Ch 2: The Challenger (Part 1) - A New Model
reviewed in the previous chapter—all in response to suppliers’ efforts to sell larger, more complex, more disruptive, and more expensive solutions. Still, if nothing else, the global economic collapse served to throw the widening gap between core and star reps into stark contrast. Even in the depths of the downturn, when most reps were far behind quota, some reps—quite inexplicably—still managed not just to hit their goals, but to exceed them. What were they doing differently? Generally, the tendency in sales is to simply chalk up the difference to natural talent and assume stars are just born with it. It’s not as if you can just take their skill, bottle it, and sprinkle it over your core performers to close the gap. Right? Well, what if you could? What if you could track down the replicable part of what truly sets star performers apart, capture that magic, and export it to the rest of your sales organization? Imagine a world where all your reps—or at least many more of them—performed like stars. What would that be worth to you? What would it mean for the overall performance of your company? Well, in 2009, in a world where only the stars were selling to begin with, it could mean the difference between bankruptcy and survival. And it was in this high-stakes world that we first set out to answer the question: Which skills, behaviors, knowledge, and attitudes matter most for high performance?
IN SEARCH OF ANSWERS To figure this out, we surveyed hundreds of frontline sales managers across ninety companies around the world, asking those managers to assess three reps each from their teams—two average performers and one star performer—along forty-four different attributes. And while the initial model was built on an analysis of the first 700 reps for whom we had data—representing every major industry, geography, and go-to-market model—we’ve since increased that number to well over 6,000 reps all over the world as we continue to run this diagnostic survey through our SEC Solutions—the implementation arm of the Sales Executive Council—group. Among other things, continuing that work has allowed us to determine whether or not the story in the data has changed over time, especially in light of the recent slow but steady economic recovery. And for reasons we’ll review momentarily, we’ve been able to establish quite clearly that these findings hold true irrespective of economic conditions. So what exactly was in this survey? The table on page 16 provides a sample of the rep attributes we tested as part of this work. We asked managers to assess attitudes, including the degree to which their reps seek to resolve customer issues and their willingness to risk disapproval. We asked about skills and behaviors, like the reps’ level of business acumen and needs-diagnosis ability. We looked at activities, like reps’ tendency to follow the sales process and thoroughly evaluate opportunities. And, finally, we asked about reps’ knowledge of their customers’ industry as well as their own companies’ products.
In terms of demographics, the study covered a wide range of selling models, everything from hunters to farmers, field reps to inside sales reps, key account managers to broad-based account reps, as well as both direct sellers and indirect sellers. That said, we carefully controlled for things like rep tenure, geography, and account size to make sure that the results apply not only universally across the entire sample, but also broadly across the wide range of the companies represented in Sales Executive Council membership. Finally, because we were working with sales reps, we had a very practical means of measuring actual performance, namely each individual rep’s performance against goal. When you put it all together, what all of this work gives you is a very robust data-driven snapshot of rep performance that allows you to answer the question, “Of all the things a sales rep could do well, which ones actually matter most for sales performance?” It’s an extremely thorough picture of what “good” looks like when it comes to sales rep skill and behavior. We should also point out what we did not study. This work is definitively not an examination of sales rep personality types or personal strengths. That kind of thing is hard to measure and even harder to do anything about. If we were to tell you that “charisma” is hugely important to sales success, you might not disagree, but you’d likely struggle to know what to actually do with that information. Sure, over time you might find new homes for all of your noncharismatic reps and hire more outgoing ones instead. But while that may in fact help performance tomorrow, it would be awfully difficult to execute practically, in order to improve performance today. Instead, first and foremost, we wanted to provide advice around what you can do right now with the reps you already have
(though there is certainly a hiring story that comes out of these results as well). To that end, looking back at the list of variables, you’ll notice that all of the attributes we tested were focused on reps’ demonstrated behaviors . In other words, how much more or less likely is a rep to do “X”? Or how effective is a rep at doing “Y”? We did that because skills and behaviors are things you can do something about right away. You may or may not be charismatic, but through better coaching, for example, I can help you do a better job of following the sales process. Or, through better training and tools, I can improve your product or industry knowledge. This is a survey about getting things done. It wasn’t designed so much to determine why your stars are better, but rather to determine how to make your core better. Think of the potentially huge commercial value currently locked up in the middle 60 percent of your sales force. What would it be worth to make each of those reps even just a little bit better? Our survey focused on the things you can do right now to help the core performers you already have act more like the stars that you wish they were. So what did we find? Which of these many attributes matters most? At the highest level, the story revolves around three key findings, each representing a radical departure from how most sales executives think about how to drive sales success. Let’s take them one by one.
