Ch 4: Teaching for Differentiation (Part 1)

Not surprisingly, then, sales leaders have spent millions of dollars and untold hours training reps to ask better questions. Lots of them. Probing questions. Financial questions. Hypothetical questions. Open-ended questions. Follow-up questions. All designed to figure out as deeply as possible customers’ “top three strategic objectives for the coming year,” or “the two things they’ve got to get right this quarter,” or—better still—their current “burning platforms.” The idea being, if we just dig deep enough to find “the story behind the story,” we’ll eventually get to a place where customers are so forthcoming about what they truly need that right there on the spot we can craft a highly targeted offer that provides the perfect “solution” to their problem. A solution so perfectly aligned with their needs that they have no choice but to buy it—no matter what the cost. It sounds great on paper, but this approach suffers one major problem: It doesn’t work nearly as well today as it used to. Certainly it no longer warrants the massive training investments poured into improving reps’ discovery skills. And that’s not just because improving reps’ ability to ask good questions proves colossally difficult—especially among core-performing reps—but, much more important, because this approach is based on a deeply flawed assumption: that customers actually know what they need in the first place. That customer needs are simply there waiting to be unlocked, either willingly or begrudgingly, through the mastery of our interrogative technique. But what if customers truly don’t know what they need? What if customers’ single greatest need—ironically—is to figure out exactly what they need? If this were true, rather than asking customers what they need, the better sales

technique might in fact be to tell customers what they need. And that’s exactly what Challengers do. When you get down to it, Challengers aren’t so much world-class investigators as they are world-class teachers. They win not by understanding their customers’ world as well as the customers know it themselves, but by actually knowing their customers’ world better than their customers know it themselves, teaching them what they don’t know but should. Across the next two chapters we dive deep into the Challenger’s ability to teach—arguably the first among equals across the three central Challenger competencies. A critical part of our teaching story will be a close, concrete look at what teaching is and is not. What it looks like and sounds like, how it works, and how to ensure we get paid when it’s done right. And along the way, we’ll address tough questions with some surprising answers. Things like: • How exactly is a “teaching” conversation all that different from a traditional sales conversation? • What kind of collateral do I need to teach effectively? • How much of this is truly a matter of individual skill versus organizational capability? • What’s the role of marketing in getting this right?

And perhaps most important: • Do customers really want to be taught in the first place?

Let’s start with the last question first. That’s really where the rubber hits the road in any sales approach: with the customer. And in the case of the Challenger approach, this is the question we hear most often. After all, it seems on the surface rather arrogant to simply show up and declare to the customer, “Hello, I’m here to teach you!” But that’s exactly what we’re saying. Perhaps not in those words per se—in fact, almost certainly not in those words. But still, after four years of extensive customer research, what we emphatically know to be true is that that’s exactly what customers are looking for more than anything else in a supplier.

IT’S NOT WHAT YOU SELL, IT’S HOW YOU SELL Beginning long before the global economy went off a cliff in 2008 and continuing right through the ensuing downturn, the team at the Sales Executive Council and its sister program, the Marketing Leadership Council, a program of the Corporate Executive Board, have surveyed well over 5,000 individuals at our clients’ customer organizations—everyone from business owners and C-suite executives to end users, purchase influencers, procurement officers, and even third-party consultants—in order to determine what exactly they’re looking for in a business-to-business supplier. Specifically, across roughly fifty questions we asked each respondent to rank the named supplier (i.e., our client organization) versus similar suppliers in terms of various attributes of their products, brand, service, and price-to-value ratio. We asked about all the typical reasons why someone might choose one supplier over another—things like product performance, product features, brand recognition, service response times. In addition, we asked those same individuals a number of questions about the sales experience itself—what it’s actually like to buy from the named supplier relative to their competitors. Finally, we asked each respondent three specific questions to gauge their level of loyalty to that supplier: “On a scale from one to seven, how willing are you to: • keep buying from this particular supplier; • buy even more from this supplier going forward; • advocate on this supplier’s behalf across your organization?”

