Enabling the Challenger Sale by David Chapnick

Enabling the Challenger Sale
by David Chapnick
You do not have to have been
born a Challenger to succeed,
but you do need to know what
the right preparation strategy
is and how to leverage it.
The research outlined by the recent
book The Challenger Sale: Taking
Control of the Customer Conversation 1
has created a paradigm shift in what we
know about how effective salespeople
interact with customers “at the table.”
Based on the research by Dixon and
Adamson, “Challengers” are reported
to be better equipped and better able to
influence customer purchases than any
other type of salesperson. Challengers
do this by providing customers with new
or unique insights into the market or on
how their customer can save or make
money through process improvements
and product innovation; work with
their customers to customize and
create potential solutions; and close
with judicious assertiveness and sound
justification for why a particular solution
makes sense, at that price, at that time.
These are the three core behaviors that
Dixon and Adamson say Challengers do
most effectively with their customers:
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Teach for Differentiation
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Tailor for Resonance
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Take Control of the Sale
However, knowing what to do to be a
successful Challenger, and knowing
how to do it are fundamentally different
questions. It is the latter question that
we hear most often from our clients.
As Dixon and Adamson rightly point
out, sales executives know that there
is “potentially huge commercial value
currently locked up in the middle 60%
of the sales force,” but how we raise
the bar of so-called “core performers”
is the true challenge. This is especially
difficult as so many core performers
are not challengers at all. And that is
fundamentally the point. Whether your
salespeople are innately “challengers” or
not, all salespeople can Teach, Tailor, and
Take Control, if they have done the right
preparation and are supported by their
organization with the right processes
and tools.
Preparing systematically for each customer
encounter is at the center of successful
sales strategy execution. Too often
we hear of sales people running from
sales call to sales call, and customer to
customer, without having sat back and
truly given thought to the objectives of
each interaction, and how each can and
should be used further their position. Using
the Challenger framework as guidance,
successful sales people can consider ahead
of time what they will need to accomplish
in their meetings, and specifically how
they will go about doing so.
Teach for Differentiation by
Understanding Customer Interests
At its core, Teaching for Differentiation
means understanding what customers truly
care about, their interests — what they truly
value, what strategy they are looking to
execute, and what they believe will help
them get there — and helping them to
understand how the solutions you offer can
help meet them. Knowing their interests as
well as they do, and supporting them as they
uncover interests that they did not know
they had, requires significant preparation.
1 Dixon, Matthew and Brent Adamson. The Challenger Sale: Taking Control of the Customer Conversation. Penguin Group USA: New York. ©2011
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Challenger says…
Prepare by…
Teach for Differentiation
„„
Tailor for Resonance
Take Control of the Sale
„„
„„
„„
Understanding customer
interests
Generating possible
options
Identifying standards of
legitimacy
Testing customer
alternatives
As you prepare, consider what you know
and don’t know about your customer. The
illustrative questions below can help you
fill in the picture:
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Why…
Does your customer care only about price,
or do they care about quality, total cost of
ownership, technology, customer service,
or other differentiators?
How are they being measured and
incented (as that will likely determine
what they care about)?
Are there other stakeholders that will
play a role in the buying decisions, and if
so what do they care about (because you
will have to satisfy their interests as well,
if you want to close the deal)?
What technical or financial challenges
are they facing? Are they short-term or
long-term?
Are there interests that you can imagine
they might or should have but which they
may not fully understand (e.g., because
of coming market changes, disruptive
technologies, competitor actions, where
their own customers are heading, etc.)?
How does your customer weigh and
prioritize those many interests?
Prepare what you know, and be prepared to
„„
Any deal that your customer will ultimately agree to has to
meet their interests
„„
Allows you to offer targeted business insights to the customer
and be seen as a trusted, credible, and persuasive advisor
„„
Getting all of the possible solutions on the table before moving
to a commitment helps to develop the most creative deal
„„
Determining which options a customer likes or does not and
why helps you to better understand their true interests
„„
Ensures that the deal is fair and defensible to stakeholders
internally and at the customer
„„
Provides non-arbitrary ways to resolve conflicting interests and
positions in negotiations
„„
Any deal has to better meet the customer’s interests than the
competition
ask them about what you don’t, with good
questions that help them to better understand
their own interests as well. At the same
time, prepare insights that you have gleaned
from your dealings with their organization,
what you have seen other customers do
effectively, and what you see daily in the
marketplace. Those insights likely center
around interests that your customer may
not know they have, and likely would
appreciate hearing about. Whether or not
you have to truly “challenge” them on
their interests, providing such insight in
an educated, well-prepared, and thoughtful
manner is a way to provide real value, and
position yourself as a trusted advisor, rather
than simply another salesperson.
One helpful way in which you might do this
is through “hypothesis-driven questions.”
