The Challenger Sale Notes

The Challenger Sale: Taking Control of the Customer Conversation by Matthew Dixon and Brent Adamson

Foreword by Professor Neil Rackham

Sales breakthroughs are rare, with only three in the last century.
First breakthrough: Hunter-farmer model in insurance (early 1900s) - splitting roles of selling and collecting premiums.
Second breakthrough: E. K. Strong's "The Psychology of Selling" (1925) - introduced sales techniques like features/benefits, objection handling, and closing.
Selling became a learnable skill, not just an innate ability.
Third breakthrough: SPIN Selling (1970s) - consultative selling for complex sales.
Focus on different techniques for small vs. large sales.
The last 30 years have seen incremental changes (sales automation, CRM) but no major breakthroughs.
Purchasing has revolutionized with supplier segmentation and supply chain management.
The sales world needs to react to these purchasing changes.
Is The Challenger Sale the fourth breakthrough?
It challenges conventional wisdom.
It makes sense once understood.
The research is solid, unlike much of the "research" in selling.
Methodological concerns addressed:
Five salesperson profiles emerged from statistical analysis, not invented categories.
The profiles are behavioral clusters, not rigid personality types.
Research compared top performers with average performers, not low performers.
Based on an impressive sample (700, growing to 6,000) from 90 companies.
Findings apply across the whole spectrum of selling.
The research didn't find what the researchers expected.
Relationship Builders were not star performers.
Challengers, though awkward to manage, came out on top.
Relationship-based selling may be less effective than it used to be.
Customers mentioned relationships less when asked what they valued in salespeople.
Relationship and purchasing decisions are now decoupled.
Customer relationships are the result, not the cause, of successful selling.
Challengers bring new ideas and help customers think differently, earning the right to a relationship.
Customers value salespeople who make them think and bring new ideas.
These are the core skills of Challengers.
Product innovation alone is not enough; how you sell is more important.
An effective sales force is a sustainable competitive advantage.
Sales leaders should read, think about, and implement the findings of The Challenger Sale.

Introduction: A Surprising Look into the Future

During the 2009 economic crisis, some sales reps were still successful.
CEB launched a study to identify what set these reps apart.
The study revealed three core insights:
Sales reps fall into five distinct profiles.
One profile spectacularly outperforms the others, while one falls dramatically behind.
Sales leaders have placed their biggest bets on the profile least likely to win.
The winning profile's success isn't due to the down economy, but rather their mastery of the complex sale.
These reps are the heroes of today and tomorrow.
Winning reps are called Challengers, and this book is their story.

The Evolving Journey of Solution Selling

CEB's initial question was how to sell through the economic crisis.
The answer was not surviving a bad economy but successfully selling the complex sale.
The complex sale (solution selling) places a huge burden on both reps and customers.
B2B customers are buying with greater care and reluctance, rewriting the purchasing playbook.
Traditional sales techniques are less effective now.
The down economy only exacerbated the gap between core and star performers.
The focus should be on adapting to the evolving world of solution selling.
The migration to solution selling helps suppliers escape commoditization pressure.
Competitors can't easily replicate a well-designed solution bundle, protecting premium pricing.
Most sales leaders aspire to be solutions providers.
Solution selling brings challenges, notably the burden on customers and reps.
The customer burden of solutions is expecting you to truly "solve" a problem.
This requires understanding customer challenges better than they do, identifying better solutions, and articulating clear benefits.
Reps spend a great deal of time asking questions.
"Discovery" can feel like a drawn-out ping-pong match between supplier and customer.
The customer has to commit significant effort early before seeing any value.
This has led to "solutions fatigue."
Four trends describe how customer buying behavior is evolving rapidly.
The Rise of the Consensus-Based Sale: Widespread support for a supplier is critical.
Need for consensus complicates sales efforts.
Increased Risk Aversion: Customers demand suppliers share more risk.
Supplier success is measured by the performance of the customer's business.
Greater Demand for Customization: Customers want to modify deals to meet their needs.
Suppliers see customization from a cost perspective, but customers see it as part of the "solutions" promise.
The Rise of Third-Party Consultants: Consultants help customers navigate solutions complexity.
Consultants often take their share of "value" from the deal, reducing supplier profits.
Selling hasn't gotten easier; solution sales are complex and risky for customers.
Customer solutions efforts have triggered a countermove by customers.
Talent gap between core and star performers widening.
In transactional selling, star performer sells 59% more than core.
In solution selling, star performer sells almost 200% more than core.
Three conclusions from the talent gap:
Stars are carrying the company.
Narrowing the gap between core and star performers pays off radically.
If the gap remains untended, core performers fall farther behind.
A new way forward is needed: Equipping reps to generate new demand in a world of reluctant, risk-averse customers.

