The Challenger Sale argues that sales is not about building relationships or discovering needs through a set of diagnostic questions. Instead, sales is about teaching the customer something that leads them to be interested in your solution and controlling the conversation by telling the customer what they need rather than asking.
Introduction
- Customer relationship is a consequence of a good sales effort not the cause of it
- Create success by teaching the customer something new and controlling the conversation
- Challenger reps are the highest performing type of rep
Chapter 1: The Evolving Journey of Solution Selling
- Companies wanted to escape commoditization and price pressure, so they created solutions. Solutions are products that solve whole business problems by being more integrated and complex.
- Challenges of solution selling
- Reps have to understand the business problem, not just supply a reliable product
- Discovery takes too much customer time
- Complex bundled solutions involve risk
- Therefore, consensus is critical for modern sales
Chapter 2: The Challenger: A New Model for High Performance
- There are five types of reps:
- Hard workers: High activity level
- Relationship builders: Do whatever it takes to make customer happy
- Lone wolf: Instinctual, won’t follow process.
- Reactive problem solver: Responds to requests, better at helping customer post sale
- Challenger: Presses customers on their thinking and on pricing
- Challenger outperforms all the other rep types
- Relationship builders get taken advantage of when they try to increase customer convenience without getting sales progress in return
- Hard workers can do well if success is based on call volume only
- Challengers teach, tailor, and take control
- Challengers try to increase customer value at each step of the sales process
Chapter 3: The Challenger: Exporting the Model to the Core
- Challengers teach, tailor, and take control through constructive tension
- Challengers teach their customers something new and give the customer an advantage in the marketplace
- Teaching concerns both uses of your product and also more generally how to compete in the marketplace
- Challengers tailor their message to different types of companies and different types of people in the organization
- Challengers maintain control over the sale without being mean
- They speed decision making and overcome decisional inertia by challenging customer thinking
- They hold the line on price by focusing the conversation on value
- Marketing department should find/develop the insights that the challenger will deploy
Chapter 4: Teaching for Differentiation (Part 1): Why Insight Matters
- Question based selling techniques presume that the customer knows what they want in the first place but customers don’t know
- Challengers tell customers what they need rather than asking
- The customer perspective:
- Customers focus on the general similarities between products, not the narrow areas of difference
- Customers recognize the big differences that exist between sales processes
- Customers want:
- To get information that’s so valuable that they’d have paid for the conversation as part of the sales process
- To have a simple, easy sales process
- But many sales interactions are painful and useless
- Half of customer loyalty depends on how you sell, very little depends on aggressive pricing
- Key is to provide unique and valuable perspectives on the market
- Commercial teaching
- Lead to your unique strengths
- Outperform competitors in the things you’ve taught your customers are important
- You have to know what actually sets your product apart; few companies do
- Challenge customer’s assumptions
- There’s some aspect of your customers’ business you know better than them. E.g., If you sell printers to hospitals, you may know more about managing information in a hospital setting.
- You want them to say “I’d never thought of it that way before” and to be a both interested and unsettled
- Catalyze action
- Show them the costs their incurring by failing to act on the opportunity you’re showing them
- Scale across customers
- Reps can’t generate these on their own for every customer
- Provide reps with a small menu of insights along with diagnostic questions that show which insight to use for which customer
- Segment customers by need. E.g., customers that need to save money benefit from this specific insight.
- These are as much about your organization’s capabilities as what a single rep does
- Lead to your unique strengths
Chapter 5: Teaching for Differentiation (Part 2): How to Build Insight Led Conversations
- Conversation has an emotional component. You take the customer to a dark tunnel and the light at the end is your solution.
- The customer says: “I had no idea we were wasting that kind of money” followed by “I’ll buy your product to stop wasting that kind of money.”
- Step 1: The Warmer
- Begin by stating that you work with companies like theirs and have found that certain problems come up all the time
- Ask hypothesis based questions that lead them to confirm your insights, not open ended discovery based questions
- Step 2: The Reframe
- Connect these challenges to either a deeper challenge or a large opportunity
- Be surprising and put them a little off balance
- Step 3: Rational Drowning
- Shows why the challenge is worth their time and attention
- This is where supporting data and evidence goes
- Step 4: Emotional Impact
- Tell a story and make them see themselves in the story
- Show them how a similar company engaged in their behavior and had bad results
- Step 5: A New Way
- Lays out the capabilities they’d need to fix the problem
- This still isn’t about your solution specifically, it’s about the traits of a solution in general
- Step 6: Your Solution
- Say why you have the best capabilities for delivering the solution
- Your solution and its differentiators are the natural outgrowth of your teaching. Lead to the solution, don’t lead with the solution.