Ask questions with an eye toward testing
hypotheses of what they might need to be
considering for their business. These are
not just general questions like “Where is
your business headed?”, “What are you
seeing in the market?”, or “Where is your
competition focused?”, but are based on your
own understanding of their business and
their market: “How are you thinking about
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____?”, “Are you worried about ____?”, “As
we see ____, I wonder if you are concerned
with ____?” Filling in those blanks shows
Whether or not you have
to truly “challenge” them
on their interests, providing
insight in an educated,
well-prepared, and thoughtful
manner is a way to provide
real value.
you care, may shake up the client as they
consider something they have perhaps not
thought of, provides you with a greater
understanding of their interests, and often
creates real insight. With such insight, you
can begin to generate possible solutions.
Tailor for Resonance by Generating
Possible Options
Challengers are effective at molding,
customizing, and shaping their offerings
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As you test the potential
options with your customer,
you will uncover more
interests that you or they may
not have even known about,
making the ultimate solution
that much better.
to the interests and needs of the customer
— as Dixon and Adamson say, Tailoring
for Resonance. They do this with the
customer by using the customer’s interests
to develop a creative, final solution, from
among all of the possible options that might
be provided. Options are all of the myriad
ways in which a salesperson and customer
might reach agreement — to eventually
arrive at a final solution. Too often sales
people jump right to what they believe is
the final solution and try their heart out
to sell it. “What you need is X” or “This
will meet your needs” are not uncommon
to hear in a typical sales pitch.
Rather than jumping straight to the
solution, look closely at the customer
interests you prepared, and consider,
what are ALL of the different ways in
which our company might meet them?
For instance:
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What are the potential ways in which we
might combine different technologies or
services to best meet their needs?
What warranties or quality guarantees
can we make?
What services can we provide along with
their purchase?
What volume commitments might they
make?
How long should the duration of the
contract be?
In what ways might exclusivity
agreements benefit each of us?
How might payment terms be altered?
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Would it be helpful for our products be
spec’d into their long-term technical
roadmaps? How might we be willing to
change other terms if they were willing
to do so?
How might they facilitate closer
relationships with the end users of our
products/services?
Are there other things that we can
provide at low cost to us, but of high
value to them? And vice versa, are there
things they can provide us that are low
cost to them, but of high value to us?
Answers to these questions are all possible
options to bring into, and use to facilitate,
your discussions and negotiations with your
customers in tailoring the ultimate solution
in a way that best meets their needs. As
you test the potential options with your
customer, it is also possible that you will
uncover more interests that you or they may
not have even known about, making the
ultimate solution that much better.
Take Control of the Sale by
Identifying Standards of Legitimacy
We hear over and over how truly difficult
it is to “Take Control of the Sale,” as
Challenger prescribes. Procurement
groups are increasingly sophisticated
in their approach to negotiations and
often act as a barrier to technical
buyers and end-users. Compounding
the difficulty, salespeople are brought
in by procurement increasingly later in
the buying discussion, often following
a due diligence process and when many,
if not most, of the parameters of the sale
have already been defined. In addition,
Procurement is often trained and incented
to focus the conversation purely on price,
ignoring all other benefits and value that
may come with the product or service they
are buying. For these reasons it is that
much more important to prepare for your
customer conversations in a systematic
way so that you are ready when you are
inevitably “challenged” yourself, on the
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value of the products and services your
company provides.
To take control of the sale, walk into
your customer conversations having
already considered as many “standards
of legitimacy” as you can. Standards of
legitimacy help you to justify the extent
to which an agreement is perceived as
fair, appropriate, or “on the merits.”
Standards provide non-arbitrary ways
to resolve conf licting interests and
positions between customers and their
suppliers, especially around those that
are controversial — pricing, terms, risk
sharing, etc. — and help you to choose
among possible options based on what is
of value to each party, and what a neutral
third party would believe are most fair.
Standards of legitimacy that you might
cite to justify why a certain solution
makes most sense, or should cost a certain
amount might include:
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Market pricing, indices, or benchmarks
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Previous contracts or business history
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Competitive offerings or pricing
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The value of the solution that you are
providing (for example, the value of what
it enables the buyer to do or offer to their
own customers or cost savings it may
provide them)
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Cost of inputs or manufacturing, terms
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Liabilities
With a list of possible standards
of legitimacy, strategize for your
conversations, by considering:
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How can we best justify the solutions on
the table?
What standards might an arbitrator or
neutral third party apply?
What will our customer argue to justify
what they believe to be fair? What would
be our best response?
How could they justify an outcome to
their constituents? How can we support
them in doing so?
Apply the standards that you prepared in
your conversations with your customer
Turning Challenger Guidance into Action
Challenger says…
Prepare by…
Teach for Differentiation
„„
Tailor for Resonance
Take Control of the Sale
„„
„„
„„
Consider…
Understanding customer
interests
Generating possible
options
Identifying standards of
legitimacy
Testing customer
alternatives
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„„
Does your customer care only about price, or do they care
about quality, total cost of ownership, technology, customer
service, or other differentiators?
„„
How are they being measured or incented?
„„
Are there other stakeholders that will play a role in the buying
decisions, and if so, what do they care about?
„„
Are there interests that you can imagine they might or should
have, but which they may not fully understand?
„„
What are the potential ways in which we might combine
different technologies or services to best meet their needs?
„„
What warranties or quality guarantees can we make?
