The New High-Performer - Why Challengers Succeed



Matt Dixon, a managing director of strategic research at Corporate Executive Board, has an unrelenting drive to find the answers to questions senior executives often take for granted. For more than 15 years, Matt has worked to uncover truths behind many pillars of conventional wisdom that is costing companies dearly in terms of wasted money and lost market opportunity.

As a senior member of CEB's global research team, Matt has overseen dozens of original quantitative and qualitative research studies on all aspects of customer service strategy and sales productivity. Matt has presented these compelling findings to hundreds of senior executives and management teams around the world, including those for many Fortune 500 companies.

In a landscape dominated by motivational speakers offering little more than personal anecdotes and reinforcement of conventional wisdom, Matt challenges leadership dialogue with presentations packed with data and insights wrapped in a story-telling format that keeps his audiences scratching their heads and questioning long-held assumptions. Matt's quest for answers help organizations chart new paths forward that they often have never before considered.

Webinar Transcript

Anchor: Matt Dixon, an executive director of strategic research at CEB, has an unrelenting drive to find the answers to questions senior executives often take for granted. For more than 15 years Matt has worked to uncover the truth behind many pillars of conventional wisdom and sales and customer service. Often overturning long-held assumptions that has cost customers dearly in terms of wasted money and lost market opportunity. And now, please welcome to Elevate 2015, Matt Dixon.

Matt: Hi everyone, this is Matt Dixon, a group leader at CEB and it's really exciting to be here with all you for Elevate 2015. I love doing these virtual summits, it's a fantastic way to get a lot of content, a lot of insight in a very compressed period of time and not having to fight airport security, so I love it. It's such a cool idea, and I'm really excited to be here. I will share with you a little bit of our research around our challenger sellers, I'm gonna share a bit of a truncated version today, about 25 minutes of content that's about five years of research so get ready to kind of drink from the fire hose if you will, in terms of data and some insights.

And please, this is just really beginning if there's anybody who'd like to talk more about this, you can get in touch with me through the Elevate 2015 speakers list and lineup. I'm on LinkedIn, so feel free to reach out we can talk about some of this research in more depth, we'd love to help you out in thinking about challenger selling as an approach for your organization.

Just to give you a little bit of background, you see the title of the presentation "The New High-Performer: Why Challengers Succeed." Back in 2009 my group here at CEB, the BDB sales research group embarked on a research exercise where we collected data from several thousand sales people. We were trying to understand, in a down economy, what kind of sales person performs best? And what we found was pretty startling, what actually unfolded was a story less about selling in the downturn and actually more about selling to a new kind of customer, to an information-empowered customer today.

Now what we found was two-fold, first we found that all sellers in our study...we started with about data 6,000 people, that data stats now extends to more than 60,000 sales persons around the world, all BDB sales people across a wide range of industries. We found two things. The first is that all sales people fall into one of five distinct, statistically defined selling profiles. I'm gonna show you those in just a couple of minutes. And the second thing was that one of those profiles performed dramatically better than the other four. And here's the kicker, the one that came in last, when you look at high performance, turned out to be the one that most heads of sales, most CEOs, most seat-level executives, are really betting the farm on. So what we found was, and pardon the expression, but they were placing a huge bet on the horse least likely to win the race, at least as far as selling to these new information-empowered customers.

Let me start though with the first slide here. This tells a story of a change of customer buying behavior. It's really the right way to start today's presentation to give a bit of context. Any good story about selling starts with what's going on in the customer world, and in fact we've dramatic changes in the way that customers are buying today. In fact the biggest change that we've found is documented in this fairly simple graphic, but actually a very troubling graphic. If you look at this, this is data from several thousand business to business customers and what we found was that on average, the customers are nearly 60%, 57% to be exact, of the way through the purchase journey before they ever sit down with a sales person.

That's a really tough place to be if you think about it, and it's very different from how it used to be. How are customers is moving all the way down the purchase journey without talking to a sales person, because back in the day, it used to be that you could only really buy a complex B2B supplier-provided product or solution or service by sitting down and learning about it from the sales person. The sales person has to come in, diagnose your needs, talk to you about their value proposition, the features and benefits of their solution and then customize something to your needs. And today what the data suggests is that customers are actually doing a lot of that work on their own. Well they are doing it with a lot of information that we've put out there.