The Challenger (Part 1): A New Model for High Performance

Understanding what star-performing reps do is crucial in the changing sales world.
Economic collapse highlighted the gap between core and star performers.
The goal is to identify replicable skills of star performers and export them to the rest of the sales force.
In 2009, the question was which skills matter most for high performance.
Hundreds of frontline sales managers were surveyed across 90 companies.
Every major industry, geography, and go-to-market model represented.
Skills, behaviors, knowledge, and attitudes were assessed.
Focused on demonstrated behaviors that can be improved.
The objective was to improve core performer skills and not just define why stars are better.
Three key findings emerged:
There are five types of sales reps.
One clear winner and one clear loser.
Challengers aren't just down economy reps; they are the solution selling rep.
Finding #1: There are five types of sales reps.
Certain rep characteristics tend to clump together.
Factor Analysis resulted in categories, including:
The Hard Worker: Willing to put in extra effort, self-motivated, seeks feedback.
The Relationship Builder: Focuses on building strong relationships, generous with time.
The Lone Wolf: Deeply self-confident, follows instincts instead of rules, drives sales leaders crazy.
The Reactive Problem Solver: Reliable, detail-oriented, focuses on post-sales follow-up.
The Challenger: Understands the customer's business, pushes thinking, is assertive, not afraid to share views.
The five profiles are statistically derived and evenly distributed.
Finding #2: One clear winner and one clear loser.
Challenger wins by a landslide - comprise nearly 40% of high performers.
Distinguishing Characteristics of a Challenger:
Offers the Customer Unique Perspectives
Has Strong Two-Way Communication Skills
Knows the Individual Customer’s Value Drivers
Can Identify Economic Drivers of the Customer’s Business
Is Comfortable Discussing Money
Can Pressure the Customer
A Challenger is really defined by the ability to do three things: teach, tailor, and take control.
Relationship Builder falls far behind--7% of all star performers.
Being available to take care of customer needs isn’t enough to win business.
Challengers push customers out of their comfort zone; Relationship Builders seek acceptance.
Challengers earn the right to a relationship by creating customer value.
Challengers focus on customer value; Relationship Builders focus on customer convenience.
Challengers strive to create tension; Relationship Builders resolve it.
Findings #3: Challengers are the solution selling rep, not just the down economy rep
In complex sales, Challengers dominate with over 50% of all star performers.
Relationship Builders nearly fall off the map in complex sales.
Lone Wolves are hard to find and even harder to control.
Solution Selling definitionally: asking customers to change their behavior.
To make that happen, however, you have to get customers to think differently about how they operate.
If you are on the journey to more value-based approach, teaching customers is essential for success.

The Challenger (Part 2): Exporting the Model to the Core

A Challenger is defined by the ability to do three things—teach, tailor, and take control—and to do all of this through the use of constructive tension.
The pillars of a Challenger Sales Model.
The Challenger Selling Model is simple in theory, but complex in practice.
Principle #1:
Challengers Are Made, Not Just Born
With the right tools, training, coaching, and reward and recognition system, you can equip many of your reps to act more like Challengers in front of the customer.
Focus on arming them with the tools and training they need to improve their existing sales force right now.
Principle #2: It’s the Combination of Skills That Matters
Combination of Challenger attributes sets Challengers apart. If you teach without tailoring, you come off as irrelevant.
If you tailor but don’t teach, you risk sounding like every other supplier. If you take control but offer no value, you risk being simply annoying.
Avoid the temptation to roll out the model partially.
Principle #3: Challenging Is About Organizational Capability, Not Just Rep Skills
Migration is a question of improving individual rep skills? For the model to really work, that is emphatically not the case.
This journey is actually just as much about building organizational capabilities as it is about developing individual skills.
Not something that you just want your individual reps out there figuring out on their own.
But the content of a teaching pitch—the business issues you teach customers to value, the idea around which you reframe how the customer thinks about their business--must be scalable and repeatable, and as such, must be created by the organization (in most organizations, this is the job of marketing).
Also, organizations can leverage intelligence and research assets to tailor messages.
The individual components should leverage individual skill.
Principle #4:
Building the Challenger Sales Force Is a Journey, Not an Overnight Trip
Change will happen instantly? Moving to a Challenger model is a commercial transformation: takes time to get it right.
Also carefully construct robust teaching pitches and train management reinforcement the right behaviors.
Advantages are accruing to early movers.
Does the Challenger Selling Model Work?
Teaching for Differentiation: sets Challenger reps apart, offering unique perspectives communicate with passion/precision that draws customers into conversation.
Tailoring for Resonance: The ability to tailor the message to multiple individuals within a customer is what cements the message and sticks with customer.
Taking Control of the Sale: Assert and maintain control over the sale (without coming across abusive).
Road map for the rest of this book.

Teaching for Differentiation (Part 1): Why Insight Matters

Sales training has centered on understanding customer needs.
But this approach suffers from the flawed assumption that customers know what they need.
Rather than asking customers what they need, tell customers what they need.
World-class investigators are world-class teachers.
Know customers' world better than they do, teaching them what they should know.
After years of customer research, know that is what customers are looking for.
Customers survey and analysis CEB had conducted to see what B2B customers look for in a B2B supplier.
Specifically, across 50 questions ranked named brands against other supplies in terms of product, value, service.
Customer were asked to name a customer rating from one-to-seven questions that would rate a given solution and its willingness to adapt and advocate.
When everything put all of that together this it allowed them to determine what were the most important factors that contributed to customer loyalty
What really matters isnt selling the highest differentiated products, but how you sell it.
Customers value insight over brand name power and ability to cut costs.
Customer want more than information, but new things worth implementing, and it will change how you think altogether then sales isnt enough
We've also got to have good insights now, if you're looking to give the insight in the commercial setting

Teaching for Differentiation (Part 2): How to Build Insight-Led Conversations

Mapping teaching conversation shows it moves through six steps.
A teaching pitch tells a compelling story with drama, suspense, and surprises.
Leads customer to a dark place before showing them the light at end of tunnel.
Teaching pitch engages both rational and emotional sides of the brain.
Change customer's thinking then change their actions then teach value.
First step is the