How to Use a 10k Report to Find a Company’s Pain Points

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What exactly are customer pain points, and why are they important when writing a personalized, cold email?

Customer pain points are a specific issue or challenge that the prospect is facing in their business.

As an example, the pain points a CFO might exhibit include the need to increase profit margins, reduce expenses, and improve overall financial health of the company. To solve for this, the CFO might look for cost-cutting solutions or new revenue streams. This potential customer might be unusually willing to take a call with a sales rep selling a cost-saving solution, or one that boosts revenue.

By finding and addressing these pain points, you can personalize your sales pitch and better address the needs of your potential customers.

What's a 10k, and how is it relevant to B2B sales prospecting?

10k reports are filed with the Securities and Exchange Commission (SEC) every year by publicly-traded companies. These reports contain a wealth of information and customer data, including a company's financial statements, management's discussion and analysis of the business, and risk factors.

There's a wealth of information in the management's discussion and analysis portion of a financial report. Why? Because this is where the company discusses its current financial position, business strategy, and any potential challenges it's facing. Oftentimes, this is where you'll find the most "meat" on what a company is actually struggling with, initiatives they have planned, and potential pain points they're struggling with (like pressure from a competitor, getting traction on a new product, or shifts in the industry).

Most sales teams only focus on finding pain points that are common to most customers, but this leaves a lot of potential business opportunities on the table.

While most people think of 10k reports as being dry and boring, they can actually be quite helpful in finding a company's pain points. This targeted approach will not only show the prospect that you have a deep understanding of their business, but it will also increase your chances of closing a deal. Trends from a 10k are also fantastic for incorporating into cold sales emails to drive personalization and relevance.

Review the "Management's Discussion & Analysis"

The best place to look for pain points is in management's discussion and analysis (MD&A). This section provides insights into how management views the business and what they believe are the biggest challenges facing the company. Pay close attention to any negative language or pessimistic tone in this section. This could be an indication that management is worried about something and is trying to prepare investors for potential bad news down the road.

Here are 5 common trends you might find in the Management's Discussion & Analysis section of a financial report, and how to incorporate them into your sales pitch.

  1. New product development or expansion into new markets: indicates a focus on growth and innovation. This can be interpreted as "offensive" (the company is doing well and might be using healthy revenue streams to finance a new product, faster than the competition is able to) or "defensive" (the company is losing in a category and needs to pivot to stay competitive).
  2. Negative industry trends or competition: indicates potential pain points the company expects to experience, to the extent they're obliged to disclose those potential harmful trends to their stakeholders. Prospecting angles could include offering cost-saving measures, suggesting ways of streamlining the sales cycle or boosting retention, etc.
  3. Increasing expenses or operating costs: indicates potential pain points the company is currently experiencing, and suggests avenues for cost-cutting measures or increasing efficiency. Prospecting angles could include offering solutions for cost reduction, automation of processes, etc.
  4. Changes in leadership or management structure: indicates potential shifts or challenges in company culture and internal dynamics, suggesting avenues for leadership training or team building efforts. Prospecting angles could include offering solutions for improving communication and collaboration within the organization.
  5. Acquisition or divestiture of assets or subsidiaries: indicates potential growth or diversification initiatives, suggesting avenues for consulting or training in integrating new teams or streamlining operations. Prospecting angles could include offering solutions for smooth transitions and maximizing value from new assets or divested entities.

Look for Red Flags in the Financial Statements

The first place to look for a company's pain points is in the financial statements. In particular, you should look at the income statement and balance sheet. Are there any red flags that jump out at you? For example, has the company's revenue been declining over the past few years? Or maybe the company has a lot of debt on its balance sheet. These could be signs that the company is in trouble and might be struggling to find new customers or increase sales.

Here is a list of 10 red flags in a company's financial statements that you can use to build your case around pain points the business might be experiencing.

  1. Declining revenue: this key financial pain point might indicate high churn in sales or marketing, strength from competition, or perhaps their customers are tightening spending
  2. Declining profits: similar causes of declining revenue, but could also be tied to an increase in expenses.
  3. Negative cash flow: company is spending more cash than it's taking in.
  4. Increasing debt levels: company is borrowing money to finance their initiatives. They'll have to have some revenue stream to service that debt, which can be a risky business if they default. This could mean they're betting on an initiative that has to succeed.
  5. Decreasing asset values: indicates the company is in trouble and might need a new way of streamlining the delivery of their product, their sales operations, or R&D.
  6. Unpaid bills or invoices: indicates the company is struggling to keep up with its expenses or having troubles making sales. Could be due to issues around marketing conversion, sales churn, delays in product development, etc.
  7. Lawsuits or pending litigation: indicates possible trouble with the company's reputation, management, or products/services.
  8. Poor customer satisfaction ratings: indicates potential issues with the company's product or customer support function, which and needs to be addressed in order for long-term success. When reaching out to a prospect, mentioning things their competition is doing well or poorly is a fantastic way of showing you've done your research, and that you might have creative ways of helping the prospect better deliver value against their competitors. A great prospect pain point to target for any sales teams selling a solution around the customer journey.
  9. High turnover rate: indicates potential issues with management, company culture, or job satisfaction and could lead to difficulties attracting and retaining talent.
  10. Reduction in workforce or layoffs announced: indicates potential financial struggles or the need to cut costs. Culture is often hit hard, and pressure commonly shifts to sales & marketing to deliver upsells and net new clients with speed.

Content marketing teams should also get feedback from their sales teams on which pain points (uncovered in financial statements) tend to resonate most closely with prospects. This can be a great way to better align marketing collateral with common customer pain points.

Identify Risk Factors

Finally, take a look at the risk factors section of the 10k report. This is where companies are required to disclose any risks that could potentially have a negative impact on the business. For example, maybe the company is heavily dependent on one customer or supplier. Or maybe there's a new competitor that poses a threat to the business. Often times, the most impactful risk factors tend to be tied to loss of market share, a degrading customer experience, or inefficiencies tied to the sales process.

These are just some of the potential risks that could be included in this section. By identifying them, you can get a better understanding of what might be keeping management up at night.

Don't overlook the value of 10k reports in your prospecting efforts. They can give you important information to inform and improve your strategy.

Daniel Wiener

Oracle and USC Alum, Building the ChatGPT for Sales.