We weren’t asking about a customer’s general level of happiness, or satisfaction, or even likelihood to buy—all of which we’ve found in earlier work at the Marketing Leadership Council to have little impact on B2B customer loyalty—but rather about their willingness to join that supplier on a “solutions journey.” Across years of loyalty research, we’ve found that the combination of these three questions better predicts deeper customer relationships and, ultimately, commercial growth than any other loyalty metric we’ve tested. When we put all of that information together—tens of thousands of data

points—and then run it through extensive analysis, it allows us to determine, of all the ways to outperform the competition, what the most important factors actually are driving up customer loyalty. The answer is not only fascinating but so unexpected for most sales and marketing executives that the results have landed in more boardroom-level conversations than any other piece of research we’ve ever conducted (see figure 4.1). Source: Sales Executive Council research. Figure 4.1. Representative Drivers of Customer Loyalty The first thing you find when you look at the analysis is a definitive impact on loyalty from brand, product, and service. When you combine these factors you find that 38 percent of customer loyalty is attributable to your ability to outperform the competition in these areas. Selling a well-branded, highly differentiated product, supported by higher-than-industry-average service will undoubtedly get you more loyalty. If you’re way behind the competition in any of these three categories, that’s probably where you want to start. That said, many executives look at these results with genuine surprise. They expect these factors to account for much more, maybe 70, 80, or even 90 percent of customer loyalty. After all, if they can’t win loyalty off their superior brand, product, and service, well then, what else is there? But the reason for their surprisingly low impact stems largely from a common trend captured perfectly in a story told to us recently by the global head of marketing at one of the world’s top financial services firms. When she saw this data, she said, “Four years ago, our company was sitting at only 65 percent customer satisfaction due to a long trend of generally poor customer service

across our entire industry. Seeing this problem as a real growth opportunity, across the next three years we set about analyzing and improving service across every major customer touchpoint, investing millions of dollars and countless hours along the way. And the results were phenomenal! At the end of three years, we had increased customer satisfaction from 65 percent to 95 percent.” Sounds fantastic, doesn’t it? “But,” she continued, “there was only one problem. In those same three years, our two biggest competitors did the exact same thing. They invested roughly the same amount of money and achieved more or less the exact same result. So here we are, four years later, and our entire industry sits at 96 percent customer satisfaction. Don’t get me wrong, that’s great, but as a result we’ve seen absolutely no commercial benefit from all that expense. Satisfied customers leave us every day, because they know they’ll be treated equally well somewhere else.” Now, is it fair to say that this company had to invest that kind of time and money simply to stay in the game? Absolutely. Had they not, they’d just as likely be out of business today. But the lesson is still maddeningly familiar. We pour millions of dollars into brand, product, and service seeking growth, and really only get status quo. Our customers are more satisfied, but they’re not necessarily any more loyal. So what’s happening here? To find out, we went out and discussed these findings with some of the customers who had completed the survey and heard something that might surprise you. In light of the results—the relatively low impact on loyalty of brand, product, and service—we expected at least some of these customers to express real dissatisfaction with the supplier in questions across these three categories. But that’s not what we heard at all. In fact, it was just the opposite. They loved the product! The brand was world-class! The service was fantastic! But if that was the case, then why in the world were the loyalty scores for these attributes so low? The answer lay in what these customers would often say next. “Sure! They’ve got a great product! It performs exactly like they said it would! But the competition’s got a great product too!” Or, “Their brand is world-class! Everyone knows their brand! But the competition’s got a world-class brand too!” Or, “Their service is fantastic! In fact, I’d put them right up there with the competition!” Sound familiar? Over and over we found that customers, generally speaking, see significantly less difference between us and the competition than we do ourselves. It’s not that they think most suppliers are particularly bad on brand, product, or service. It’s just that they don’t think they’re particularly different. So while we spend much