„„
What services can we provide along with their purchase?
„„
What volume commitments might they make?
„„
How long should the duration of the contract be?
„„
Are there other things that we can provide at low cost to us,
but of high value to them? And vice versa?
„„
Market pricing, indices, or benchmarks
„„
Previous contracts or business history
„„
Competitive offerings or pricing
„„
The value of the solution that you are providing (e.g., the value
of what it enables the buyer to do or to offer to their own
customers or cost savings it may provide them)
„„
Cost of inputs or manufacturing, terms
„„
Liabilities
„„
What other competitors’ solutions are they considering?
„„
How well do the competitive solutions meet the customer’s
interests relative to ours?
„„
If our customer was to walk away, what switching costs or
other consequences might they face?
„„
How can we improve how well our solution meets the
customer’s interests relative to the competition’s?
„„
How might we worsen their perception of how well
competitive solutions meet their interests?
„„
How could we test potentially unrealistic expectations they
might have about their alternatives?
Use standards as a “sword”
to persuade the other side why
a given solution makes sense.
to justify the various options that make
most sense, as you craft a final solution.
Negotiate defensible and durable
agreements with clear standards that
ensure that the buyer can explain to their
constituents why the solution and the
contract is a good one. Use standards as
a “sword” to persuade the other side why
a given solution makes sense by saying
things such as, “The price we are offering
is the lowest of any of my customers with
your market share and volumes.” At the
same time, you can use standards as a
“shield” to protect yourself when you are
challenged with unreasonable demands by
asking things such as “What are you basing
that on?” or “Why that number?” You can
also rely on the principle of reciprocity by
looking for standards or precedents that
would seem fair to whichever side one was
on. Ultimately, demonstrate that you too
are open to persuasion on-the-merits — or
else why should your counterpart be?
Take Control of the Sale by Testing
Customer Alternatives
The other lever that you have to Take
Control of the Sale is by testing your
customer’s alternatives. Alternatives for
your customer could be turning to your
competitors, using an internal solution, or
simply doing nothing. Whatever solution
you and your customer settle on must better
meet their interests than their alternatives;
otherwise you will likely lose the deal.
Other than standards of legitimacy,
knowing your customer’s alternatives is
the other significant source of leverage
and power that you have in your customer
discussions. If the customer’s alternatives
are perceived to be worse than what you
are offering, they will likely sign the deal
with you. Prepare for your conversations
by considering:
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What other competitors’ solutions are
they considering?
How well do the competitive solutions
meet the customer’s interests relative to
ours?
If our customer was to walk away, what
switching costs or other consequences
might they face?
How can we improve how well our
solution meets the customer’s interests
relative to the competition?
How might we worsen their perception
of how well competitive solutions meet
their interests?
How could we test potentially unrealistic
expectations they might have about their
alternatives?
Enabling Salespeople to Engage in
Challenger Sales
In the end, you (or your salespeople) do
not have to have been born Challengers
to succeed, but you do need to know what
the right preparation strategy is and how to
leverage it at the table with the customer.
Companies we have worked with have taken
this advice to heart in how they support
their salespeople to do exactly what we have
just described. Our clients have embedded
the advice above in new sales tools (or by
adjusting preexisting ones), which drive
consistent preparation approaches for
customer meetings and negotiations. They
have created new strategies and playbooks
for the sales force for more effectively
working with procurement and end users.
Management has also embraced these new
approaches by asking for and reviewing
their salespeople’s customer meeting and
negotiation plans before they provide
authorization for a certain price, or to make
a certain deal. Such preparation reviews
have been built into agendas for senior
executive sales / price council meetings, and
occur more informally in regular meetings
with managers.
These types of actions contribute to building
in salespeople new mindset, skills, and
understanding for how such interactions
with customers ought to occur. Vantage’s
interactive and experiential training provides
salespeople with knowledge of industry best
practices for managing customer interactions
and negotiating with procurement. These
types of training programs afford participants
an informal forum with colleagues and
coaches to practice and try out new skills
and sales tools — before the stakes are raised
in front of the customer — and are a useful
communication vehicle for rolling out such
significant change efforts.
Whether you are a Challenger or not (or
whether your sales team is full of them)
should not be your primary concern. If you or
your sales team walk into your next customer
encounter having systematically prepared
for the conversation with an understanding
of what the customer truly cares about and
with insights into what they should be caring
about; a set of possible solutions that address
those customer interests and concerns; and
standards for why a given solution might
make sense and why yours is better than the
competition’s, then you will be more than
ready to challenge for that next sale.
About Vantage Partners
Vantage Partners, a spin-off of the
Harvard Negotiation Project, is a
management consulting firm that
specializes in helping companies
achieve breakthrough business
results by transforming how they
negotiate, and manage relationships
with, key business partners. To learn
more about Vantage Partners or to
access our online library of research
and white papers, please visit:
www.vantagepartners.com
Vantage Partners | 10 Guest Street, Boston, MA 02135 USA | T +1 617 354 6090 F +1 617 354 4685 | www.vantagepartners.com
Copyright © 2013 by Vantage Partners, llc. All rights reserved.
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