The challenger sales model for corporations

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[Applause] welcome to the SBI podcast offering CEOs sales and marketing leaders ideas to make the [Music] number welcome SBI podcast listeners and video podcast viewers my name is Andrew ER tiaga and with my co-host Drew Karen we're principles at SBI a sales and marketing consultancy dedicated to helping you make your number this is a weekly SBI podcast and its purpose is to share insights and information relevant to your business before we get started an interesting fact about myself and my co-host besides having the same first names we both hold black belts in the martial arts I have over 17 years martial arts experience and Drew Karen has 27 years what this means to you is if we can't agree on a topic we're going to sett it settle it in a cage fight on SBI TV yeah I think that would work out well for the viewers probably work out well for me too so you think people want to watch us fight for 30 minutes or actually talk about sales and marketing and strategic alignment I honestly think it's both so today's show we're going to be reviewing one of my favorite books of 2015 the Challenger customer co-author by Brent Adamson Matthew Dixon Pat Spencer and Nick tomain the book's the sequel to the very successful Challenger sales but this time around the focus is on the consensus purchasing Dynamics the number and diversity of stakeholders involved in purchases is increasing and those parties are failing to arrive at the kind of consensus early on in the purchase to give suppliers any chance of winning high quality deals yeah the implication of these findes have a ripple effect throughout the organization and we can probably spend a lot of time talking about that and we'll start with the sales organization here's a quote from the book that I I uh I pulled out drew that I really liked and I think it's going to resonate with a a lot of heads of sales and marketing uh listeners out there this is from a head of sales and marketing leader at a global industrial fragrances company and I quote I just don't understand we are the leading supplier in our industry our products are world class our brand second to none and our salespeople are highly skilled there's not a single deal in our industry where we are not invited to participate we make it to the table every time and then in the book he goes on to say we ended up competing on price every single time we're always one of three suppliers the issue of consistence buying is causing a downward pressure on Deal size margin and growth so really what this is saying and I hear a lot from my clients is that every deal is a competitive slugfest right yeah and I've seen it play out too often right we're competing on price because they're not seeing any other differentiation right so I think it's going to resonate well with our listeners when they think about that too but too often what I hear is the fix is sales training right in fact I had the quote from one of the sales weps and he said if I can just equip my Salesforce with these new found skills I can differentiate my seller from the competition and thus win more deals at a higher deal size and higher margins right so when you think about that and it's most simplistic terms I don't disagree with it too but it's definitely not the answer yeah so what is so what do you think you mean by that well that's really putting a Band-Aid on an old problem right and it's really trying to attack a strategic problem with a tactic right so a good example would be to start off at first and say okay what's the difference between tactics and strategy right so strategy is actually doing the right things right when you look at tactics tactics is actually doing things right so if we can put up the graphic for the audience what I like to show them is the 2x two grid so if we look at the 2 by two grid you have a strategy across the top axis and then you have tactics across the vertical axis right so for strategy you're going to be effective or in effective in the way you execute it for tactics you're going to be efficient or inefficient so if you're looking at that too if you are very efficient at executing your tactics but your strategy is bad you're going to die quickly right right now that same thing if you have a bad strategy but you execute very inefficiently you're going to die slowly right now if your strategy is good and you can execute still inefficiently you'll get in that survive mode right but where our listeners want to be is in the top right quadrant and what that is is the Thrive category so that's where you have a brilliant plan that's executed brilliantly yeah so in other words training training really what I took away from this book is the pitfall here is if if you extract the concept of the purchasing Dynamics and the changes have occurring and really the concept of too many chefs putting their hands in the pot is that you can pull from here uh the fact that you think your people need more training and that's tactical right right that doesn't really solve the problem as you mentioned earlier and then I think what compounds the problem is you could be pursuing call it this buying decision team but you could be pursuing the buy and decision team with the wrong products with the with the wrong poor leads right so you really got to look at the entire ecosystem which I think we're going to touch a little bit later uh in the podcast the other thing here is that even when it comes to training I think a lot of organizations rely on this as a check the box if you think about skos there's training events and this event Based training cost a lot of money thousands and thousands of dollars it takes a lot of resources out of the field so you're you're missing a lot of opportunities in at bats takes a lot of man-hours to put it all together so think about the cost you know the people the time the money the resources that it takes and anywhere you look on the internet you see the statistics when it comes to training that what is it like five days after the event people have forgotten 80 to 90% of what they actually consumed and 2% say they've never even been to it and 2% can't even remember those are the people that have been at the bar a little bit too long but you know my other point there is you you equip them with these ideas and these Concepts and