ERA Global FT Master workbook v3

Foundation Training Client Engagement Process Prep 4: Discovery meeting convincing and confirming Task 1. List three questions or concerns (about working with ERA) you think the client many have (at this stage) and write down an answer for each. Notes Question Your answer © Expense Reduction Analysts 2020 – All Rights Reserved. Page 101

Foundation Training Client Engagement Process Prep 5: Discovery meeting convincing and confirming VIP = Value Improvement Point Task 1. Make notes on how you will summarise the client’s cost areas and ask for a second meeting. 2. Be sure to explain the benefits of the meeting, what will happen or what you will do before this and confirm a date and time. Notes © Expense Reduction Analysts 2020 – All Rights Reserved. Page 102

Foundation Training Client Engagement Process Prep 6: The big two questions to answer In the first meeting you have overcome two major questions the client will be thinking: 1. Now is not a good time to do this project with ERA 2. We can probably do this ourselves, using our finance and procurement teams. Even if they do not say it, they might think it or someone else in the business will tell them this. Task Make notes on what you can ask them, say or present during the first meeting to answer these two questions? - Why now is the best time? - Why they cannot do what we do themselves? Notes © Expense Reduction Analysts 2020 – All Rights Reserved. Page 103

Foundation Training Client Engagement Process Structured questioning and listening techniques Open Types of Closed question High impact • Speculate • Evaluate • React TED • Tell me • Explain • Describe Key points 1. Short clean questions 2. Active listening 3. Answering customer questions – FAQ’s Short clean questions The based questions short, simple, direct and easy to understand. Do not explain or over talk them. There are four types of questions: general or yes/no questions, special questions using wh- words, choice questions, and disjunctive or tag/tail questions. Closed or Yes/No Questions Common questions that can be answered with a simple “yes” or “no” are logically called yes/no questions. As a rule, this kind of question relates to the whole sentence, and not to a separate element of it. • Are your free to talk now? • Can I sit here? • Can I help you? © Expense Reduction Analysts 2020 – All Rights Reserved. Page 104

Foundation Training Client Engagement Process To ask such general questions, the appropriate rising intonation should be used at the end of the sentence. The answer can be a brief “yes” or “no.” Or, a longer answer can be given. Open or Wh-Questions Open questions, as you can guess, uses a certain word at the beginning of the sentence. The questions words who, what, where, when, why, how, how many, etc., are used to begin the question: • What is the problem exactly? • How can I help you today? • What is your full address? Note that questions about a subject (who? what?) have their own special structure; they do not require an auxiliary verb, we replace the subject with the question word. We use special questions to get specific information. This implies that the answer will be more detailed. Multiple Choice Questions Choice questions are questions that offer a choice of several options as an answer. They can help customers make decisions faster and save time. • Do you want to hold or can call you back? • Do you want the super or standard? • Is Monday or Tuesday better for you? TED Questions This type of question probes or encourages more information. For example: • Tell me more about what happened • Please explain in more detail or give me an example • Describe in more detail Developing problems and opportunities Questions that create opportunities Exploring needs is a process of uncovering the gaps between a customer’s perception of his or her present state of affairs and his or her desired state of affairs. In other words: • Where is the customer’s organisation now? • Where does he or she want it to be? This can be thought of as a physical gap. A need is defined on the gap between the customer’s present state and desired state. Customers have a wide range of needs, but any of them can be classified into two broad categories. These are needs related to: © Expense Reduction Analysts 2020 – All Rights Reserved. Page 105

Foundation Training Client Engagement Process • increasing something • decreasing something Defining the Gap Not every customer has explicitly defined the gap between his or her present state and desired state. Defining the gap requires converting vaguely defined problems into clear statements of need. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 106

Foundation Training Client Engagement Process Exploring Consequences and Payoffs Exploring needs with a customer helps you uncover potential problems by identifying gaps between a present state and a desired state. Similarly, exploring consequences and payoffs is intended to heighten the customer’s interest in taking action by sharpening his or her perception of the gap between the present state and the desired state. The strategy is linked to the three driving principles. Principle Implication Focus on the customer Asking customers about consequences and payoffs forces you to focus on their situations rather than on your organisation’s services Earn the right to advance Exploring consequences and payoffs puts you in a problem- solving mode, not a “sales pitch” mode. Persuade through Having customers discuss consequences and payoffs builds involvement their conviction about the urgency and importance of their needs. Exploring consequences and payoffs entails performing three steps: 1. Choosing a gap to explore between the present and desired states 2. Helping the customer link to the gap to consequences 3. Exploring the payoffs of closing the gap Widen the gap by exploring consequences Present Desired state state © Expense Reduction Analysts 2020 – All Rights Reserved. Page 107