FINDING #1: THERE ARE FIVE TYPES OF SALES REPS The first thing we did was to run a factor analysis on the data. Put simply, factor analysis is a statistical methodology for grouping a large number of variables into a smaller set of categories within which variables co-present and move together. For example, if we were studying ecosystems, a factor analysis of every potential ecosystem variable would tell us that things like intense heat, sand, arid conditions, scorpions, and cacti tend to co-present in nature. Because we tend to find them together, we could give this category a name, i.e., “a desert.” When we ran factor analysis on the data from our sales rep study, we found something really intriguing. The analysis indicated very clearly that certain rep characteristics tend to clump together. The forty-four attributes we tested fell into five distinct groups, each containing a very different combination of rep characteristics. When a rep tends to be good at one attribute in that group, he or she is very likely to be good at all of the others in that group as well. Source: Sales Executive Council research. Figure 2.1. The Five Sales Rep Profiles Figure 2.1 shows these five distinct rep profiles as well as the descriptive
variables that are clustered within each. These groups are not necessarily mutually exclusive. Going back to the ecosystem example earlier, think of it this way: All deserts have intense heat and sand, but intense heat and sand are not unique to deserts. You find these things in other ecosystems too, maybe just in different abundance. In our study, every rep has at least a baseline level of performance across all the attributes we tested. For example, to one degree or another, all sales reps adhere to a formal sales process. All reps have at least a minimum acceptable level of product and industry knowledge. But for almost every rep, a specific subset of these attributes defines their primary approach to customers. We like to think of these profiles as college or university degrees. In order to graduate, every student must cover a broad core curriculum: science, language, history, math, etc. But at the same time, university students have a “primary” or “major” as well—the thing they specialize in that sets them apart. And that’s what these five profiles are all about. They are the five distinct “majors” in sales. These five profiles are not groups that we put together based on our interpretation of the data or our view of the world. We let the analysis tell the story. The five profiles are statistically derived, but they accurately and completely describe the five most common profiles found in the real world. Interestingly, they’re relatively evenly distributed across our sample population. So who are these different reps? As we go through the five profiles, ask yourself the following questions: Which of these five profiles do you think best describes the bulk of your sales force? Where have you placed your bets as an organization or, perhaps more practically speaking, which type of rep are you trying to recruit right now? Which are you trying to get your reps to behave more like?
The Hard Worker Hard Workers are exactly who they sound like. These are the reps who show up early, stay late, and are always willing to put in the extra effort. They’re the “nose to the grindstone” sellers. They’re self-motivated and don’t give up easily. They’ll make more calls in an hour and conduct more visits in a week than just about anyone else on the team. And they enthusiastically and frequently seek out feedback, always looking for opportunities to improve their game. A CSO at a global logistics company put it like this: “These guys believe that doing the right things the right way will inevitably get you results. If they do enough calls, send enough e-mails, and respond to enough RFPs [requests for proposal], it’ll all come together by the end of the quarter. They’re the ones who were actually paying attention when we pounded the importance of sales process.”
The Relationship Builder Just as the name implies, Relationship Builders are all about building and nurturing strong personal and professional relationships and advocates across the customer organization. They’re very generous with their time and work very hard to ensure that customers’ needs are met. Their primary posture with customers is largely one of accessibility and service. “Whatever you need,” they’ll tell customers, “I’m here to make that happen. Just say the word.” Not surprisingly, one VP of sales we recently interviewed told us, “Our customers love our relationship builders. They’ve worked very hard to build customer relationships, sometimes over years. It feels like that’s really made a huge difference to our business.”