- Building the organizational foundation
- Marketing’s job is to generate the scalable insights for sales to employ
- Sales makes sure that knowledge diffuses throughout the salesforce
- The rep’s hypotheses about the problem are prescripted
- The solution is predefined by the organization, the rep just needs to figure out what category to put the customer in
- Example 1: W.W. Grainger
- Makes maintenance, repair, and operations equipment (MRO)
- Grainger didn’t know what made them different once they got past the buzzwords
- Customers came to think of them as a transactional supplier of commodity products
- They realized that:
- Customers were purchasing MRO equipment inefficiently by making just in case purchases
- Grainger’s unique capability was being so reliable and comprehensive that customers didn’t need to buy a second part just in case the first one broke
- Their pitch
- “Would you like to meet to discuss how to save money on MRO spend”
- Step 1: Warmer
- Lays out a few typical issues, asks customer to select which is most important
- Step 2: Reframe
- Customer thinks in terms of product verticals (hammers, nails)
- Grainger introduces the horizontal concept of planned vs. unplanned purchases
- 40% of purchases are unplanned
- Step 3: Rational Drowning
- Slides showing high cost of unplanned purchases
- Purchases take extra paperwork and time
- Purchases made at full retail because companies use many suppliers for unplanned purchases while only a few for planned purchases, so no economies of scale for unplanned purchases
- Companies often buy extra units, just in case it breaks again
- Step 4: Emotional Impact
- Grainger tells the story of what happens when something breaks at the last minute
- Step 5: New Way
- Grainger has the ability to prevent these last minute purchases across many areas of spend
- Key is that this discussion of Grainger’s capabilities doesn’t happen until the very end
- Example 2: ADP’s Profit Clinic Seminars
- ADP provides enterprise software to vehicle dealerships, but faced challenges
- There was an overpopulation of dealerships due to shrinking demand
- ADP was facing many small, lower cost competitors who specialized in a specific software feature rather than the whole suite
- ADP was losing business to these lower cost competitors
- Their response
- ADPs unique advantage was helping customers lower costs across their business
- Buying one off software solutions actually costs more due to operational inefficiency
- ADP designed a “total dealer spend” presentation showing how much money dealers spent across many different IT vendors
- They also designed “profit clinics” that assess the cost of duplicative work across multiple IT systems
- Reframe: The software decisions you make to save money cost you money
- Rational drowning: Explaining how disjointed IT costs a lot of money
- New way: ADP has a solution in the form of integrated software
- ADP provides enterprise software to vehicle dealerships, but faced challenges
Chapter 6: Tailoring for Resonance
- For decision makers, key factors are ease of doing business, widespread support
- Nurturing influencers/stakeholders can be just as important as talking to decision makers because it builds support for a decision that will be made by consensus
- Nurturing these stakeholders requires professionalism and adding informational value with each interaction
- This informational value filters throughout the customer organization and builds consensus for your sale
- To tailor messaging to specific individuals, start with industry trends and work your way down to impacts on the particular company and role
- Focus on customer outcomes, what that individual wants to accomplish as part of their job
- Determine this centrally and give it to reps in the form of a sales tool
- Tailoring Case Study: Solae
- They make soy based food ingredients
- Shifting to selling solutions brought in a wider range of stakeholders
- Problem was that reps would lead with features, which the new wider range of stakeholders didn’t understand
- Solution
- Solae documented what each type of stakeholder cared about and what drives value for each type of stakeholder
- This took the form of an “outcomes card” for each type of stakeholder
- They also created pitch guidance for each type of stakeholder tying Solae’s product back to the outcome each role cares about
- When deals progress, Solae develops a project plan listing what the customer company will get from the project and also what each stakeholder will get
- Solae maps this out in partnership with the customer and gets sign off from each major stakeholder
- When the ultimate decision maker wants to see if there’s consensus, the rep shows them the project plan with sign off from all stakeholders
- They make soy based food ingredients
Chapter 7: Taking Control of the Sale
- Key attribute of challenger reps is taking control, meaning pushing the customer and being able to talk about money
- Taking control happens throughout the sales process
- Challengers know that many “opportunities” are just due diligence by a buyer who isn’t really interested
- Challenger reps trade sales effort for increased access
- “When we engage on this type of solution, we need these key executives to be involved. Is that the case here? Great, when can we meet with them?”