It's on our websites, our case profiles, our proof points, our business case profiles, our ROI documents. There are peer reviews out there. There are tons of sources of information today that just didn't exist just a few short years ago, that allow the customer to move down the purchase funnel on their own without a sales person. Now from a sales person's perspective that's a really, really tough place to be, because if you think about it for a moment, the things historically we've trained sellers to do, to come in and ask great questions, to ask the customer, "Hey, what's keeping you up at night? What are your MBOs this year? What's gonna get you fired or promoted? What's important to you and to your boss and how does your function or your department or what you're responsible for tie into the group-level strategy?"

These kind of things are what we taught sellers to ask for years, and then to talk about value proposition and then to figure out how do we customize the value proposition. All these things have happened, but they happened without the sales person at the table. So what the data suggests is that the customers already figured out what is it that's keeping me up at night? What's the opportunity I'm trying to get after? What are the different ways I could solve for that opportunity? Whether doing it myself or hiring from a supplier but what are the different solutions out there? If I'm going to go outside, if I am going to go to a third party, who are the different suppliers out there that could actually deliver what it is that I need.

They are even starting to stack rank their suppliers relative to one another, according to their capabilities and even their pricing, a lot of that information is publicly available now, too. So by the time they sit down with the sales person as you can see, all that's really left to talk about is price. It's a really, really tough place to be and it's especially challenging to today's seller who's trained to do many of the things that customers are actually out there doing on their own.

It's a bad news story and I think as we've told many of our clients here at CEB, in many respects, your biggest competitor as a sales person today isn't the competition or the competition sales person. Today your biggest competition is your customer's ability to learn on their own. To learn a lot about what you do, to put you in a box and to do it without you being there at the table. That's a really tough place to be as a seller, but there is a flip-side to this. So in a world where customers are learning on their own, what actually does deliver value when it comes to a sales conversation with a customer?

And so let's turn this around a little bit. In that seeing surveys of customers when we ask them, "What point in your recent purchase did you sit down and talk with the sales person?" We found on the average it was 57%. The same survey, what we asked them to do was compare the supplier who won the deal with the supplier who came in second place and there's an old adage in sales that many of us know very well, and that is, "The worst place to finish in a sales, especially a long cycle, complex sales is second place." Nobody wants to finish second, you much rather lose early than lose late. What we tried to do is compare on how the customers perceived the winner of the deal, with the supplier who came in just short, the one who came in second place. And we asked them to compare those suppliers across a range of attributes. You see here on the graph, things like their relative brand strength and reputation in the market place, their perceived quality of their products and services, the solutions that they sell to those customers, the value to price ratio they offer, and of course lots of questions about their sales experience, "What was it like to sit down with their sales people or their account managers? What was it like to do business with them?"

And at the end of that survey, what we asked we ask the customers to evaluate the winner versus the second place finisher across the range of attributes, which was about 45 to 50 attributes in the survey, and then at the end of the survey we asked them to tell us how loyal they were to the supplier who won the deal. Now we didn't ask them that way, we asked them in three specific ways: how likely will they be to re-purchase from that supplier, how will they be to buy more from the supplier over time, to increase their share of wallet with that supplier, and then how likely will they be to advocate for the supplier, say good things about them and what they do? Two colleagues, two folks on LinkedIn discussion groups, you name it, how likely would they be to spread the good word about us and what we do for customers? And when we regressed all that data, what we found is this graphic and I tell you this is one graphic that has ended up in board room presentations than anything my group has ever put out, because it answers three simple questions which is, in a world where customers are learning on their own, what actually drives loyalty? What do they actually want from suppliers? But it answers it in a pretty surprising way.

Now as sales researchers I think our hypothesis coming into this was the sales experience mattered more than most companies give it credit for, but we didn't realize it was gonna count as much as it does. Nearly half, actually more than half I should say, of customer loyalty is actually a function not of what you're selling, but of how you sell it. The sales experience in particular, it trumps things like brand reputation in the market place, product and service quality, value to price ratio, are all trumped by the accumulative effect of the sales experience.

