Integron_CFO_Practical_Guide_version2.pptx

nice presentation for sales people,
it learns a general strategy to negotiate with Financial managers and decision makers

1. Loss Prevention Executives Winning Over the CFO A Practical Guide for

2. Introduction Loss prevention executives know they must make radical changes over the next couple of years to effectively reduce shrink. In 2014 alone, US retailers lost more than $44 billion due to shoplifting, organized retail crime, employee theft, vendor fraud, and other causes (Grannis Allen, 2015*). While this is already a gigantic number, it does not account for lost sales due to stolen merchandise no longer available to be sold. In addition, today’s customers expect a seamless experience within all omni-channel segments — forcing retailers to buckle down on loss prevention and inventory management. To accomplish this, it will take a holistic, company-wide loss prevention strategy including intelligent, cutting-edge technology that provides analytics and integration with current business applications to gain a competitive advantage. And even though many loss prevention budgets have not increased over prior year, a lot of resources are dedicated to technological solutions designed to maximize efficiency for the entire LP team. But for most loss prevention executives, adjusting their shrink-reducing strategy is imminent and in order to do so successfully, getting the CFO and other senior executives on board is paramount. Many find it difficult to either convey the value of a new or slightly adjusted LP strategy, or to make a business case for new loss prevention technology. This resource was designed to help bridge that gap. *Source: Grannis Allen, K. (2015, June 23). Retailers Estimate Shoplifting, Incidents of Fraud Cost $44 Billion in 2014. Retrieved October 1, 2015.

3. How To Use This Guide Understanding the possible objections beforehand affords the LP executive the ability to preemptively address them within the presentation before they arise. This builds credibility and increases the likelihood of a successful meeting. This guide was written with the needs of loss prevention executives in mind. It is designed to be used as a go-to resource when seeking capital to fund new LP initiatives. Among other things, this guide will address the language many successful LP executives stated they use to gain a CFO’s trust, as well as the trust of other key executives. This guide will also help LP executives customize their presentations with unique company information, data, and perspective. CFO’s are highly analytical and data-driven, so it’s important to present information in that format. According to many accomplished LP executives, it is vital to have an understanding of the CFO’s objectives and to anticipate any possible objections prior to delivering the presentation.

4. CFO Pressures & Concerns • Stakeholder value (stock or other measurement of value) • Business Performance • Profits/Margins Understanding other people’s perspectives is the foundational key to a successful negotiation, and asking senior company executives to invest in LP initiatives is just that — a negotiation. A famous philosopher once said, “There are no facts, only interpretations.” This quote speaks to the importance of understanding the perspectives of the CFO and other executives before asking for the investment. In order to persuade the CFO and other executives that the new LP solution has value, it is crucial to understand their perspectives and structure the presentation within that framework. The world of a CFO revolves around: • Growth Strategies • Return on Investment • Cutting costs/controlling spending The goal is to prove that the LP initiative for which funding is being requested will provide a solid return on investment, break even within an acceptable time frame, and will contribute more to the company’s bottom line than the strategy or tool currently being utilized. CFOs and other executives are typically analytical, data-driven people who are always looking for attributable, predictable, and efficient ways to add to the bottom line.

5. Finding Common Ground

6. Speaking The Same Language In order to earn the support of a CFO or other executives, it helps to speak their “language.” When presenting information, avoid using lingo considered to be more technical or specific to the loss prevention field. Doing so may cause the presenter to lose his or her audience. Everything said must instantly be attributable to what the CFO and other executives care about most: the future and value of the company. Therefore, by explaining how this new LP initiative can increase profit margins through a 10% reduction in shrink or how customer counting can help store managers reduce labor costs by using the data to make better staffing plans, support from senior executives for obtaining capital becomes much easier. Successful LP executives often follow three basic rules when presenting to a CFO or other senior executives: • Explain the value of the loss prevention strategy or initiative using financial languag e , • Speak about high-level strategies rather than technicalities and • Be comfortable enough to discuss the 30,000 feet goals and metric s . Failure to connect loss prevention strategy and tactics with the company’s high-level business goals will cause credibility to be lost and will significantly decrease the chances of obtaining capital funding. Identifying the metrics and goals the CFO truly cares about and directly attributing efforts accordingly is the key to winning the negotiation.