The Lone Wolf The Lone Wolf will look familiar to anyone in sales. Lone Wolves are deeply self-confident. As a result, they tend to follow their own instincts instead of the rules. In many ways, the Lone Wolves are the “prima donnas” of the sales force —the “cowboys” who do things “their way” or not at all. More often than not they drive sales leaders crazy—they have no process compliance, no trip reports, no CRM (customer relationship management) entries. “Frankly,” one head of sales told us, “I’d fire them if I could, but I can’t, because they’re all crushing their numbers.” And that’s the case for most companies. On average, Lone Wolves tend to do very well despite egregiously flouting the system, because if they didn’t do well, they’d probably have been fired already.
The Reactive Problem Solver The Reactive Problem Solver is highly reliable and very detail-oriented. While every rep in one way or another is focused on solving customer problems, these individuals are naturally drawn to ensuring that all of the promises that are inevitably made as part of a sale are actually kept once that deal is done. They tend to focus very heavily on post-sales follow-up, ensuring that service issues around implementation and execution are addressed quickly and thoroughly. One SEC member described the problem solver as “a customer service rep in sales rep clothing.” As she put it, “They come into the office in the morning with grand plans to generate new sales, but as soon as an existing customer calls with a problem, they dive right in rather than passing it to the people we actually pay to solve those problems. They find ways to make that customer happy, but at the expense of finding ways to generate more business.”
The Challenger Challengers are the debaters on the team. They’ve got a deep understanding of the customer’s business and use that understanding to push the customer’s thinking and teach them something new about how their company can compete more effectively. They’re not afraid to share their views, even when they’re different and potentially controversial. Challengers are assertive—they tend to “press” customers a little—both on their thinking and around things like pricing. And as many sales leaders will tell you, they don’t reserve their Challenger mentality for customers alone. They tend to push their own managers and senior leaders within their own organizations as well. Not in an annoying or aggressive manner, mind you—then we’d simply have to call this profile “the Jerk”—but in a way that forces people to think about complex issues from a different perspective. As one member put it, “We have a handful of Challengers in our company, and almost all of them seem to have a standing time slot on our CSO’s calendar to discuss what they’re seeing and hearing in the market. The CSO loves it. They’re constantly bringing fresh insight to the table that forces him to constantly check his strategy against reality.”
FINDING #2: ONE CLEAR WINNER AND ONE CLEAR LOSER If you step back and look at the five profiles, ask yourself: Which would you prefer to have on your team? In many ways, they all look good. But as interesting as it is that reps fall into one of five distinct profiles, it’s really the second finding that’s proven so completely surprising. When you take these five profiles and compare them to actual sales performance, you find something very dramatic. One in particular performs head and shoulders above the other four, and one falls dramatically behind, yet the results go against conventional wisdom. When most sales leaders see how each profile performs, they tell you quite frankly, they’ve indeed placed their biggest bet on the profile least likely to win. So who wins? The answer is the Challenger by a landslide. Take a look at figure 2.2. Source: Sales Executive Council research. Figure 2.2. Core and High Performers by Profile In comparing the five rep profiles with actual sales performance, the first thing we did was separate core performers from star performers and analyze each independently. To determine star performers, we asked participating
companies to tell us which of their reps in the sample fell into the top 20 percent of their sales force as measured by performance against goal. Once we had categorized all the reps in our sample by performance, we then determined the distribution of each group across the five profiles. And what we found was fascinating. First, the distribution of core performers across the five profiles is fairly even. No profile dominates among average sales reps. It turns out core performers aren’t average because they gravitate to a specific profile; they’re average because well, they’re average. They show up in all five categories and achieve average performance in every single one. In other words, there’s not one way to be average, but five. Mediocrity comes in multiple flavors. Indeed, you see this in figure 2.2 in the relatively even distribution of the lighter-shaded bars across the five profiles. But when you look at the distribution of star performers across these same five profiles, you find something completely different. While there may be five ways to be average, there’s clearly a dominant way to be a star. And that, by far, is the Challenger profile, comprising nearly 40 percent of all high performers in our study. You’ll remember that the Challenger rep is the rep who loves to debate. The one who uses his or her deep understanding of a customer’s business not simply to serve them, but to teach them: to push their thinking and provide them with new and different ways to think about their business and how to compete. So what truly sets them apart? In our analysis, of the forty-four or so attributes we tested, six of them showed up as statistically significant in defining someone as a Challenger rep: • 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
At first glance, this list may seem like a strange mix of unrelated qualities. In fact, when we first put together the list of attributes to be tested, it’s unlikely anyone would have picked these particular six as the key components of star performance. Nonetheless, that’s how the analysis came out. Each of these attributes represents a particular way in which Challenger reps significantly outperform their colleagues in the core.