then there's no reinforcement afterwards there's no coaching there's no help in the implementation I mean people are going to struggle to implement these you know call it these Training Concepts and then what happens is there's nobody to redirect them so it's natural human behavior to go back to doing the things the way you used to do them because that's what you're used to right that's what you're comfortable with well and that's kind of goes right back to the tactics versus strategy conversation too and the problem is this book is definitely not tactics right this book is a great strategy AB the problem is it's the way it's viewed in the marketplace right so too many of our listeners are viewing this and say I'm going to take this plug it in and tactically execute on this too so they're not seeing the broader picture so it's almost we have to reshape the thinking of our listeners for them to understand how to leverage this and how to apply it into their businesses right right why don't we take a quick break right now to let our viewers know about some new offerings from SBI but stick around because when we come back Andrew and I are going to teach you another approach on how to leverage the concepts that are in this [Music] book do you have too many things to do and not enough time to do them is finding time to learn best practices almost impossible the SBI podcast is your Your solution turn time spent exercising commuting and traveling into productive learning time with a subscription to the SBI podcast SBI podcast listeners get unique insight into real world sales and marketing issues through interviews with your industry peers every week find us on iTunes by searching for sales Benchmark index podcast And subscribe today [Applause] welcome back everybody I'm Drew Kieran of SBI and with me my co-host Andrew urtiaga today we're discussing a great book called The Challenger customer co-authored by Brent Adamson Matthew Dixon Pat Spencer and Nick tomain so far we've discussed some of the ways to implement the concept of the consensus purchasing Dynamics and the downward pressure is having on average deal size win rates and sales Cycles but let's shift gears for just a moment and talk about a different approach let's talk about a different approach here and and a way to look at this is to see that the changes in the buyer Dynamics right this whole concept of the buying decision team right I think when if you read the book you'll see that historically a seller will go to one buyer at a time individually and and try to gain a a series of yeses from the buying decision team what's wrong with that well the problem with that is that everybody's diverse and and different and you mentioned this earlier in the podcast we all didn't grow up together we all didn't go to the same schools we all don't have the same work history and so when we end up working in the same organization as functional leaders and even in in the head of the organization the CEO we all have different lenses in which how we view a problem and how we want to solve that problem and so what happens is that when we get together right we all have our own agenda and our own objectives so what happens is we can never agree on what the problem looks like number one and number two how we go about solving the problem so in order to move the needle we end up agreeing to the lowest common Den denominator and I think this is really the essence of the book when we talk about downward pressure on the average deal size the win rates and the sales cycle right is the fact that your products ends up being commoditized and like we said earlier it becomes a competitive slug fist so the different approach instead of training's not the answer I think you and I both agree there the different approach here is to look at how this impacts the overall strategy of the organization right let me explain what this means and it's in the in the concept of strategic alignment which is the linking of your internal strategies with the external Marketplace so what does this mean market research find out how my buyers have changed right specifically what are the markets that we want to play in what are the accounts that want to pursue that give us the greatest probability of success right in the shortest period of time who are the buyers and how they make a purchasing decision which really the essence of this book who the users are that's market research that will Define our corporate strategy how we allocate people money in time and then then we can determine what are the products what are the bullets in the gun that we want to arm our Salesforce with right that provide a competitive differentiation in the marketplace how do we create demand for that from a marketing strategy perspective and then how do we convert that finally sales strategy into right how do we convert that demand into revenue and who are the people that are going to help us do that from a talent strategy perspective that is the linking of the external Market which is really what this book is touching on one component of it the buyer segmentation to the internal functional strategies of an organization so really what I'm saying here Drew is long gone are the days of launching these indiv individual initiatives the only way to systematize Revenue growth is through strategic alignment and this is exactly what the top 9% of organizations are doing to Leap Frog the competition right because too many too much effort is spent trying to if you're trying to get up to best practices the amount of time and effort that you get to Best Practices they're going to move again right so it's kind of the Gretzky skate to where the Puck's going not where the skate is that's really the concept there correct right but in order to kind of put that into context you've got to be able to determine where you are your organization within strategic alignment right so you you identified the links properly too but how do I know where we sit in what's what's my unit of measurement too well in order to do this SBI has come up with a revenue growth maturity model and for those of you that are following following along at home if you look at the annual research report and you flip pages 11 through 16 you'll see specifically how it's outlined so Andrew why don't you take us through this for just a second yeah no problem so our viewers I know can see the