7. Using “Finance” To Explain LP A best practice is to give a CFO what he or she needs to know right up front. At the end of the day, executives do not need to understand the technicalities of why LP system A is better than LP System B. Senior executives tend to trust the LP executive’s expertise in that regard. What senior executives need to know is — does it make financial sense? Here are some key concepts most successful LP executives are familiar with: Return on Investment (ROI) This is arguably the most important metric CFO’s care about: Will the investment be recouped, and when? There are two ways of approaching ROI: - Non-compounding ROI (straight break-even). A simple ROI (expressed in %) is calculated by Net Profit / Investment X 100. Once an ROI of 0% is reached (meaning your net profits equal your investments), you break even. The rule of thumb is to find a high-quality, yet affordable LP solution that can achieve a break- even point that is acceptable to the company. The profitable returns begin immediately after the break- even point. - Compounding Return: The compounding return refers to the rate of return the proposed LP initiative or solution earns over time as a cumulative effect on an original amount. This is usually expressed in a percentage and in annual terms can be referred to as a compound annual growth rate (CAGR).

8. Using “Finance” To Explain LP (cont.) Funding for the new LP initiative or solution will come from one of two financial categories: Capital Expenditure (CAPEX) or Operating Expenditure (OPEX). Capital Investment or Capital Expenditure (CAPEX) Capital expenditures, or CAPEX, are funds used by companies to either purchase fixed assets or upgrade assets already owned in order to maintain or improve their operations. Generally speaking, the lifespan of the fixed asset must extend beyond the taxable year in order to be classified as a capital expenditure. An example of a capital expenditure would include adding or upgrading EAS systems in stores to reduce shrink. Operating Costs or Operating Expense (OPEX) Operating Expenditures, or OPEX, are funds used for running the day-to-day operations of the stores. They are used to pay for two types of costs: • Fixed Costs: Costs that generally remain the same, such as rent and other overhead expenses. • Variable Costs: Costs that vary according to how much merchandise is sold, such as inventory, marketing and shipping.

9. Handling C-Level Objections Seasoned LP executives know that when attempting to acquire funding for a new LP initiative or solution, they must be prepared to answer some very tough questions. Their recommended best practice for preparing is to consult others within the company who have had experience going through the same capital request or budgetary process. Often times coworkers will share the objections or tough questions that were previously asked of them. Use that knowledge to anticipate the most common scenarios, then practice a viable response. In an effort to demonstrate the level of preparedness successful LP executives stated they have before asking for budget allocations or capital, we’ve compiled some common questions and objections, along with sample responses. In this scenario, we will assume the LP executive is requesting approval to install latest EAS system technology with overhead antenna & compined RF/ RFID cabability: • Will you be implementing this in all stores, and what will be the return on investment? • What are the operating costs? • I don’t want to burden the store employees. They have enough to do!

10. Handling C-Level Objections (cont’d) • We have other priorities right now. Maybe next year! • That sounds like a huge operation! We don’t have capacity for that right now. • Can we test this first? • Investing in this will temporarily increase inventory levels. • This LP solution will NOT improve sales. • This LP solution requires additional hardware and capital expenditures.

11. Handling C-Level Objections (cont’d) Q: Will you be implementing this in all stores, and what will be the return on investment? A: “ We used return on investment calculations available based on decades of experience that can predict the amount of shrink reduction to be expected from this particular LP solution. In addition, we assessed the risk levels of each and every store based upon crime index, shrink history, average employee tenure and the percentage of high-risk merchandise they carry. This categorization process will allow us to appropriately equip the stores according to the level of protection needed. In other words, we will only implement this EAS system with RFID technology in the medium-to-high risk stores this year, then make a separate plan for a full rollout in later months. This will ensure we obtain a return on our investment within the fiscal year.” Q: What are the operating costs? A. “Rather than continuing down the path of standard EAS, RFID EAS system is much more intelligent. It will allow us to use the EAS system as more than just a deterrent to theft, as it provides Retail Analytics . However, any slight increase in costs when compared to our current LP solution will be more than covered by the increase in sales we will realize due to having product on the shelf as a result of the reduction of theft, as well as the added benefits of RFID technology. Therefore, this LP solution is well-suited to ensure we reach our break-even point within the first 10 months of the fiscal year.”

12. Handling C-Level Objections (cont’d) Q: I don’t want to burden the store employees. They have enough to do! A: “Currently, our employees have to manually test the current LP solution and they are distracted by too many false positives (insert ratio or other metric if available). By investing in more comprehensive technology like Electronic shelf labels (ESL) , not only can we reduce and reallocate store labor, but we will eliminate the false positives that cause poor customer experiences. In addition, the Retail Analytics will give us insight into a range of topics that influence our bottom line. We can monitor and analyze our visitor numbers, dwell time, staffing levels, labor planning, and even the energy consumption in each store. Q: We have other priorities right now. Maybe next year! A: “We understand that one of the biggest challenges of any senior executive is how to justify spending capital on an LP solution, especially when shrink has improved over prior years. However, it is important to note that this LP solution doesn’t only reduce shrink. It also reduces labor, provides crucial insight into what is being stolen so we can ensure proper replenishment immediately, and provides a wealth of other analytics that can be used by operations, marketing, and Loss Prevention. Since all of these areas are priorities for us, it is imperative to integrate this LP solution. By reducing theft, we will decrease turnover, increase average transaction size, and increase same store sales over last year. With this improved in-stock position, customer satisfaction will undoubtedly improve.”