Foundation Training Client Engagement Process Exploring consequences Bridge the gap by exploring payoffs Present Gap Desired State State Widen the Gap by Exploring Consequences Step 1: Choose a Gap to Explore In choosing a gap to explore, select one for which your organisation’s services might provide a solution. To review, a gap is the difference between the present state and the desired state. A gap can represent a need to: • Increase something • Decrease something In your questioning, you might uncover gaps for which you have no solution. Therefore, it is important to continue listening and questioning until you uncover a gap that you – after further exploration with the customer – may be able to help close. Step 2: Link the Gap to Consequences Once you have discovered a gap to explore, ask high-gain questions to determine the consequences of the gap for the customer’s organisation or them personally. The following are some potential consequence areas that you might explore when linking gaps to consequences: • Cost – financial impact, profitability © Expense Reduction Analysts 2020 – All Rights Reserved. Page 108

Foundation Training Client Engagement Process • Quality – both customer perceptions or expectations of quality and the degree to which your product or service conforms to them • Reliability – how well the product or service performs each time used • Personal/political compact – what the effect will be on the customer’s performance or on his or her career • Productivity – the amount and level of work output By discussing the consequences of the gap, the gap appears larger, which prompts the customer to take action. The reason for exploring consequences is simple: small gaps generate little interest in taking action; large gaps generate greater interest in taking action. When you widen the gap, you increase the customer’s sense that it is urgent to take action. Step 3: Explore need-payoffs and value Once you have determined the consequences of a gap, the next step is to explore the payoffs of taking action to close the gap. You should ask the customer high-gain questions about payoffs that result in his or her identifying the benefits of taking action. Remember the acronym SPIN – Situation, Problem, Implication, Need-payoff or value Not every customer has explicitly defined the gap between his or her present state and desired state. Defining the gap requires converting vaguely defined problems into clear statements of need. The more concrete and explicit the statement, the more likely the customer is to recognise the need to take action. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 109

Foundation Training Client Engagement Process High-gain or high-impact questions High-impact questions maximise the sales call by returning high-value information in an efficient amount of time. High impact questions High-impact questions require customers to think, organise information, and search for new meanings to existing information before responding. They ask customers to: 1. evaluate or analyse 2. speculate 3. express feelings 4. react The result is the type of information you might hear if you were to attend a customer’s problem-solving or planning session. Good high-impact questions make customers say: “…I don’t know. I never thought about that.’’ “Hmm…I never put those ideas together that way before.” Criteria High-impact questions should be: • brief and clear • open-ended • phrased to require a thoughtful answer • relevant to the customer’s situation and position Benefits Using high-impact questions in sales calls has several benefits to you. High-impact questions are likely to: • involve the customer by requiring him or her to think • increase the amount of time that customers talk • provide new insights into problems • produce high-quality information • expose underlying issues • result in people being seen as perceptive professionals and consultants • cause the customer to believe that the meeting was valuable © Expense Reduction Analysts 2020 – All Rights Reserved. Page 110

Foundation Training Client Engagement Process Comparison to open ended questions Open-ended questions invite customers to respond with more than a yes or no answer. However, open-ended questions may elicit factual information that easily could be found in files, annual reports, or organisational charts. Customers who enjoy talking about their organisations or themselves may respond willingly to open-ended questions for a while, since it allows them to talk. However, such conversation usually does not require customers to engage in high-level thinking, nor is it likely to produce any new insights of value for them. Tips on High-Impact Questions Prepare high-impact questions to use with a customer as part of your client engagement process. Once in front of a customer, you may use these prepared questions or devise others spontaneously in response to points the customer has raised. Encourage the customer High-impact questions are tough to answer. If you do not encourage while questioning, the customer may feel interrogated. By encouraging frequently, you can take the edge of your high-impact questions and make the section more conversational. Skill-building tasks for consulting – needs analysis • Make a list of short, clear and need-development questions, including high-impact questions. • Practice asking questions to probe further into implications and the value of solving any problems. • Develop active listening and empathy skills. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 111