of our time emphasizing subtle differences, customers tend to focus first on the general similarities. Does this mean you should stop investing in brand, product, and service? Certainly not! It’s all still hugely important. But—at least in the B2B world—the investments we make in brand building, product development, and improved customer service are not the final step to winning customer loyalty, but the first. It’s the price of entry to gaining customer loyalty at all. In fact, after they’ve had a chance to wrap their heads around this finding for a while, sales and marketing executives tend to agree, as they see it every single day in their own business. However, in many cases, their natural inclination across the last several years, at least, is to explain away the low impact on loyalty from brand, product, and service as a natural by-product of customers’ intense focus on reducing costs. Sure, customers are loyal, they’d argue. They’re just loyal to whoever’s got the lowest price. But it turns out, that’s not the case either. Only 9 percent of customer loyalty is attributable to a supplier’s ability to outperform the competition on price-to- value ratio. Yes, you might be cheaper than the competition, but in the eyes of your customer, you likely provide less value as well. So your lower price may get you the deal, but it almost certainly won’t get you much loyalty. If your customer is dead set on buying the cheapest option today, then chances are pretty good they’ll be dead set on buying the cheapest option tomorrow as well. And that may or may not be you. After all, there’s usually little stopping your competition from discounting their way to a win. In that game, loyalty is essentially irrelevant, as customers aren’t looking for a partner, they’re looking for a bargain. And that’s not what this story is all about. This is a story about a customer’s willingness not only to keep buying from you, but to buy even more over time and to advocate on your behalf. And if that’s your goal, price is simply a bad way to get there. Unless your lower prices come with significantly higher perceived value than the competition, today’s discounts won’t get you tomorrow’s business. So if only 38 percent of customer loyalty is attributable to your ability to outperform the competition on brand, product, and service, and 9 percent of loyalty is attributable to your ability to outperform the competition on price-to- value ratio, then what about the other 53 percent? What else is there? Well, to understand the answer, let’s go back to those customer conversations we mentioned a moment ago. What we typically heard from customers, after they told us how little difference they saw between one supplier and another in terms of brand, product, and service, is that they saw huge differences in the sales experience itself—the actual sales conversations they had with suppliers on

an ongoing basis. Customers were painfully blunt on this point. Some reps, they said, would so thoroughly waste their time that at the end of the sales call they felt as though they’d just been robbed of an hour of their lives—an hour they will never get back. And frankly, it didn’t matter how good the rep’s presentation skills might be. It just wasn’t worth it to have to sit and listen to an excited explanation of how the new and improved Model XPJ178 could run three seconds faster while using less energy and requiring less maintenance, “saving you time and money for the more important things!” Who cares?!?! Do I want to save time and money? Of course I do! Do I think that three seconds justifies a 5 percent price premium? Probably not. On the other hand, those same customers told us that other reps would take the time to provide information so interesting and valuable that—in the words of Neil Rackham—the customer would have been willing to pay for the conversation itself. In other words, while customers found some suppliers to be horrible in the sales experience, they found others to be invaluable. Even suppliers that appeared similar in every other way on paper performed all over the map when it came to the sales experience. And that difference, it turns out, has a huge impact on customer loyalty. That’s the real bombshell finding of this work. Loyalty isn’t won in product development centers, in advertisements, or on toll-free help lines: Loyalty is won out in the field, in the trenches, during the sales call. It’s the result of the conversations our reps are having with customers every single day. The entire remainder of customer loyalty—all 53 percent—is attributable to your ability to outperform the competition in the sales experience itself. Over half of customer loyalty is a result not of what you sell, but how you sell. As important as it is to have great products, brand, and service, it’s all for naught if your reps can’t execute out in the field. That said, it’s one thing to say that the sales experience is hugely important for customer loyalty, but another thing altogether to understand how. After all, remember, customers were very specific here. Some of these interactions are desperately painful, others incredibly valuable. So what exactly needs to happen during the sales experience in order to generate such an impact on customer loyalty? Well, this is where the story really gets interesting, because when you crack open the data inside the sales experience category, what you find is the exact same Challenger story, only this time from the customer’s perspective.

