these techniques.

Sample 10-K Reports:

Wal-Mart Stores

Exxon Mobil

Chevron

Berkshire Hathaway

Apple

Sample DEF14A Reports:

IBM

Google