Now a couple of things I should point out there, if you look at the call out box, it's not any kind of sales experience that drives that kind of lift in customer loyalty. The specific kind of sales experience, and these are the drivers that create that 53% lift are called out in the box here, it's the kind of sales experience where the sales person brings in a unique or valuable perspective on the market place, where they help the customers think through alternative ways of solving business problems, where they help educate them about issues and outcomes, help the customer avoid stepping on landmines, these sorts of things they bring insight to the table. It's a very teaching oriented sales conversation, so it's not any kind of sales conversation, it's an insight-based sales conversation.

Now if you put this together with the last slide, what this is really telling you is that in a world where customers can learn on their own, what they're really looking for is the sales person that bring to the table the thing that they couldn't learn on their own. The thing that wasn't on the internet, the thing that's not really the conventional wisdom out there. What they are looking for is for the sales person to show up with new ideas to make money, to save money, to mitigate risk, ideas that they themselves had overlooked, hadn't even thought of before. That's a tall task obviously for the sales person, and we're gonna talk about what kind of sellers do that and do that really well over in the next slide.

But let me hit on the left-hand side here of the graphic really quickly. What the data really says, it doesn't say that having a great brand and reputation is unimportant, it's very important. And making a product that actually does what you say it's going to do is also critically important, and offering all of that compelling and fair price is equally important. But what it does tell you is that the greatest incremental opportunity for loyalty generation lies in the sales experience, and it specifically lies in the conversations between your sales people and your customers.

Now, what you could discern from this is that while having a great reputation brand and making a great product and offering it a fair is really important, it will get you to the table but it actually won't win you the deal. What will win you the deal is kind of conversation your sales person is having with the customers, the kind of insights they are delivering. As I said, this was a big finding around what it is that's happening in our customer world today, what customers are really looking for, and so we, from here, sort of spring-boarded into a second inquiry, which was really around what kind of sellers do you need in this kind of world, in this new environment? And this is where the story went from, at some level almost perplexing and puzzling, how do we deliver that kind of sales experience, what kind of seller has that kind of impact on the customer's loyalty, can do these kinds of things? It went from sort of perplexing to really, really fascinating, so let me get you the data her over the next few slides.

As I mentioned earlier, the core of the challenger research was a study of 6,000 sales people, that data set has now been expanded to tens of thousands around the world, across industries, all B2B sellers and what we did, the way we did this research for folks on the phone, or folks who are dialed-in today, is that we asked sales managers to evaluate the sellers on their teams across a range of attributes and you see some of those attribute represented here. Things like attitudes, goal motivation, accessibility, curiosity, discretionary effort, things like that. Skills and behaviors, business acumen, negotiating skills, solution selling skills. Activity, the ability or proclivity to follow the sales process, to file their expense reports on time. And knowledge, how much do they know about us, what we do, and what our customers do, how we fit into their world and their workflow.

We asked those sales managers to evaluate sellers on their team, across this whole range of attributes one against the other. So how good is Bob or Sally around these attributes relative to the other people on the team? The first thing we found as we got into this research, and as we get into it let me just say upfront, what I'm gonna show you now are the five profiles of sellers that I alluded to in the beginning of the presentation. But it's important that we think of this in a couple of ways. The first thing is, these are not mutually exclusive profiles, so there are trace elements. Every seller has trace elements of all five, but nevertheless we found that every single sales person across our entire study statistically can be placed in one of those five profiles I'm about to show you.

The second thing is to think of them as sort of college majors. So again, there's non-mutual exclusives set up here, or if you will there's overlap of belief between these profiles, we all have trace elements. But we do spike in one, just like the college majors, so we all took the curriculum in other words, but what we can say is that we tend to spike, and every sales person in our study spiked in one of these five. So let me show you those here.

Now importantly, as I get to the next slide, when you think about the attributes we tested, these are actually all attributes that have to do not with personality but with things that can actually developed in the average sales person. So we're looking at the things with the right training, the right coaching, with the right enablement, the right tools, the average seller can actually get better at. We left personality out of the study and as many of the folks on the phone know today, there are lots of studies on sales effectiveness that were more personality driven, that's not what we're looking at here.