Foundation Training Client Engagement Process ERA First Meeting Question Examples (not in order or sequence) Question Comments, variations What was it that led you to see me today? How do you ensure you get the best price and service from your suppliers now? Have you ever worked with a cost-reduction company before? What are the trends around sales / income in your business? What are the 3-4 cost areas or categories that are increasing the most? What have tried or are planning to save money and reduce costs? Who else is involved or responsible or margin and EBITDA in the business? If you were to research potential savings, when be good time to start? What categories Are margins going up, down or staying the same? …and costs? Without giving away secrets, where is the profit in your business? Are banking, insurance, and professional services fees a significant outcome category? © Expense Reduction Analysts 2020 – All Rights Reserved. Page 112

Foundation Training Client Engagement Process If we could find savings What would sort of saving % would be a realistic target? What are you doing today to manage and reduce costs? What 3-4 cost or budget categories do you feel have the best potential for cost- reduction? What is your current approach to margin improvement? How do your procurement or supplier management functions work? And do they approach taking cost out of the business every year? What are 3-4 biggest challenges your business faces in the next 12 months? How long have are you contracted with your main utilities? © Expense Reduction Analysts 2020 – All Rights Reserved. Page 113

Foundation Training Client Engagement Process Ask simple to understand questions but difficult to answer General Why did you accept to have this meeting? Where is the profit made in your business? How do you make money? You said (or better: my analysis shows that...) you've been very successful (or very unsuccessful) in the development of the business A, B or C. • Could you tell me more about this? What is your definition of performance, of success? What's the impact of Covid-19 / Brexit (or any other tough subject) on your business? How and when do you envisage the growth phase, the recovery? • What immediate decisions have you made? • What are the expected results? • What are the lessons learnt? How do you see the sales/business opportunities in the next two years? Where is the opportunity to increase profitability? Where do you see your business in 3/5 years? What have you done in the past to reduce your costs? What programs, initiatives you are running today? And a few more If you had more cash, what would you do? What would be your ideas for the future? What’s the attitude of your Chairman, your shareholders if costs continue to rise? What kind of transformation would be needed into your business if you would have to go for cost-killing? \"Remember to build relationship and trust and NOT make the prospect feel guilty and not to be a salesperson... make him or her come to the conclusion that he/she needs you\" © Expense Reduction Analysts 2020 – All Rights Reserved. Page 114

Foundation Training Client Engagement Process Five key How do you get best price and performance questions - from suppliers now examples Current cost-reduction programs and plans How important is cost-reduction long-term Three or four secondary cost areas we could look at Who else would be involved if this project went ahead © Expense Reduction Analysts 2020 – All Rights Reserved. Page 115

Foundation Training Client Engagement Process Question examples Entering the topic of cost reduction 1. What was the last time you looked in detail at your energy costs? 2. What would be the impact of a price increase trend? 3. How will it affect your business and your profitability? 4. Please explain to me more in detail what you did to monitor your costs? 5. What do you think about costs management? 6. Could you tell me more about the link between your costs and your strategy? 7. What are the 3 or 4 cost areas increasing the most this year? 8. What are the top 3 to 5 categories for which you would like to reduce your costs? 9. What is your opinion on your current supplier? 10. Have you ever worked with an expense reduction company? 11. How can you be sure you get the best price from your supplier? 12. What is the hardest secondary cost to reduce? A few more \"What 2 or 3 ideas do you or your team have to reduce costs in the next 12 months?\" \"Which are the most challenging cost categories to get the best value from. - time and effort?\" \"If I can guarantee to make worthwhile savings on a range of cost areas, without any of your time, when would be a good to start?\" Discovery Discovery and qualification meeting questions questioning plan Business challenges – confirming and expanding Current approach to cost management/profit improvement Possible areas of improvement and value improvement © Expense Reduction Analysts 2020 – All Rights Reserved. Page 116

Foundation Training Client Engagement Process Day Four Review of CEL Presenting your solution Day four Closing for a second meeting Introduction to ten step methodology © Expense Reduction Analysts 2020 – All Rights Reserved. Page 117

Foundation Training Client Engagement Process The CEL The technical 50/50 savings aspects of the 24-month term CEL Advanced payment Target savings Cost category Start date Input time ERA - 3 (CEL/terms) Agree categories and targets ERA paid from savings 24-36 month term Supplier choice is yours Minimum time from you Advance, cancellation, add-ons © Expense Reduction Analysts 2020 – All Rights Reserved. Page 118