THE POWER OF INSIGHT Of the fifty or so attributes we tested in our loyalty survey, seventeen of them fell into the sales experience category, each reflecting at least a marginally positive impact on customer loyalty. They included things like, “Demonstrates a high level of professionalism,” “Adjusts to our unique needs and specifications,” “Portrays a realistic picture of costs,” and “Matches communications to my preferences.” However, when we ranked the list according to impact, we found seven in particular that rose way above the others in terms of importance: • Rep offers unique and valuable perspectives on the market. • Rep helps me navigate alternatives. • Rep provides ongoing advice or consultation. • Rep helps me avoid potential land mines. • Rep educates me on new issues and outcomes. • Supplier is easy to buy from. • Supplier has widespread support across my organization. Now, if we start at the bottom of that list and work up, the first thing we find is statistical corroboration for what we all know to be true—and something we’ll discuss in more depth in chapter 6. The need for consensus across customer stakeholders has gone way up. Senior decision makers inside the customer are no longer willing to go out on a limb for any supplier or any solution, unless that deal has the support of his or her team. It’s a logical, if frustrating, outcome of the larger, more expensive, more disruptive solutions suppliers are seeking to sell. When the stakes are higher, you can’t just claw your way to the corner office to get the deal done. You’ve got to build a network of advocacy along the way or risk losing the deal altogether due to weak support across the organization. Likewise, customers place a great deal of importance on a smooth, uncomplicated purchase. No one wants to work with a supplier that makes any purchase more complicated than it has to be—especially a solutions purchase. Nothing slows down a deal faster than reps who have to constantly “check with

their manager,” or “run it through Legal,” or “see if Finance will be willing to do that.” Don’t make your customers work so hard to spend their money! There’s something else about this list that really jumps out. Take another look at the top five attributes listed there—the key characteristics defining a world- class sales experience: • Rep offers unique and valuable perspectives on the market. • Rep helps me navigate alternatives. • Rep provides ongoing advice or consultation. • Rep helps me avoid potential land mines. • Rep educates me on new issues and outcomes.

Each of these attributes speaks directly to an urgent need of the customer not to buy something, but to learn something. They’re looking to suppliers to help them identify new opportunities to cut costs, increase revenue, penetrate new markets, and mitigate risk in ways they themselves have not yet recognized. Essentially this is the customer—or 5,000 of them at least, all over the world— saying rather emphatically, “Stop wasting my time. Challenge me. Teach me something new.” It’s a powerful conclusion that runs contrary to years of thought and training in B2B sales. Sure, a supplier has to have great products, brand, and service. But from the customer’s perspective, most already do. After all, if that weren’t the case, they probably wouldn’t be speaking with that supplier in the first place. Instead, what sets the best suppliers apart is not the quality of their products, but the value of their insight—new ideas to help customers either make money or save money in ways they didn’t even know were possible. In this sense, customer loyalty is much less about what you sell and much more about how you sell. The best companies don’t win through the quality of the products they sell, but through the quality of the insight they deliver as part of the sale itself. The battle for customer loyalty is won or lost long before a thing ever gets sold. And the best reps win that battle not by “discovering” what customers already know they need, but by teaching them a new way of thinking altogether. Customers are very clear on this point. They place much greater value on reps’ teaching skills than on their discovery skills. To go back to the data for a moment, much farther down the list within the sales experience is, “The rep excels in diagnosing our specific needs.” The ability to diagnose needs scores much lower because, frankly, it’s just not as valuable to the customer. Sure, it’s great if a rep knows my needs as well as I do and can ask great questions to

uncover those needs as quickly as possible. But what I really need is a rep who knows my needs better than I do—one who can challenge me to think differently about my business altogether. And to do that, great questions aren’t enough. You’ve got to have great insights. And by the way, for those selling a commodity, this is all the more applicable. There’s no question that winning customer loyalty when you can’t differentiate yourself on product, brand, or price is difficult at best. But these findings provide the best possible path for doing just that. As a head of sales at a global chemical company put it to us, “Sure, you and I may both sell five-gallon buckets of unbranded axle grease at the same price. But if I can sell my five-gallon bucket of unbranded axle grease better than you can sell your five-gallon bucket of unbranded axle grease—well, then I’m going to win. And the way I do that is by helping the customer think differently about their business.” And he’s right. After all, if he’s not, then there’s really nothing left other than price itself as the basis for differentiation. And in that case, why have a sales force at all? Put that unbranded axle grease online and sell it through your Web site. It’s a lot cheaper that way. So where does that leave us? In this world—where quality insight trumps all else—it’s no wonder, then, that Challengers win. Insight is all about teaching customers new ways of thinking, pushing them to rethink their current perspectives and approaches. And that’s exactly what Challengers do. They teach customers new perspectives, specifically tailored to their most pressing business needs, in a compelling and assertive enough manner to ensure that the message not only resonates, but actually drives action. After all, if you don’t change the way a customer thinks—and, ultimately, acts—then you haven’t really taught them anything to begin with. At least nothing worth doing anything about. And where’s the value in that?

