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The Single Most Important Question for the Challenger Sale

Posted on  9 October 12  by 

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Here at CEB’s Sales Executive Council we are both excited and humbled by the global excitement for our research profiled in The Challenger Sale.  Indeed, just last week the book made it into the Wall Street Journal business book bestseller list for the first time.  Not surprisingly, that kind of attention has led to a great deal of momentum around the model, but some common questions as well.  Many of those questions are easily addressed through a better understanding of how we conduct our work and the assertions we make regarding its findings.

Is the Challenger approach really all that new?  In many ways, no.  It’s very likely that the best sales professionals have effectively sold this way for years.  Indeed, we know the best reps are already challenging customers’ thinking because if they weren’t we wouldn’t see the story in the data.   That’s one of the reasons why we rely so heavily on broad-based, data-driven analysis.  It allows us to better understand the world as it actually exists today.

Is Challenger always the right answer?  Certainly not.  Challenger reps are not the silver bullet to every possible sales scenario.  In many cases, more transactional customers are better served through a much lower cost sales channel altogether—perhaps even a website—as it’s the cost of sale (more than the magnitude of disruption) that drives margins for customers stubbornly focused on high-volume, low-cost transactions.

What is clear, in a world where customers want more time to decide and bigger discounts, is  that allowing customers to decide for themselves how they should be served  is a recipe for disaster.  Yes, we must give customers what they want, but not at the expense of killing our margins in the process.  Prior to any application of the Challenger model, we recommend rigorous customer segmentation and opportunity qualification around criteria designed to determine a customer’s openness to disruption in the first place, irrespective of that customer’s geography, size, or industry vertical. For many companies, more insight and disruption creates more opportunity – but this isn’t the case for all.

Are Challenger attributes meant to be an exhaustive list of what makes a star a star? Not at all.  Challenger reps’ ability to teach, tailor, and take control distinctly set them apart from their core performing colleagues, but they by no means represent the only techniques stars apply to win a sale.  In many ways, it’s more helpful to think of those three skills as a definitive list of what core reps are not doing, rather than what star reps are doing.  This certainly doesn’t mean, however, that selling skills, such as world-class questioning, effective relationship-building, or proper use of body language aren’t important for effective selling.  They absolutely are.  Crucial in fact.  However, the data tell clearly indicate that Challengers deploy these skills in a very different manner, namely in an effort to disrupt customers’ thinking rather than confirm it—to deliver insight to customers rather than extract it from them.

How comprehensive is CEB’s research methodology?  Very.    Our sample size now covers over 20,000 B2B sales professionals from around the world, spanning every major industry, geography and go-to-market model.  Put simply, it’s very robust.  Beyond the raw data, however, CEB brings decades of experience in analytics, interpretation, and validation with our network of 500+ heads of sales to extract the insight and tools leaders need to take very tactical action around the small number of findings most likely to drive the greatest commercial impact.  We boil the ocean, so you don’t have to.

Furthermore, we are a research organization above all else. Our understanding and the level of precision we apply to Challenger, or any of our research, continues to evolve. The backbone of any of our research, tools, engagements, or publications is what we see working at the leading edge of sales effectiveness.

Be all that as it may, however, the one question we find relatively fewer people asking is the one we ultimately think matters most.  And that’s simply:  Why now?

If it’s true that Challengers have indeed been around for a while, and that it is also possible for at least some reps to succeed in other profiles, why place a disproportionately big bet on one set of attributes as opposed to simply making everyone better at everything?

In many ways, the answer is fascinating—if not simultaneously rather troubling—because the urgency we see around getting Challenger right has much less to do with what we see in our massive amount of rep data, and everything to do with what we’re currently tracking in all of our customer data.

In our most recent study of thousands of participants in a typical B2B purchase, we found that on average customers are nearly 60% of the way through a purchase prior to proactively reaching out to a supplier for their input (indeed some organizations cite similar findings up to 70%).

And only upon significant reflection and hundreds of conversations with sales and marketing leaders around the world have we teased out the full implications of this blue arrow.  Inside that blue arrow, more than anything else, the customer is doing on their own the very things we’ve been training reps for years to do with them in person.   Customers have recognized needs, researched solutions, prioritized options, set requirements, and benchmarked pricing.  By the time they engage a supplier, the only thing left to “discover” is how big of a discount we’re willing to offer to win their business.

And this phenomenon is new.  Very new in fact.  If we go back five or ten years, customers used to have virtually no option but to speak with suppliers relatively early in the purchase if they wanted to figure out how to meet their needs (or what types of solutions were even possible) as much of that information simply wasn’t available anywhere else.  Today, however, with the explosion of available information, that’s no longer the case.  Customers don’t engage suppliers, because they believe they don’t have to.