Foundation Training Client Engagement Process CEL Quiz Twenty questions you should know the answer to. 1. What does CEL stand for? 2. When do you present it to the client? 3. Does the client need to get it approved by a legal specialist? 4. How long is the term of the contract? 5. What is the situation if the client chooses to cancel the CEL part way through? 6. If the client changes a supplier or makes savings themselves, do they still pay ERA a fee? 7. How is the ERA fee calculated? 8. What happens if the company is taken over or sold during the term of the contract? 9. Can the client add categories to the CEL part way through? 10. Is there a cancellation fee payable if the client cancels between the option report being accepted and implementation starting? 11. How long after an invoice is payment due? 12. What is the definition of a ‘reference price’? 13. Is there a confidentiality clause in the agreement? 14. What is a situation report? 15. What is an options report? 16. Which is produced first? 17. What is a performance report? 18. How much is the advanced payment? 19. How much is payable if no savings are found? 20. What happens if ERA cannot find the expected savings entered in column three of the Schedule of Work in the CEL? © Expense Reduction Analysts 2020 – All Rights Reserved. Page 119

Foundation Training Client Engagement Process Client Convincing skills Convincing and Presenting Skills • How we present to the client • The final impact statement • Conducting a second meeting • Objection handling • Staying firm on the CEL • Gaining commitment • Transitioning into the project and if not signed the follow up • Bridge from the CEL to the options report Learning Outcomes: • How to structure and conduct a second meeting • Presenting ERA’s Value Through Insight • Handling Objections and Concerns Preparing for a second meeting Suggested agenda 1. Introductions and objectives 2. Recap of first meeting 3. Presenting the project options a. Gold b. Silver c. Bronze 4. Projected savings and linking to VIPs and benefits 5. ERA CEL presentation / walk through 6. Questions and concerns 7. Ask for agreement and next steps Common FAQ’s that new consultants ask 1. How long after a first meeting is best? 2. Who should attend? 3. Will I get the CEL signed on the day? 4. What can I change or negotiate on the CEL? © Expense Reduction Analysts 2020 – All Rights Reserved. Page 120

Foundation Training Client Engagement Process Success planning Task Whilst this might vary depending on the client or industry type, make a checklist or process map for the second meeting. This might include: 1. Data to collect and analyse 2. Information to prepare 3. Facts to check 4. Things to do 5. What you should take with you Notes © Expense Reduction Analysts 2020 – All Rights Reserved. Page 121

Foundation Training Client Engagement Process Presenting the CEL Write down how you will present, explain, and position each of these aspects of the CEL. Key point Notes 50/50 share of savings 24-month term Advanced payment Target savings (successful expectation) Cost category Project start date Input and involvement by the client’s organisation © Expense Reduction Analysts 2020 – All Rights Reserved. Page 122

Foundation Training Client Engagement Process Presenting the project options Task Following the first meeting, you have identified a number of potential savings areas. These saving are VIPs with the following benefits: 1. Impose more control across the business with regards to spending by managers 2. Free up cash to reduce overdraft and short-term bank borrowing and charges 3. Divert money (long-term) to invest in new equipment and refurbishment Cost categories highlighted for possible saving include: Office supplies, vehicle maintenance, packaging and warehouse supplies, credit card fees, electricity, water, cleaning, health and safety equipment, travel (train, hotel and air travel), printing and advertising. Now group these into three option categories as follows: Option one • Small number of categories, perhaps lower in value, maybe quick wins. • Also, least involvement and time from client • The least disruption or change of suppliers or process. Option two • Medium value and larger number of categories, but some significant savings achievable in the short to medium term. Option three • Higher value categories and more of them at once. Categories are more complex and may involve changes to suppliers, organisation and process. However, more time needed from client. • Major savings potential. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 123

Foundation Training Client Engagement Process Case study: Projected savings and linking to VIPs and benefits Task Prepare a short presentation that highlights how ERA can help the client. Make up information as you need to. The goals of any cost-reduction program are to: 1. Impose more control with regards to spending by managers 2. Free-up cash to reduce overdraft and short-term bank borrowing and charges 3. Divert money (long-term) to invest in new equipment and refurbishment Perhaps recap the summaries the four-step methodology. Also anticipate and answer the following questions and concerns 1. We do not want to change suppliers in some cases 2. What happens if we make savings ourselves during the 24 months? 3. Can you guarantee that quality or service will not slip or be worse as result of lower cost options? 4. What happens if we do not like a choice of supplier? Use the following points if this helps Category Annual spend Target or projected saving over two years Travel costs £1.2m 4% - 6% Printing £800k 8% - 12% Credit card fees £200k 8% - 10% Packaging and warehouse £350k 9% -11% supplies © Expense Reduction Analysts 2020 – All Rights Reserved. Page 124