NOT JUST ANY TEACHING. COMMERCIAL TEACHING Still, as important as teaching is, it is not enough to simply build a team of Challenger reps and tell them, “Go forth and teach!” That may be good for customers, but not necessarily good for business. Here’s how the global head of sales at a large enterprise software company put it to us: “What happens,” he asked, “if my rep goes out, teaches a customer something completely new and compelling about their business, gets them all excited to take action, and that customer then takes that insight, puts it out to bid, and my competitor wins the deal? In that case, it doesn’t feel like I’ve really won anything.” And he’s right, you haven’t. All you’ve really done is provide free consulting. Sure, you’ve given the customer exactly what they want, but in the process you’ve actually given your competitor exactly what they want too—your business. And that is truly a bad place to be. It’s one thing to challenge customers with new ideas, and another thing altogether to ensure you get paid for it. Even the world’s best Challengers can’t win if they’re teaching customers to value capabilities they can’t competitively provide. So how do we ensure that our teaching efforts actually lead to more business for us and not the competition? Well, to do that, we find that your teaching efforts have to meet some very specific criteria. We call this approach Commercial Teaching. A bit unimaginative, perhaps, but we like the name nonetheless because it perfectly captures what Challengers ultimately must do: teach customers something new and valuable about their business—which is what they want—in a way that reliably leads to commercial wins for us—which of course is what we want. It sounds a bit like jujitsu, but it’s actually pretty straightforward; it’s just not necessarily easy. Commercial Teaching has four key rules:

Lead to your unique strengths.
Challenge customers’ assumptions.
Catalyze action.
Scale across customers. As we work through these rules, you’ll find that they are as much about building an organizational capability as they are about developing an individual

skill, a key lesson of the Challenger selling model we discussed in the previous chapter. This approach is about much more than simply building Challengers; it’s about broad, long-term commercial transformation. More on that shortly. For now, let’s review the four rules of Commercial Teaching.

Commercial Teaching Rule #1: Lead to Your Unique Strengths First and foremost, commercial teaching must tie directly back to some capability where you outperform your competitors. If what you’re teaching inevitably leads back to what you do better than anyone else, then you’re in a much better position when it comes to winning the business. We often put it like this: The sweet spot of customer loyalty is outperforming your competitors on those things you’ve taught your customers are important. Yes, you’ve got to get a customer thinking about new opportunities to save or make money—opportunities that move them to take action. But you’ve only really succeeded when the customer asks, “Wow, how can I make that happen?” and you’re able to say, “Well, let me show you how we’re better able to help you make that happen than anyone else.” That’s the magical moment. You’ve shared new, relevant insight—which is what customers are looking for—but at the same time, you’ve tied that insight to your unique solution. You’ve taught your customer not just to want help but to want your help. There are two important caveats, however, to doing this well. First, in order for this approach to work, you’ve got to make sure that you actually can help. From the customer’s perspective, there’s nothing more frustrating than a supplier that teaches them a new and compelling way to save or make money, but then can’t actually do anything about it. One head of sales we work with refers to this as “teaching your customer into the desert.” You leave them troubled by a new problem they never knew they had and with no real way of doing anything about it. Yes, customers want insight on how they could operate more productively, but insight they can’t do anything about actually makes things worse, not better. Then you really have given them something to keep them up at night! Second, and this is the big caveat, in order to ensure that your teaching efforts ultimately lead to your unique strengths, you actually have to know what your unique strengths are. Sure, it sounds obvious. But we have been consistently surprised by the number of executives who struggle mightily on this issue. Here’s how one head of marketing at a well-known manufacturing company put it: “If I polled a hundred reps on our core value proposition, I’d get at least a hundred different answers.” We hear this all the time, usually coupled with a slow shake of the head and a rueful sigh; it’s one of those age-old truths of sales