- “If I can’t get access to your top people, then I can’t confirm that we’re aligned and there’s no purpose in continuing the conversation.”
- “It’s going to cost us 200k to put our best thinking into this project. We’re willing to make that investment but we need to know that you’ll invest in us as well.”
- Don’t assume that customer know how to buy, tell them who needs to be involved
- Telling reps to take control doesn’t make them overly aggressive
- Push the customer but with respect
- If a customer refuses a price increase, persistently note the value you’ve driven
- Reps need to understand how valuable their advice is to the customer and that this value gives them power
- Selling company has done many implementations, buying company has done very few
- Push the customer but with respect
- Equipping reps to take control
- Have to overcome a desire for closure
- Instead, look for clear direction in the sales process rather than resolution
- Challenger reps are comfortable with silence and leaving negotiating points open for a longer period of time
- Negotiation plans:
- Note relative power positions of supplier and customer on each issue
- List potential objections
- List potential concessions you can make and those you’d ask in return
- Acknowledge and defer pricing objections
- Ask them what else besides price matters to you
- Then ask what they’re trying to achieve with price reductions and try to meet those needs in ways that are less harmful to bottom line
- Start with a larger concession and then offer smaller ones after that
Chapter 8: The Manager and the Challenger Selling Model
- Management fundamentals like reliability and integrity explain 25% of success
- Sales-side factors account for 75% of performance, rest of this section is about the sales-side factors and the 75% they explain
- Most important sales side attributes are:
- Selling
- Coaching
- Owning (Managing)
- Selling
- 25% of effectiveness (of the portion attributable to sales-side factors)
- Modeling good behaviors, particularly teaching for insight
- Coaching
- 28% of effectiveness
- Attributes of effective coaching are guiding reps to tailor effectively
- Owning (Managing)
- 45% of effectiveness
- Most important driver is how innovative they are
- Innovation is unsticking deals, not coming up with a new value proposition or product
- Innovation means identifying a wide range of choices and picking the one that matches the situation
- Good coaching is highly formal and scheduled
- Continuous and customized
- Highest impact on core performers, not low and star performers
- Good coaching increases retention
- Coaching should be built on top of the sales process so it happens in the course of normal management activities
- Coaching is about behaviors, not outcomes
- PAUSE Structure:
- Prepare
- Tailor the coaching to the stage of the sales process and the rep’s development goals
- Affirm the relationship
- Separate coaching from performance management; i.e., create a safe space for coaching
- Understand current behavior
- Specify behavior change
- Embed new behaviors
- Prepare
- Sales Innovation
- Investigating:
- Determine what is holding a sale back
- Map the decision making process to determine where it got stuck
- Creating solutions:
- E.g., reposition capabilities to connect to their needs, take on additional risk in exchange for a longer term contract
- More important than efficient resource allocation
- Too much manager time is spent on inspection activities like “did you call them back?”
- Efficient resource allocation is only more important than innovation when every deal is the same
- Questions to ask to generate better ideas:
- Deepening understanding: What’s the customer situation this fits into?
- Broadening perspectives: If you were the CFO, what would you think of our proposal?
- Expand ideas: How would we pursue this customer if we could spend as much money on the sales process as we wanted?
- Investigating:
Chapter 9: Implementation Lessons from the Early Adopters
- Identify your Challengers and observe how they currently operate
- Hiring for challengers requires a different interview approach
- Effective implementation requires:
- Rep buzz before it’s rolled out
- Experiential learning that provides “safe practice”
- Creating behavioral certification programs to reinforce learning over time
- Key points
- Customers see few real differences between competitors
- Don’t describe your differences with the competition, make the customer value them
- Be memorable, not agreeable
- Teach about a problem they didn’t know they had
- Making the transformation
- Find high performers who will be champions for the change
- Aim for 80% adoption, the last 20% is very painful
- Not all reps are early adopters, give average reps time to warm up to it
- Transformation takes years
Afterword: Challenging Beyond Sales
- Internal business functions deliver more value when they provide insight too
- HR: Being a strategic advisor accounted for 52% of performance
- IT: Internal customers want advice about how to save money more effectively