13. Handling C-Level Objections (cont’d) Q: That sounds like a huge operation! We don’t have capacity for that right now. A: “ We have partnered with a professional vendor who specializes in implementing the Nedap !Sense RF EAS system. In order to ensure this LP solution will be professionally installed without disrupting our stores’ operations, this vendor partner has surveyed each location in advance, spoke to each manager to assure them there will be no disruption, and even agreed to train all employees so management wouldn’t have to incur additional labor. In addition, this LP solution will be diligently maintained by this certified vendor partner with no required store labor on our side going forward. As a result, our current capacity will be unscathed.” Q: Can we test this first? A: “ Yes, we already conducted a 6 month trial on our new store in Main City, USA. We were able to decrease the shrink at this store by 22 basis points within this short period of time. Considering the full cost for this LP solution, our break-even point will be reached in 10 months or less.”

14. Handling C-Level Objections (cont’d) Q: Investing in this will temporarily increase inventory levels. A: “ While it is true that implementing this LP solution may temporarily increase inventory levels beyond the current state, our roll-out plan is paced in a way in which we will not incur large scale costs within just one fiscal period. We will spread these costs over several periods. Also, any increase in inventory can be managed by reallocating product through stock balance transfers or extending clearance sales. After the first round of merchandise is worked through, the reduced levels of inventory will come to fruition, leaving us with the right stock in the right place.” Q: This LP solution will NOT improve sales. A: “ While sales might not be significantly affected by this LP solution immediately, there are enough white-paper studies that indicate we can expect a subtle but steady sales increase over time. Additionally, our sales team has partnered with us to create the best approach for implementing this RF EAS system with RFID capability in a way that helps reduce the amount of inventory in the stockroom and ensures it is on the shelf, thereby increasing the likelihood of increasing sales.”

15. Handling C-Level Objections (cont’d) Q: This LP solution requires additional hardware and capital expenditures. A: “It is true that with any EAS system, there are hardware purchase requirements; however, the increase in sales, shrink reduction, and labor savings alone will more than compensate for the needed capital in just a few short months. And remember, the warranty that comes with this LP solution will eliminate the ongoing expenses we are incurring by servicing and maintaining the current near-obsolete LP solution this will replace. A RFID upgrade is cost-effective and relatively simple solution for future proofing your investment. ”

16. Next Steps - Build the Business Case 1. Be prepared to first discuss the current situation the new LP solution will solve, or the existing solution being replaced. 2. Explain the benefits of the new LP solution and how it will solve the dilemma that currently exists. 3. Explain the plan of how the LP solution will be implemented as it relates to needed resources, including implementation time frame. 4. Be prepared to discuss the Return on Investment in terms of break-even point and go-forward financial benefits. Now that we shared the best practices of how some successful LP executive’s stated they win over their respective CFOs and senior executives, it’s time to share their comments on how they go about building the business case for needing new capital:

17. About Integron About Integron store At Integron store we work hardly to deliver industry-leading products, services and solutions for our customers’ diverse needs in loss prevention and stock management . Our inventive thinking and collaborative spirit allows us to deliver tailor-made solutions for the fast paced retail sector. We simplify retail management while improving your customers’ shopping experience. By taking most recurring tasks off your hands, we create time for you to devote to your customers. And that is what retail is all about. Whether you run a small local store or a large international chain, you will benefit from our broad range of products, ideas and services. Integron solutions are built upon more than 1 years of retail experience, market expertise and close cooperation with leading retailers. Our operations are supported by a flexible network of different vendors across the globe. Integron solutions are future-proof , highly reliable, cost-efficient and eco-friendly. Our mission is simply to make sure your customers maintain the best shopping experience whilst we help you protect your profits. Our philosophy: "your store - our store."

18. About Integron (cont’d) Our culture Integron has an open, creative and innovation-oriented culture. Our division is market-driven and focuses strongly on seeking latest proven technologies . We foster an entrepreneurial spirit, an inspiring learning environment and space for personal development. Integron Goal Integron ’s long-term goal is to create a sustainable added value relationship with its clients , Where work with Integron really makes practical benefits to its clients .