In fact, the dramatic shift of that blue arrow has led us to postulate a simple truth about customer buying behavior:  Given a choice, customers will generally engage a supplier as late as they possibly can.

Why?  Because they believe the supplier has nothing unique or valuable to contribute to the conversation.  If I reach out to a supplier, the thinking goes, all they’re going to do is ask me a bunch of questions, or drone on about their product or service.  It’s biased information, and it’s never really about helping me with my business, so much as selling theirs.  In a world of information accessibility, I simply don’t have to have that conversation – I can learn elsewhere.

And herein lies the very real and very unique challenge of selling today relative to any other time in the past.  It’s not that sales is different, it’s the world that’s different.  And in this world, the most urgent question in B2B sales isn’t so much what reps are doing while they’re selling; it’s what customers are doing while they’re learning.

In this world, the way customers determine what’s important in the first place—the criterion against which they’ll measure any solution—is more often than not through independent learning.  Using all of the information sources now at their disposal (e.g., the Internet, online communities, 3rd-party consultants) customers not only identify the criteria they care about most, but they also identify the minimum threshold of performance acceptable for each criteria.

So, for example, if I were buying a machine, I might determine I care most about speed, durability, and up-time.  And specifically, I’m looking for 100 units per day, for ten years, running at 95% up time.  More might be nice, of course, but all my research and others’ past experience tells me that’s what I need.  So what do I do next?  I identify the short list of suppliers who can provide me a machine that meets those requirements, and then I reach out to each in turn to determine who can offer the best price.

Welcome to the world of the blue arrow, where you make into the top three, but wind up competing on price every time.  It’s a world where you consistently get consideration, but almost always commoditization at the same time.  And it’s become a huge challenge for B2B sales and marketing.  We call it the “1 of 3 problem,” where customers will acknowledge right up front that you’ve got a world-class solution, but they still won’t pay you for it because there’s at least one or two other companies that can meet their needs equally well. In the world of the empowered customer, no amount of traditional needs analysis or customer discovery will help you win.

Why?  Because in a world of traditional sales and marketing, companies seek to first indentify customers’ top priorities and then meet or exceed customer requirement expectations.  “If you want 100 units per day, our machine can do 110!  You’re looking for 95% up-time, we can guarantee 98%!  We are, bar none, the world-class provider of the solution you’re seeking!”

But what many suppliers and sales reps fail to fully appreciate is, having done their homework in advance, at this point customers aren’t looking for maximum performance, they’re looking for a minimum threshold.  The customer’s own research has told them that 95% is sufficient to meet their needs.  And while they’re happy to take your 98%, they’re less happy to pay you for it, because they’ve determined that the other two suppliers who only offer 95% are not only good enough, but also significantly cheaper.  Their response to your pitch?  “You’re right!  You’ve convinced me that you’re solution is better.  And I’d love to have 98% up time.  I’ll take it!  But… the other two guys are cheaper.  So if I can get your solution at their price, then I think we’re good to go!”

More than at any other time in the past, customers will look you in the eye, openly admit your solution is better, and still not pay you for it. And this is the new reality of selling in a world where customers can learn on their own.   Outperforming the competition no longer wins business.

But rest assured, today your competition is feeling the exact same pressure from the exact same customers.  In many ways, a supplier’s biggest competitor today isn’t so much the competition, but their own customer, and more specifically their customer’s ability to learn on their own.   And unless someone unexpectedly shuts down the Internet and purchasing consultants in the next few years, we see this challenge only getting worse going forward.

This is why challenging customers with insight is so important.  It’s about proving to customers that they do have to talk to you.  That you not only have something valuable to say about their business, but even more importantly, that it’s based on information that, despite all of their research and all of their learning, they would not and could not have discovered on their own.  It’s insight that shows customers they’ve somehow missed a criterion or set a threshold too low.  Frankly, that they got it wrong, and that oversight is going to hurt their business in a way they’ve failed to fully appreciate.

In a world of information availability, the only way to get customers to think differently about you is to first get them to think differently about themselves. You can’t just teach customers, you have to unteach them.  Challengers escape the trap of the 1 of 3 sale by disrupting customer needs, not just fulfilling them.

But the way they make that happen is a crucial part of this story.  Yes they do accomplish that task through deploying a wide range of sales skills.  But more than anything else, they make it happen through their ability to deploy ideas and insights as part of the sale that forces customers to rethink what they’re doing.

For most reps, the identification or creation of that kind of insight is simply beyond their individual capability.  Not because they’re unskilled or lack training.  Rather, the organization behind them isn’t set up to find insights on their behalf.  Often marketing puts the wrong content in their hands, or managers fail to coach them.  Because traditional opportunity qualification metrics drive them to customers with already-established needs, and organizational metrics like pipeline velocity encourage reps to fulfill demand rather than create it.