Okay, so I mentioned five profiles, you'll see the five across the page here, let me go through them one by one. The first one is the hardworker profile. This is the person who is very activity-focused in their sales approach, they get in early, they stay late, they place more phone calls than anybody else on the team. Their view around sales is that it's about throughput management, it's about getting enough opportunities in the top of the funnel and then sort of in lock step and sequence following the sales process. The belief being, if I have enough opportunities and I follow the sales process, I should hit my number at the end of the year.

Second, you've got the challenger. Many of you know that the challenger wins, so act surprised when I show you the data on the next slide. But the challenger, the important point here, they've got a sort of unique point of view. They like to provoke the customer, to push the customer outside of their comfort zone, to get them to think differently, not just about them as suppliers but get them to think differently about themselves as customers and themselves as executives, and how their business operate. They are looking into kind of getting into a little bit of debate, an intellectual back and forth with their customers. They don't mind mixing it up. In fact, that's really what they look for in a customer conversation. Now as an aside, they can be cultural tough-fits in organizations, I think we all know these people, the very opinionated debaters on the team. They will debate with not just our customers but with our managers and with senior leadership and with all you good folks on the phone today. So they can be tough to manage as well, I don't want to make light of that.

Next we've got the relationship builder. Relationship builder is kind of a classic profile, it's all about acquiescence and doing what the customer needs. Now I want us to be careful, this is not about the glad [inaudible 00:16:08] the five martini lunch, the round of golf, things like that, that are sort of vestiges of days gone by, if you will, of the old world of B2B sales. What we're talking about here are sales people who really actually do what they've been trained to do. They go in, they diagnose customer needs, and then they try to deliver on those needs. They take a very reactive and responsive approach to do what customers want. One head of sales said, "I know the people you're talking about, because when I walk the floor of my sales organization, listening to the calls that are taking place, these are the sales people who call up every customer in their pool and their territory once a month and say, 'Hey, it's Bob here from Acme Company. I just wanna check in, make sure everything is okay and just let you know, if you need anything I'm here, I'm your guy, give me a call, I've got you covered.'" They are the kind of I-got-you-covered folks.

Next we've got lone wolves. Lone wolves are sort of the prima donna's of the organization. They do things their own way, they don't follow the sales process, they have their own marketing materials that they created on their own, which drives marketing crazy. They don't file their expense reports which drives finance crazy. And they sell things that you don't even make, which drives everybody crazy. Now the things is, in most organizations, we actually let people get away with this stuff. There are few places where we don't. It's highly regulated industries, we tend to find not a lot of lone wolves, but in other industries we do see a lot of them. And the reason is that they tend to do pretty well, by and large. You will see some selection bias when we look at the results in a moment. What that tells you is beware of the siren song of the lone wolf, because while it looks like they're doing pretty well, there's a culling of the population to stick with the metaphor. The bad ones, the ones who ignore the rules and miss their number, well they've been shown the door, they've been performance managed out. What is left therefore are lone wolves who actually tend to be high performers. So again, there's a big selection bias in the population.

The last one is the problem solver. The problem solver is more of a customer service representative in sales person clothing if that makes sense. They are more interested in post-deal execution than in getting the next deal through the pipeline. They really feel it is important to, and this is a great thing, they feel it's important to make sure that all the promises that were made across the course of the sale are kept. And so the customer keeps them on speed dial even after the ink is dry on the contract and this person is loath to hand over that relationship to the deployment team or to the customer support organization or to the account manager and let them take it from there.

So five types of sellers, and as I said before, when you look at performance it's really quite a different picture, so let's look that here on the next slide. What we did is we cut the data by high performing sales people which are the blue bars and average performing sales people which are in the grey bars. Let's focus on the grey bars, the light bars for just a moment. What we found here is that average performing sales people kind of fall evenly across the five profiles, there's a slight spike in the relationship builder which I think is interesting, but not a huge one. But look at the blue bars. A very, very different story. There are five ways to be average and there's clearly one dominant way to be a strong performer and that is to be a challenger sales person, 39% of high performers in our study fell into the challenger profile, or statistically fell into the profile.