Foundation Training Client Engagement Process Expense Reduction Analysts Executive Summary for XYZ This proposal summarises recent conversations and gives the reasons why I believe you should proceed with this project as soon as possible, making significant savings, without risk, effort or time on your part. Your objectives To find long-term cost savings in the following expense areas. These savings, whilst initially quite modest, will make a positive contribution to cashflow, profitability and financial control. They are not guaranteed but are understood as a reasonable expectation. Other cost categories can be added. 1. A 2. B 3. C 4. D 5. E Other cost categories can be added as these projects are implemented. What ERA can achieve – initial savings examples ERA work only on a success fee, based on savings achieved. We are confident the following (and greater) savings can be made: Category Est. spend per year Target savings % Net savings 2 years A 50,000 10% 5,000 B 100,000 5% 5,000 C 60,000 10% 6,000 D 94,000 10% 9.400 E 200,000 3% 6,000 The numbers are estimated and will be confirmed within the first phase of the project. The net savings are after ERA fees. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 125

Foundation Training Client Engagement Process Expense Reduction Analysts – how we are different ERA has over 25 years of experience and are considered as global leaders in cost reduction. Our unique four step process and our in-company team of over 700 internal specialist cost consultants combine to create savings without risk, time or effort on your part. The four steps are Analysis Research Implementation Monitoring Defining what you Benchmarking to Implementation of Monthly reporting of spend, when and identify potential supplier choice or supplier to ensure which suppliers savings; present changes. All done by performance and cost-saving options. ERA. savings are achieved No time commitment from your staff Our approach is to work behind the scenes, needing only one or two short online meetings a month. Because we work on a few categories at a time, working remotely and without input needed, your team will not be disrupted, I can guarantee this. We do not charge by the hour, day or monthly retainer. Commercial terms All our work is carried out risk and ‘cost’ free. Instead, we simply share in the savings we find, month by month, as we find them. Most importantly, once we have identified your savings, we monitor the suppliers monthly, saving your staff the job of doing so. Our savings-share fee is 50/50, paid monthly only as savings are realised. We do not charge day rates, a monthly retainer or expenses. Our minimum term of a project is 24 months, which our experience tells us in the time needed to establish cost control and maximise potential savings. Next step We can start work upon agreement of our Customer Engagement Letter (CEL) and payment of a twenty per cent advance payment of estimated savings. This is deductible from actual savings and refundable if target savings are not achievable. These terms are explained in the CEL. This is required because of the considerable amount of work and time taken by our specialist consultants in the initial 4-12 weeks of a project. Also, because savings are normally achieved monthly as purchase are made. I very much hope you choose to partner with ERA, and I look forward to working with you and your colleagues. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 126

Foundation Training Client Engagement Process Questions and concerns Task How will you deal with these comments? 1. We don’t have time for this 2. 50% is too much, competition is only 30% 3. 24 months is too long 4. We have done it/are doing it 5. We don’t use consultants/don’t like consultants 6. I really like this, need to talk this over with …., call me next week 7. I need to think about it / I need to get legal to review this. 8. You don’t know my business 9. Why should I trust you? 10. It’s just about getting better prices, I can do that myself! 11. We have experienced purchasers; they know what they are doing 12. Not interested/don’t need you 13. I could hire somebody for that money 14. We have used Expense Reduction Analysts before, did not like the results 15. You will jeopardize the relationship with our suppliers 16. You will jeopardize the relationship with our suppliers 17. Do you have references in our industry? 18. 10% in the beginning? – “I do not understand what this is!” 19. We have good staff 20. Payment in advance is too much © Expense Reduction Analysts 2020 – All Rights Reserved. Page 127

Foundation Training Client Engagement Process Concerns worksheet Common Concerns and FAQ’s: List three of these here, and where they occur most in the technical analysis process Concern, queries or obstacles Where it occurs Type – early – (Misconception / anytime – close Sceptical / Real to decision drawback / Complaint) © Expense Reduction Analysts 2020 – All Rights Reserved. Page 128