revenue growth maturity model for those that are listening in I'll walk you through the model uh there's five levels in the growth maturity model starting with level one which is chaos so how do I know that I'm in the chaos by the way we love that phrase right it's just like a bunch of people pulling their hair out everybody flying around end of the month end of the month yeah this is a very reactive organization and the way to define this and how you know you're in chaos is a corporate strategy may or may not exist for sure the functional strategies do not exist right right so what you have is complete misalignment the the customers uh don't understand what the brand is of the organization what you're trying to accomplish but more importantly the metrics that you're looking for is a high customer acquisition cost and then a low customer lifetime value right and this is happening because you got a lot of customers turning the second level is what we call defined and in defined now we have a corporate strategy that has been defined given the name and the functional strategies have also been defined but they not been implemented okay okay and in addition to that how you know you're in the defined level is that they're also in they've the the functional strategies that have been created are in isolation of each other right so you still the fact that you have a strategy helps you're on the right path but you still have a high customer acquisition cost and a lower customer lifetime value it's going through the motions right they're going to do it in an annual planning exercise and then never look at it again with no interdependencies between the others absolutely I think shelfware collecting dust and then from there we move into level three which is implemented so the difference here is as the name States is now you've got your corporate strategy your functional strategies they've actually been implemented so you're starting to see some pockets of success however the difference here is that they're still not in alignment with one another they've been created in silos right so your customer acquisition cost decreases there's a level of improvement there and your customer lifetime value increases compared to level one and four we call it managed now you're starting to see some incremental gains here you have a corporate strategy that's been defined and implemented the functional strategies have been defined and implemented and more importantly here the difference between level three and four is that they've been in internally aligned to one another right right so you see once again the biggest decrease from level one from a customer acquisition cost and the biggest increase in customer lifetime value and then finally the last level level five is predictable this is the Holy Grail of the revenue growth maturity model and where you want to be it's a corporate strategy that's been defined implemented functional strategies have been defined implemented they're internally aligned with one another and the key here between level four level five managed to predictable is the fact that they're aligned to the external market and the gains here are uh great compared to level one so your customer acquisition cost has decreased by 30% and your customer lifetime value has increased by 26% right well and that's why I love this book so much because it ties in perfectly too so if you read the book and you start to it talks about the difference and the changes in the buyer what it's really telling you is like a level five company we need to change and align our strategies with the external Market which is the prospects and the customers too so it's absolutely fantastic in that but one of the things that they also talked about a lot too was the difference in the number of purchasers that are involved right they call it the consensus buyer and in the book they reference three specific types they call it the go-getter the skeptic and the mobilizer right and they talked about how you get and relate to these particular people and how you get them on board answer those concerns too the other interesting statistic that was in there was they said that 5.4 people are generally involved now in a buying decision as compared to what it was previously so if you're not looking at this in an overall strategic way there's no way that you're going to be successful and when you talk about misalignment you know in our research report this year what we found is if you are strategically misaligned which almost 90% of the companies are too you have a 4X higher percentage of missing your number this year so that's why it's so important it's critical so why don't we do this why don't we take a quick break and stick around because when Drew and I get back we're going to show you how to get strategically aligned making your number is hard your problems are complex complex problems need complex Solutions introducing the SBI magazine read in-depth stories written by award-winning journalists about how your peers have overcome their problems to make the numbers when you need more than a tweet social post or blog article turn to the SBI magazine go to salesbenchmarkindex.com to [Music] subscribe [Applause] welcome back I'm Drew oraga of SBI and with me is my co-host Drew Karan today we're discussing the Challenger customer co-authored by Brent Addison Matthew Dixon Pat Spencer and Nick tomman in the first segment we've discussed some of the ways to implement the concept of the consensus purchase Dynamics and the downward pressure it's having on the average deal size and win rates we also discussed the pitfalls of using sales training as a plug-and play to make a strategy now we're shifting to the concept of strategic alignment and how to weave the customer purchase Dynamics into every function of the organization right so if this resonates with you you're wondering how do I know of I'm in strategic alignment or not too let's break it down and we're going to unpack that here for just a second so we'll use the six-step revenue growth methodology and the first step in that is market research right and that's simply getting an understanding of the market the accounts the buyers and users and ensuring that we're differentiating ourselves from the competition agreed right the market research everything flows from market research right that has to be done first the sequencing