And compare that with 7% who fall into the relationship builder profile. Dramatically different and very different from what heads of sales would have expected, because again, think about what we've been teaching sales people for years. To go in and ask open-ended questions, to diagnose the customer's needs and then deliver on those needs. And what we're are finding here is, the relationship builder, who does the best at that across all five profiles, who is defined by that posture and that approach, that selling approach, does the worst when it comes to high performance. The challenger is not a silver bullet and I don't want to suggest it is, there are many ways to be high performer, as you can see clearly from the data. But in the world of tele-management and human resources and sales leadership, it's often a game of placing bets. We've got limited training, selection and assessment dollars, we've got limited time from our managers to coach to specific competencies, and what the data clearly suggest is that a dollar spent on inculcating, hiring for and inculcating challenger behaviors, training to challenger competencies and skills, is better spent than training to any of the other four profiles.

Let me show you just a double clip here on the next page. Just to get into a little bit more detail about challengers versus relationship builder, because I think this is an important point. That is the big surprise to sales executives and I think to many folks who have leadership positions for many years, is that the challenger does so well and the relationship builder does so badly when it comes to high performance. And let me just sum up the real differences between the two profiles. Here you see all the data that clustered together to describe those two selling approaches. On the left-hand side, the challenger, the challenger does three things: they teach the customers, remember we said earlier, in a world where the customer are inundated with information, what they are really looking for, what really earns their loyalty is when the sales person brings a new idea to the table, a new insight. So the sales person, the challenger teaches the customer, they lead with insight, they sell exactly the thing that we know today's customer is looking to buy from their sales person.

The second thing is that they tailor that message, depending on what stakeholder they are interacting with. They tailor at not just the individual level but at the group level. And so they understand that challenging a customer, bringing in new ideas to the table, a new idea that gets them to think differently, a new way to save money or make money or mitigate risk that the customer hadn't even thought of before, shaking their...causing them to blink and they rethink some key assumptions around their business, that's all well and good, but there's a long journey between that moment and getting consensus, especially in something complex and disruptive that we might be trying to sell the customer on. And so you've really got to do a lot of tailoring to get that message to stick to individual stakeholders, and then to figure out what is the common ground between diverse stakeholders, how do you tailor to the group so that they coalesce around around a common cause rather than disparate causes.

Finally, the challenger takes control. This scenario we get a lot of confusion on it and I think when you hear the word challenger, you hear taking control, you think of so that pushy oir obnoxious sales person, the aggressive sales approach. That's not what we're talking at all here. What we're talking about is the sales person who respectfully, empathetically, and in a culturally acceptable way, holds their ground at key moments in the sales conversation, whether that's about pricing, whether that's really around the idea they put on the table that the customer has never seen before and the customer starts to push back, it's holding your ground and understanding that you are bringing value to the conversation and not letting the customer kind of clearly derail things and push you off topic, if you will, to get concessions that we don't wanna give.

If you compare this with the relationship builder, the relationship builder is about getting along with people, being likable, be generous of their time, and again that's a very reactive and acquiescencent kind of posture that the sales person takes. And it's summed up really well in the bottom two grey boxes there. The challenger is all about building constructive tension in a purposeful way, they're trying to create tension in the sales conversation because they know that that's the way that you'll move the customer out of their status quo mindset to start to think really differently, not just about them as a supplier, but about themselves as a customer, and what is true for their own organization, how they make money or save money or avoid risk or engage customers or employees or any number of strategic objectives.

The relationship builder however is about reducing tension. They're trying to make tension go away, they are trying to defuse tension, they're trying to understand what is it that's causing tension for the customer or in the relationship between the sales person and the customer, the supplier and the customer, and let's make that go away. Let's diagnose the customer's need, let's deliver on that need, and if we do that, they will keep buying form us, they will buy more things, or they'll say good things about us. But as we know from the data in today's day and age, being a good relationship builder is really table stakes. I can tell you that challengers actually minor in relationship building. They're the second best relationship builders of the five profiles. Now what that tells you is not that relationship building is unimportant, what it tells you is that it's critically important, but again it's table stakes today, it's the price of entry. The challenger uses the relationship as a means to get in and therefore challenge the customer's thinking. To earn the credibility and the respect, in fact lay a good foundation of a relationship, but then to use that relationship to go in and push the customer's thinking.