Foundation Training Client Engagement Process Handling concerns worksheet Write down a common concern and make some notes on how you can respond. Concern (write down the actual words used commonly by customer or prospect) Questions to clarify and encourage: How to answer: • If misconception – clarify • If scepticism – prove • Real drawback – show big picture and outweigh with other FAB’s • Real complaint – show action Feel-felt-found summary © Expense Reduction Analysts 2020 – All Rights Reserved. Page 129

Foundation Training Client Engagement Process Ask for agreement: Staying firm on the CEL Task Expect the customer to push-back or try and negotiate some aspect of the CEL. 1. How will you react? 2. What techniques or behaviours can you use to stay firm and yet still gain agreement to proceed? Notes © Expense Reduction Analysts 2020 – All Rights Reserved. Page 130

Foundation Training Client Engagement Process Gaining agreement - guidelines The following will help you close a CEL meeting effectively: Guideline Key Points Summarise Summarise the needs, consequences, and value, and tie them to the benefits your solutions can provide, thus reminding the customer that it is urgent to act and that your solution is appropriate. Be direct Ask for the business. Do not try to manipulate the customer into signing for the business or you will violate the trust built during the sales process. Be concise Make each word count. Wordiness indicates uncertainty and lack of focus. Avoid unnecessary statements that could be misinterpreted. Close with confidence Act as if you expect the customer to buy, using your voice, posture, and choice of words. Establish eye contact and ask, in a friendly way, for the customer’s business. Be silent Once you have delivered your close, wait for an answer and be silent. No matter how good your offer, the customer needs time to accept. Affirm the decision to Affirm the customer’s positive decision. Help the customer feel buy comfortable with his or her decision. Communicate that your concern goes beyond closing the deal. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 131

Foundation Training Client Engagement Process Gaining commitment “Don’t think about closing the sale, thinking about opening a new customer relationship.” The Direct Question Ask a closed question which requires a yes/no answer: \"Would you like to go ahead? \" You may get a no, if so, ask the customer why or what other product he or she would prefer. The Alternative Question Give the customer alternatives from which to choose, e.g. \"Would you prefer to have it delivered this week or would the first day of the month be more suitable?\" Sharp Angle When your customer asks about a certain aspect of your product or service, do not answer their question directly. Ask them whether or not he or she will have it. Use a little diplomacy, e.g.: \"When can you deliver?\" - \"When would you like delivery?\" Next Step Close By summarising the conversation and progress and asking” “so, what is your next step from here?” The Step-by-Step This is where you take the customer through the sale step-by- step, gaining commitment at each stage and is similar to the Blank Order Close, which uses a series of questions to attain final commitment. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 132

Foundation Training Client Engagement Process Closing the CEL meeting Task Make notes on the following: 1. The question you will use to ask for any final concerns or questions 2. The question you will use to ask for agreement or to uncover any concerns 3. A summary of the next actions if they choose to proceed with the project 4. A summary of options and actions if they need more information or have further questions. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 133

Foundation Training Client Engagement Process Day Eight Regents Park University You are a senior manager at the University The meeting is with a consultant from ERA Task: Prepare for the meeting, using online search if you wish. Here is a useful page on their website: https://www.regents.ac.uk/about https://www.regents.ac.uk/about/corporate-governance/documents-financial-statements Consider what questions new prospect might have for an ERA consultant, assuming they know very little about ERA. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 134

Foundation Training Client Engagement Process ERA Consultant Assignment: Preparing for a meeting with the VC of Regents Park University Work to prepare for this meeting The meeting will be online with a head of finance. Task: Prepare for a full first discovery meeting, using online search if you wish. You have received an email response to a contact you made at a networking event three weeks ago. It is from the Vice Chancellor of Regents College, Regents Park, London. You are invited to a meeting tomorrow to discuss how ERA might be able to help the college. It does not state in what areas or state why they want to meet. As this is an excellent lead, you need to carry-out some good research and prepare thoroughly. Here is a useful page on their website: https://www.regents.ac.uk/about However, a bit of detective work online digging might provide some more information. What to research You should also consider looking into market trends and predictions in their sector and target market, perhaps affecting similar organisations. Reviewing the key personnel might also be valuable. Finally, you can find the last four years of accounts here: https://www.regents.ac.uk/about/corporate-governance/documents-financial-statements © Expense Reduction Analysts 2020 – All Rights Reserved. Page 135

Foundation Training Client Engagement Process A short extract is provided. Plan the meeting, including an agenda. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 136