and marketing. Yet notice that this executive’s lament really captures only part of the problem. Yes, it’s hard enough to get reps to agree on a broad description of what the company does well. But ask those same reps what the company actually does better than the competition, and instead of a hundred different answers you’re just as likely to get none at all. At best you might hear something like, “Yeah, the competition can do something like that too, but we do it so much better!” Or even more common: “Sure, you could go with the other guy, but keep in mind we’ve been in this business longer than anyone else. We’ve been serving leading companies for over fifty years with innovative solutions backed by a deep commitment to product quality and a laser-like focus on serving customers.” Blah, blah, blah. As if your main competitor didn’t have a “laser- like” focus on customers either. Of course they do! How is a customer supposed to choose between two suppliers that are more or less undifferentiated? It’s actually rather simple: They choose the cheapest supplier. Who wouldn’t? In today’s world, everyone is “innovative,” “solutions- oriented,” “customer-focused,” and—of course—“green,” so why pay more for it? In a recent survey of B2B customers, the Marketing Leadership Council found only 35 percent of companies able to establish themselves as truly preferred over the competition. And still more troubling, even among preferred companies, when we tested the impact of each of the benefits they believed to be unique, we found that customers perceived only half of them to be actually relevant to their needs. And among those, customers told us that most weren’t delivered consistently enough to actually influence their preference. When you put it all together, only 14 percent of companies’ so-called unique benefits were perceived by customers as both unique and beneficial! And as you might imagine, being “innovative,” “customer-focused,” and “green” were not among them. When it comes to differentiation, your customers hold you to a much higher standard. It’s no wonder, then, that reps continually revert to price. It’s not just that they struggle to articulate the value of their solution; they struggle to articulate the unique value of their solution. And this, it turns out, is the hardest part of commercial teaching: understanding and agreeing on what it is that your company does better than anyone else. It requires a very deep understanding of who you are and what you do. Much of our work at both the Sales Executive Council and the Marketing Leadership Council across the last several years has aimed at providing clients the tools to figure this out—everything from step-by- step self-guided exercises, to facilitated leadership workshops, to customer

survey builders, to actual customer diagnostics. But no matter how you go about addressing it, all of this work ultimately boils down to a single question you must answer. We sometimes refer to it as the “Deb Oler question,” named after Debra Oler, vice president and general manager of Grainger Brand at W. W. Grainger, Inc. As Deb puts it, “Why should our customers buy from us over anyone else?” That’s it. It’s disarmingly simple. But that one question can take your entire commercial leadership team to a very dark place as you realize it’s much harder to answer than you might have thought. In fact, most companies can’t answer it, at least not in a way that’s compelling to customers (again, being “innovative,” “customer-focused,” and “solutions-oriented” doesn’t count). And for the few companies that can answer it, even fewer still would find agreement on that answer across their entire sales force. So where does that leave us? Well, first and foremost, it means that if you’re going to build Challenger reps to teach customers something new about their business, you’ve likely got some work to do in your own business first. Unless you can ultimately connect the insights you teach your customers back to capabilities only you can offer, you’re much more likely providing free consulting than Commercial Teaching. That’s a dangerous place to be unless you happen to also be the lowest-cost provider in that market (which is improbable since lowest-cost providers, by definition, can’t afford the added cost of teaching customers).

Commercial Teaching Rule #2: Challenge Customers’ Assumptions If the first rule of Commercial Teaching is all about the connection between insight and supplier, the second is about the connection between insight and customer. It feels like an obvious point, but we’ll say it anyway. Definitionally, whatever you teach your customers has to actually teach them something. It has to challenge their assumptions and speak directly to their world in ways they haven’t thought of or fully appreciated before. The word we like to use here is “reframe.” What data, information, or insight can you put in front of your customer that reframes the way they think about their business—how they operate or even how they compete? That’s what your customers are really looking for. Remember what we saw in our customer survey? • Rep offers unique and valuable perspectives on the market. • Rep helps me navigate alternatives. • Rep provides ongoing advice or consultation. • Rep helps me avoid potential land mines. • Rep educates me on new issues and outcomes.