That said, if we group the attributes into three categories we find they paint a very clear picture of who the Challenger truly is. A Challenger is really defined by the ability to do three things: teach, tailor, and take control: • With their unique perspective on the customer’s business and their ability to engage in robust two-way dialogue, Challengers are able to teach for differentiation during the sales interaction. • Because Challengers possess a superior sense of a customer’s economic and value drivers, they are able to tailor for resonance, delivering the right message to the right person within the customer organization. • Finally, Challengers are comfortable discussing money and can, when needed, press the customer a bit. In this way, the Challenger takes control of the sale.
These are the defining attributes of the Challenger—the ability to teach, to tailor, and to take control. They’re the pillars of what we’ve come to call the Challenger Selling Model, and the rest of this book will provide a road map for building these capabilities in your sales force. Before we turn to a closer analysis of Challengers, however, let’s return briefly to our overall results. Because as big an ah-ha! as it has been for sales leaders around the world that the Challenger is so much more likely to win than any other profile, it’s proven equally surprising—and frankly much more troubling—for sales executives to learn that the Relationship Builder falls so far behind. In our study, only 7 percent of all star performers fell into the Relationship Builder profile, far fewer than any other. And this finding should be a real red flag for all sales leaders encouraging their reps to simply go out and “build deeper relationships” with customers, or, as one company told their reps in the depths of the recession, to go out and “hug your customers.” Now, before we go any further, we should emphasize that these results by no means suggest that customer relationships aren’t important for sales—this would be a naïve conclusion. Of course they are important, particularly in complex sales where reps are required to engage in relationships with multiple stakeholders. If your customers don’t know who you are, or worse, outright dislike you, you must fix that first. But at the same time, if your strategy as a sales rep is largely one of being available to take care of whatever your customer needs—of acquiescing to the customer’s every demand—that can be a recipe for disaster in an environment where your customers are more reluctant than ever to buy your solutions for all the reasons we discussed in chapter 1. In that environment, as critical as a strong customer relationship may be, familiarity
alone isn’t enough to win the business. A service-oriented quarterly check-in call with your customer can be a great way to find business, but it’s not a very good way to make business. As a result, in a world where findable business has all but vanished, Relationship Builders are doomed to fail. Source: Sales Executive Council research. Figure 2.3. Challenger Versus Relationship Builder Profile So is the Challenger profile really all that different from that of the Relationship Builder? It absolutely is. When you look at the attributes that define the Challenger and compare them with the ones that define the Relationship Builder, as we’ve depicted in figure 2.3, you’ll see why. Challenger reps succeed for all of the reasons we just discussed—they excel at teaching, tailoring, and taking control. Meanwhile, as the Challenger is focused on pushing the customer out of their comfort zone, the Relationship Builder is focused on being accepted into it. They focus on building strong personal relationships across the customer organization, being likable and generous with their time. The Relationship Builder adopts a service mentality. While the Challenger is focused on customer value, the Relationship Builder is more concerned with customer convenience. The Challenger rep wins by maintaining a certain amount of constructive tension across the sale. The Relationship Builder, on the other hand, strives to resolve or defuse tension, not create it. It’s the exact opposite approach. Granted,
the conversation with the Relationship Builder is in most cases a very professional one, but it doesn’t really help the customer make progress against their goals. They’re likable, but they’re not very effective. The Challenger, by contrast, knows that there is value for both you and your customers in maintaining that tension a little bit longer in a manner that pushes the customer to think differently about their own business—about the ways in which you might be able to help them (to save money or make money) and, ultimately, about the value you provide as a supplier. Here’s how a global head of sales in the hospitality industry put it when he saw these results: “You know, this is really hard to look at. For the last ten years, it’s been our stated strategy to hire effective Relationship Builders. After all, we’re in the hospitality business. And for a while, that worked fine. But ever since the economy crashed, my Relationship Builders are completely lost. They can’t sell a thing. And as I look at this, I now know why.”