Foundation Training Client Engagement Process Day Ten © Expense Reduction Analysts 2020 – All Rights Reserved. Page 137

Foundation Training Client Engagement Process Appendix © Expense Reduction Analysts 2020 – All Rights Reserved. Page 138

Foundation Training Client Engagement Process Profitability Ratios For most profitability ratios, having a higher value relative to a competitor's ratio or relative to the same ratio from a previous period indicates that the company is doing well. Ratios are most informative and useful when used to compare a subject company to other, similar companies, the company's own history, or average ratios for the company's industry as a whole. For example, the gross profit margin is one of the most often-used profitably or margin ratios. Some industries experience seasonality in their operations, such as the retail industry. Retailers typically experience significantly higher revenues and earnings during the year-end holiday season. It would not be useful to compare a retailer's fourth-quarter gross profit margin with its first-quarter gross profit margin because it would not reveal directly comparable information. Comparing a retailer's fourth-quarter profit margin with its fourth- quarter profit margin from the same period a year before would be far more informative. Examples of Profitability Ratios Profitability ratios are the most popular metrics used in financial analysis, and they generally fall into two categories: margin ratios and return ratios. Margin ratios give insight, from several different angles, on a company's ability to turn sales into a profit. Return ratios offer several different ways to examine how well a company generates a return for its shareholders. Some examples of profitability ratios are profit margin, return on assets (ROA) and return on equity (ROE). Margin Ratios: Profit Margin Different profit margins are used to measure a company's profitability at various cost levels, including gross margin, operating margin, pretax margin, and net profit margin. The margins shrink as layers of additional costs are taken into consideration, such as the cost of goods sold (COGS), operating and nonoperating expenses, and taxes paid. Gross margin measures how much a company can mark up sales above COGS. Operating margin is the percentage of sales left after covering additional operating expenses. The pretax margin shows a company's profitability after further accounting for non-operating expenses. The net profit margin concerns a company's ability to generate earnings after taxes. Return Ratios: Return on Assets Profitability is assessed relative to costs and expenses, and it is analyzed in comparison to assets to see how effective a company is in deploying assets to generate sales and eventually profits. The use of the term \"return\" in the ROA ratio customarily refers to net profit or net income, the value of earnings from sales after all costs, expenses, and taxes. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 139

Foundation Training Client Engagement Process The more assets a company has amassed, the more sales and potentially more profits the company may generate. As economies of scale help lower costs and improve margins, returns may grow at a faster rate than assets, ultimately increasing return on assets. Return Ratios: Return on Equity ROE is a ratio that concerns a company's equity holders the most since it measures their ability to earn a return on their equity investments. ROE may increase dramatically without any equity addition when it can simply benefit from a higher return helped by a larger asset base. As a company increases its asset size and generates a better return with higher margins, equity holders can retain much of the return growth when additional assets are the result of debt use. KEY TAKEAWAYS • Profitability ratios consist of a group of metrics that assess a company's ability to generate revenue relative to its revenue, operating costs, balance sheet assets, and shareholders' equity. • Profitability ratios also show how well companies use their existing assets to generate profit and value for shareholders. • Higher ratio results are often more favourable, but ratios provide much more information when compared to results from other, similar companies, the company's own historical performance, or the industry average. © Expense Reduction Analysts 2020 – All Rights Reserved. Page 140

Foundation Training Client Engagement Process CEL Quiz 11. How long after an invoice is payment due? 1. What does CEL stand for? 12. What is the definition of a 2. When do you present it to the ‘reference price’? client? 13. Is there a confidentiality clause in 3. Does the client need to get it the agreement? approved by a legal specialist? 14. What is a situation report? 4. How long is the term of the contract? 15. What is an options report? 5. What is the situation if the client 16. Which is produced first? chooses to cancel the CEL part way through? 17. What is a performance report? 6. If the client changes a supplier or 18. How much is the advanced makes savings themselves do they payment? still pay us a fee? 19. How much is payable if no savings 7. How is the ERA fee calculated? are found? 8. What happens if the company is 20. What happens if ERA cannot find taken or sold during the term of the the expected savings entered in contract? column three of the Schedule of Work in the CEL? 9. Can the client add categories due the CEL part way through? 10. Is there a cancellation fee payable if the client cancels between the option report being accepted and implementation starting? © Expense Reduction Analysts 2020 – All Rights Reserved. Page 141

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