There’s nothing on that list about “confirmation” or “validation.” Yes, customers appreciate it if you can confirm what they already know to be true; there’s value there to be sure. But there’s vastly greater value in insight that changes or builds on what they know in ways they couldn’t have discovered on their own. That kind of insight is not necessarily easy to achieve. You have to know your customers’ business better than they know it themselves—at least that part of their business that speaks to your capabilities. It sounds like an impossibly high bar but the reality is that most suppliers actually do understand their customers’ business better than customers do themselves—when viewed specifically through the lens of that supplier’s capabilities. A company that sells printers to hospitals, for example, may not know more about health care than the hospital administrators they sell to, but they certainly know more about information management in a hospital setting. A company that sells consumer packaged goods probably knows more about how and why consumers buy groceries than

most of the retailers they sell to. Wherever the insight comes from, you’ll know if you’ve actually reframed your customer’s thinking based on their reaction. And this is where some reps really fall into a trap. Ironically, if your customer reacts to your sales pitch with something like, “Yes, I totally agree! That’s exactly what’s keeping me up at night!” well, then you’ve actually failed. That may feel counterintuitive, but it’s true nonetheless. Sure, you’ve found an issue or insight that resonates, but it doesn’t reframe. You haven’t actually taught them anything. This is exactly where we see Relationship Builders struggle all the time. They return from a sales call excited about the “connection” they established with a customer because they “nailed the issue match.” “It was like I was reading his mind! Everything I put on the table was something he was focused on!” But then they’re surprised when that customer hasn’t returned their calls two weeks later. They assume that their successful diagnosis of the customer’s needs was sufficient to win the business. But that’s not the case. Rapport and reframe are not the same thing. Just because you “get” the customer’s business doesn’t mean you automatically get the customer’s business. Not by a long shot. Challenger reps, on the other hand, are looking for a different customer reaction altogether. Rather than, “Yes, I totally agree!” they know they’re on the right track when they hear their customer say, “Huh, I never thought of it that way before.” The best indicator of a successful reframe, in other words, isn’t excited agreement but thoughtful reflection. You’ve just shown your customer a different way to think about their business—perhaps a land mine they’d overlooked, a trend they underappreciated, or an alternative they’d prematurely dismissed—and now you’ve got them curious. They’re wondering, “What exactly does this mean for my business?” or even better, “What else don’t I know?” This is the pivot point of any effective Commercial Teaching conversation. When your customer says, “Huh, I never thought about it that way before,” they’re clearly telling you they’re engaged, maybe even a little unsettled. And as customers themselves have told us, that’s exactly what they were hoping for when they sat down with you in the first place. That’s when the conversation itself becomes something worth paying for. Still, just because we’ve helped them see things differently doesn’t mean we’ve necessarily persuaded them to do things differently. That’s next—and it’s just as important.

Commercial Teaching Rule #3: Catalyze Action In a world of limited resources and competing priorities, it’s not enough to change the way customers think. You’ve ultimately got to get them to act. We often joke about the customer who responds to your reframe with, “Huh, I never thought about it that way before! . . . I wonder what’s for lunch . . .” Like Doug, the dog in the movie Up who becomes completely distracted every time he sees a squirrel, customers easily lose focus. So if you want them to take action, you’ll need to build a compelling business case for why action matters in the first place. This is well-trodden ground. For most suppliers, the move to “solutions” is grounded in an effort to justify premium prices for bundled products and services. As a result, they’ve invested huge amounts of time and money in a wide range of tools designed to help customers calculate the “ROI” or “total cost of ownership” of their offerings—usually accompanied by sales reps’ enthusiastic assurances of the “lifetime value” of their products. “Yes, we might cost a little more up front, but look at what you can save over the next four years! Our solution practically pays for itself!” Unless you can convince your customers they’ll get incremental value for that premium price, your solution strategy is doomed to fail. In a Commercial Teaching approach, this is exactly where we find the biggest difference between companies who believe they do this well and those who actually do this well. That’s because a well-executed teaching conversation isn’t about the supplier’s solution at all—at least not initially. It’s about the customer’s business, laying out an alternative means to either save money or make money they’d previously overlooked. In a conversation like that, traditional ROI calculations prove useless because they’re focused on the wrong thing. Nearly every ROI calculator we know of is built to help customers calculate the return on buying the supplier’s solution. But before you convince customers to take that action, you first have to show them why the insight you just shared with them merits any action at all, especially when that insight competes directly with conventional wisdom. To that end, the best ROI calculators in a teaching approach have nothing to do with your solution at all. Rather, they help

customers calculate the costs they’re incurring or the returns they’re forgoing by failing to act on the opportunity you’ve just taught them they’ve overlooked. If you’re going to build an ROI calculator, make sure it calculates the return on pursuing the reframe, not purchasing your products. Before they buy anything, customers first need to understand what’s in it for them to fix their problem.