The relationship builder views the quality of the relationship as sort of an end unto itself. "If I do the things that the customer ask for, they'll keep buying from me, they will buy more and say good things about me." And we know that that's just not the case, clearly from the performance data that we just went over. The new currency of the relationship in a world, again, where customers are inundated with information, the new currency of the relationship is insight, and new ideas that sales people can bring that change the way customers think about how to accomplish the strategic objectives they are trying to accomplish.

Let me share one last slide here, one last data slide. Many questions we get around challenger are, "Where does it apply?" And we have parts of our sales organization that are transactional and parts that are very complex, more of a solution sales organization, and here what you see is ta distribution of high performers in a low complexity, transactional sales environment on the left-hand side, and a high complexity ,what you might call a solution sales environment, on the right-hand side. So this might be the difference, for example, between our inside sales group and our solution selling kind of field base account managers, our key account managers, our global account managers. What you find is that in world of transactional sellling, low complexity selling, challengers actually don't win, hardworkers actually win. Not by a lot but they do win and it makes sense because selling in a transactional environment is about through-put, it's about activity management. What you really need is people who show up early, stay late, and place lots of phone calls. It's about through-put and volume management.

But if what we're trying to do is sell the customer something complex what we're really trying to do is sell them on changing the way they do things. "Stop doing this yourself and start outsourcing into us. Stop buying this one single product and buy the whole suite of products from us. Stop using your current supplier and go with us." Those are big disruptive changes for the customer, and what the challenger does, and when you look at the data you find challengers dominate in the world of complex solutions, what we're really selling is disruption and behavior change to the customer. Because what they know is that I need to get the customer to think really differently, I need to get them to understand that the pain of same, the pain of the status quo is actually worse than the pain of change and disruption. So many sales people go in with the intention of selling a big complex disruptive solution, but they get pushed back to the left-hand side of this graphic and they leave with nothing more than a low margin product sale. The challenger is able to hold their ground and keep the conversation focused on the right-hand side and really create that calculus for the customer, that the status quo is unacceptable and that this new way of doing things is by far, despite the change it might entail, the preferable way to move forward.

Just as we wrap up here I do want to show everyone my contact information as a way to get a hold of me. I mentioned this at the beginning of the call. It's really important to understand that as we think about challengers, we've done a lot more research about how do you find these challengers, how do you screen for them, what kind of selection assessment or interviewing approach might you need to find that needle in the haystack, that challenger out there? And what we found in the broader labor market, if you look at available sales talent, only about 17% of sales professionals spike high on challenger competency, so the ready-made challengers if you will.

What that tells you is two things. First of all we got to get really sharp with some powerful selection and assessment tools to find challengers in the labor market, because if we're not using those vehicles, probably our competitors are and we're getting what's left over from the labor market or the labor pool. The other thing it tells you is that at 17%, you can't really hire your way to victory here and so a key part of this is how do we develop our sales people to become challengers over time, because a big questions again is, can the average seller who is not a challenger become a challenger? And what we found in working with companies for many years now is working through this, training to these challenger competencies, and teaching sales managers to coach, well first of all to coach period, and then to coach to these challenger competencies is that the average seller, they may not change their profile entirely from a hardworker to a challenger or a relationship builder to a challenger, but through the right development experience you can improve or increase the amount of challenger portion or challenger-ness to every sales person so that they can at least play the role of the challenger when the customer situation demands it.

So with that I'm gonna leave you again with my contact information. I encourage everyone to shoot me an email, to give me a phone call, reach out to me on LinkedIn, I'd be more than happy to talk to you about this. And then I also want to allude to the CB Challenger sales exchange resource which we're really excite to launch with Higher View CB and Higher View Partner together on this. It's a coaching tool, a coaching resource that you can check out by contacting Higher View. A great resource that we're just rolling out to our clients right now, we're going this Challenger Journey and getting great feedback on that as a key tool to drive some of these challenger competencies option with their sellers.

So with that, thank you very much. Thank you to Higher View, thank you to the Elevate 2015 team and I hope you enjoy the rest of the session today. Take care.