FINDING #3: CHALLENGERS ARE THE SOLUTION SELLING REP, NOT JUST THE DOWN ECONOMY REP The dramatic difference between Challengers and all other reps brings us to our third and arguably most dramatic finding. Almost inevitably at this point in our story, a question naturally comes up about the “staying power” of the Challenger profile. After all, we first derived these findings at a very specific and uniquely bad moment of economic performance. So is it possible that the superior performance of Challengers is simply a temporary phenomenon—a product of the Great Recession and the brutal sales environment it engendered? If that’s the case, are we likely to come back in two or three years and find that some other profile—perhaps one as yet unidentified—is more likely to win? Based on what we’re seeing in the data, we don’t believe that’s the case. To show you why, let’s shift our perspective to the longer view for a moment and look at the Challenger findings in the context of the broader shift toward solution selling. Source: Sales Executive Council research.
Figure 2.4. High Performance by Sales Rep Profile in Low-and High- Complexity Sales Environments If we look at the data through a different lens—the lens of sales complexity— we find something even more dramatic. After our initial analysis, we went back to the data and divided up the high performers according to the complexity of the deals they were selling (see figure 2.4), comparing star performers who sell relatively simple, stand-alone products across a shorter sales cycle versus those who sell more complex bundles of products and solutions across a relatively longer sales cycle. In complex sales, Challengers absolutely dominate, with more than 50 percent of all star performers falling into this category. The only group that can even come close are the Lone Wolves—who, most sales leaders will agree, are hard to find and even harder to control. At the same time, Relationship Builders nearly fall off the map entirely—the likelihood that they achieve star status when you’re selling complex solutions falls to nearly zero. This explains why so many organizations struggle with the migration to solutions. The world of solution selling is almost definitionally about a disruptive sale. It’s not that you’re asking customers to buy your product and put it up on the shelf with all of the other products they’ve bought. Rather, you’re asking customers to change their behavior—to stop acting in one way and starting acting in another. To make that happen, however, you have to get customers to think differently about how they operate. You need to show them a new way to think about their business. From that perspective, it’s really no surprise that in this more complex world only one profile wins—and it wins by a country mile. If you’re not building or hiring Challenger reps, chances are you’re going to come up well short as your deals become more complex. Challengers aren’t just the down economy rep of today; they’re the solution-selling rep of tomorrow. If you’re looking to grow through solutions, you’re going to need Challenger reps to do it. If you stop and think about your best salespeople—the ones bringing in the biggest deals from the most complex customers, you can see them in this picture. Chances are they’re your best Challengers. That said, implicit in this finding is a lesson for how you might think about the less complex, more transactional parts of your business, as well. In these areas (many of them in the inside or telesales parts of your company), it probably doesn’t make sense to overinvest in building Challengers, as the data suggest that Hard Workers are more likely to win the day there. If sales success is more a matter of call volume than call quality, Hard Workers are primed to succeed.
Challengers are critical in the complex world of solution selling, but they’re not requisite for every part of the business. The overall conclusion from our research is this: If you’re on the journey to more of a value-based or solutions-oriented sales approach, then your ability to challenge customers is absolutely vital for your success going forward. It’s therefore imperative to understand just what exactly makes someone a Challenger. After all, it’s one thing to tell reps, “Be a Challenger!” It’s another thing altogether to tell them exactly what you want them to do.
3 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. These are the pillars of what we call the Challenger Selling Model—an approach to sales that is based on what Challengers do. It’s a methodology that we’ve worked on with companies across a wide range of industries—companies