Commercial Teaching Rule #4: Scale Across Customers Done well, Commercial Teaching is much more than simply an effective sales technique. It’s a powerful commercial strategy. To be sure, it absolutely works well at the individual deal level, as Challenger reps opportunistically uncover occasions to teach customers fresh insights tailored to their specific context. However, there are a number of important reasons why the approach is unquestionably more effective when deployed segment by segment rather than customer by customer. From a tactical perspective, it’s not realistic or fair to expect your reps to understand their customers’ business better than they do themselves without at least some organizational support. Your core performers will struggle mightily with that task no matter how much you train them—especially if they work across a diverse customer base. But imagine if you could provide those same reps with a manageably small set of well-scripted insights along with two or three easy-to-remember diagnostic questions designed to map the right insight to the right customer. Then they’d be in a much better position to teach. It would significantly shift the burden of effective needs diagnosis away from frontline sales reps and back into the organization, where you’ve got both the depth of skill and the breadth of insight necessary to figure it out in advance. For this approach to truly work, you need a small number of powerful insights that naturally lead to an even smaller number of unique solutions, all applicable across the broadest possible set of customers. In other words, you need scale. Commercial Teaching is definitely not something you just want to leave in the hands of individual reps. Commercial Teaching also requires you to think very differently about customer segmentation. While traditional segmentation schemes like geography, product silo, or industry vertical may be sufficient for sales rep deployment, the companies that do best at this approach have learned to also segment customers by need or behavior. If you can find a group of customers with similar needs— irrespective of where they are or what they sell—those customers will likely all react in a similar fashion to a common set of insights. For example, we have seen Commercial Teaching work very effectively around a common need to free

up cash, or reduce employee churn, or improve workplace safety. In each of these cases, the suppliers in question helped customers think about that need in new and surprising ways by reframing their thinking, convincingly laying out the fully loaded costs of inaction, and then providing a credible course of action that naturally led back to the supplier’s unique solution. And each did it across large groups of customers who under any traditional segmentation strategy would have appeared, superficially at least, to have nothing in common. The common denominator for insight, in other words, isn’t geography, or size, or industry. It’s a common set of needs. We’ve done a great deal of work at the Marketing Leadership Council across the last three years helping clients develop and implement various needs-based segmentation techniques, based on a number of best practices developed at some of the world’s leading B2B companies. The one thing every company that’s gone down this path has discovered is this: Needs analysis is not something you can afford to leave in the hands of your individual reps. If your reps’ primary goal going into a sales call is to “discover” the customer’s needs, you’ve lost the battle before you’ve even begun to fight, because, frankly, your customers don’t want to have that conversation. Alternatively, Commercial Teaching equips reps to teach customers what they really need by challenging the way they think about their business altogether, providing them with new means to address their toughest problems in ways they would have never identified on their own. Granted, there are some important conditions that must be met in order for this approach to work. Commercial Teaching must lead to your unique strengths, challenge customers’ assumptions, catalyze action, and scale across customers. But when these conditions are met, it works—phenomenally well, in fact. And the reason why, as we saw, is because more than anything else customers are looking to suppliers to challenge their thinking and teach them something they don’t know. That said, once you’ve laid the groundwork for effective Commercial Teaching, your reps still have to go out and actually talk to customers. If they don’t have the skills to challenge, even the most powerful insights will fall on deaf ears. So what does a “teaching conversation” actually sound like? Is it really all that different? Absolutely. It’s not just that Challengers teach that sets them apart, it’s the way that they teach that really matters most. World-class teaching conversations, it turns out, follow a very specific choreography, one that takes a traditional sales conversation and completely stands it on its head. Let’s look at that next.

5 TEACHING FOR DIFFERENTIATION (PART 2): HOW TO BUILD INSIGHT-LED CONVERSATIONS ONCE YOU’VE AGREED on the unique benefits that clearly set you apart from the competition and you’ve identified a set of compelling insights that teach customers a new way to compete more effectively, how do you put it all together? Well, if you were to map a world-class teaching conversation—or teaching “pitch”—you’d find it moves through six discrete steps, each building