If nothing else, as we continue our research on the Challenger journey, we find ourselves significantly broadening the scope of our work to include a wide range of marketing activities, account planning practices, and insight generation techniques that cover the broader set of organizational capabilities necessary to make this approach work.

And as a result, we’ve become deeply convinced by everything we see in our research that a single set of individual reps skills, or even a method for reps to follow, is nowhere near sufficient to effectively compete against their customer’s ability to learn on their own.

This is why CEB is investing huge amounts of effort and resources into developing a broad set of solutions designed to provide commercial teams with a single, coherent strategy to adapt to this new world—all built back from the single core idea that disruptive insight is crucial to commercial success.

To that end, we recently introduced our Challenger Messaging workshops and engagements to help companies create the kind of insight they’ll need to effectively disrupt customers’ thinking.  Last spring we published the first version of our full suite of account planning tools known as the Challenger Plan.  Over the summer CEB announced the acquisition of SHL, the world’s leader in hiring and assessment analytics which has allowed us to create an incredibly robust Challenger hiring and assessment tool, which we publicly announced today.  We’ve produced a whole new set of tools for B2B marketers to ensure their content marketing efforts are completely and consistent aligned around commercial insight across every piece of content they produce.  And we continue to develop and iterate on our comprehensive Challenger Development Program and Manager Coaching Program designed to train the front line to deploy, execute, and support the model consistently over time.

In cooperation with our sister program, the Marketing Leadership Council, we’ve begun extending the reach of Challenger into the world of B2B marketing – producing a whole new set of tools for marketers to ensure their content marketing efforts are completely and consistently aligned around commercial insight across every piece of content they produce. We’ll have more on those tools next week, but you can get the gist of MLC’s work by checking out “Content Marketing’s Dirty Little Secret” and “The Two Qualities of Content Marketing that Matter Most”.

In the end, it’s a huge amount of effort to ensure we’re equipping commercial organizations with the single, consistent, and complete set of tools they’ll need to succeed rather than awkwardly cobbling together pre-existing approaches never designed to work in this very different era of B2B selling.  Because the most important lesson at the heart of all of our research, by far, is not that the Challenger story is transformational, but that information is.

In a world where customers can now do on their own what we’ve spent so many years training our reps to do on their behalf—discover their needs and identify solutions—if suppliers adopt a wait and see or “steady as she goes” approach, they’ll likely find their customers have never been happier, but their margins have never been lower as customers happily buy their world-class performance but at the competition’s rock-bottom prices.

Comments from the Network (3)

  1. Jim Jusic
    on October 9, 2012
    Respond

    Great post Brent, thank you for the insight.

  2. Jim T
    on June 27, 2013
    Respond

    I do like the concept, not sure how new and innovative it is and I do question the research and the order of the findings. Did they come up with the concept and then do the research to substantiate the concept or did they go in open minded and then come up with the concept.

    One point that I feel is critical that they seem to blow by is that the rep should know their business better than each stakeholder knows their own business. Well don’t you need to have an incredibly strong relationship with each stakeholder to get to that point? Yes you can do research and have other sources that feed that trough of knowledge that you are building not only of his/her business, but of that stakeholders unique position and drivers in that business and to do that, not only do you need time with that person, but open, honest, brutally candid time with all the other important stakeholders that will be part of the decision making. Once all that time is put in then you have to have the courage to judiciously suggest a solution that they have not thought of and create that constructive tension by challenging them….I like it and it is ballsy, however, if done wrong it could all come tumbling down at that point, it could be perceived as arrogant and telling them how to run a portion of their business. That is where you need to believe, swallow hard and trust the relationship(s) are strong enough to survive this regardless of the outcome. This is a test and you will know how valued your opinion is within the organization after a meeting like this. I would rather know whether I’m just being used for free coffee and lunches or if I’m perceived as a trusted adviser or as a free consultant. Just like any business owner, pharmaceutical or otherwise, with this approach due to the time put in you can only afford so many strikeouts, especially early on, and you will need an occasional home run to make up for the 17 pitch at-bats that result in you walking back to the bench with the bat on your shoulder.

  3. Scott
    on August 6, 2013
    Respond

    The research came first and the concept followed. This is absolutely the opposite of many organisations who go out looking to substantiate their answer and, unsuprisigly, find exactly what they are looking for. I heard Neil Rackham (research professional at Cranfield and writer of the Challenger Sale book foreword) speak on this at the book launch some years back. He shared that he was very skeptical prior to observing the methodology and the data collected, but that he couldn’t fault the research process and conclusions, which is why he went from skeptic to advocate.

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