is very very important right once you have that done you can move into the corporate strategy right the corporate strategy sets the tone for everything else right and that is really just a proper allocation of people money and time in the pursuit of profitable Revenue once the corporate strategy is set the next up is the product strategy and product strategy we Define as building and launching products that service the needs of the market that the Market's also willing to pay for okay next up is the marketing strategy and when you look at that too marketing strategy is simply about driving demand for the products and services that we sell as a company right sales strategy will come into play now and sales strategy is taking that demand and converting it into revenue and the final piece of the puzzle is the talent strategy right so we need to get the right people on board to execute the strategy perfectly gotcha right and one of the things that was interesting too and there was a quote in the book um that I love and what he said was he said it isn't a sales methodology referencing the Challenger book it isn't a sales methodology it's a commercial strategy it affects what sales and marketing needs to do independently and also together so when you're listening at that this is what we talked about in the beginning segment too where too many people are taking this it's not that the book isn't talking about the overall strategy it's that people are narrowly taking it and coming back in they're not breaking the mental model which came from the book too and they're just trying to plug and play everything as a tactic or a strategy to try to fix things versus looking at a holistic approach yeah absolutely I mean just talking from experience you saw this when they came out with the first book which was the Challenger seller right or the Challenger sale and even in my prior life in the organization that I worked with I remember we hired a lot of these guys to do the training and and execute on this right and I remember nobody used it afterwards it was great ideas good intent you come out of the training thinking hey this is going to be great there is something that you mentioned that was great though um that I think they really hit on is this idea that hey sales and marketing need to be on the same page on how to leverage this and it's more of a corporate strategy right um that's a great point and I think what you just walked us through the six-step revenue methodology we we think of it as expanding it even further right we believe it touches product corporate strategy market research and even your talent strategy right what are the type of people that can actually execute this how do you Coral it's like hurting kittens how do you Corral the 5.4 concept all these buyers who have different ways of looking at a problem different ways of wanting to solve the problem but then you got to go sell these people Corral them and then pull them all through the purchasing decision at the same time and by the way when you interact with them they're all at different stages of how they're thinking about the problem some might have investigated further on some of are not even thinking about it because it doesn't impact them and here you are you have to apply different approaches so the talent piece I think is also critical in this well it is and um when you look at that too we've always said that Talent is you know it's 50% of the equation the other are the performance and conditions and if you really look at the first sections of the strategy too those are really setting the performance conditions right so all of those market research corporate straty you know Marketing sales product they're all going in kind of setting the performance conditions and getting the talent right is hugely important because you're right it's a complex sale these days and in order to and I love the phrase that was in the book too breaking the metal model right and really what that is is Shifting the way that we think about things and from putting this book into application one of the things I noticed the most is that breaking the metal model I don't think is as relevant for the customers as it is for the sales people and the sales leaders in there too because I think we have to really ret ourselves break down the way we used to do things recognize this is a new world and there's certain ways that we need to approach this in order to be successful and if you read the Challenger customer he lays it out perfectly right they tell you exactly how to do it but once again that has to fit in the overall strategy yeah absolutely agree so why don't we take one last commercial break but stick around because when we come back we'll wrap it up with some final [Music] thoughts each day you receive hundreds of emails tons of text messages countless telephone calls and sit in too many meetings how do you find ideas to make the number with all this noise the SBI blog filters all this nonsense for you and presents only First Rate ideas to make the number simplify your life subscribe to one blog and read the best content go to salesbenchmarkindex.com And subscribe today welcome back I'm Andrew oraga and with my co-host Drew Karen Drew before we give this book a spinning back kick by the way that's four spinning back kicks because there's four authors to the book tell the audience where we can find more information in regards to the topic of strategic alignment sure so if you are listening or watching and wondering where your organization is with regards to strategic alignment and where you rank on the revenue growth model you should download the 2016 research report and read pages 28 through 33 and then fill them out with the other functional leaders okay Drew so for the big question is this book a pretender or a contender uh Contender huge Contender when you leverage it appropriately no I absolutely agree right the book's definitely Contender there's no spinning back kick needed right excellent material that hits at the heart of the ma matter with market research but what does this mean to you the audience means you can't make your number if you don't have strategic alignment across the organization this is why you care if you feel you may not be in strategic alignment you can have one of our experts lead you through a workshop which will detail how to do this simply go to salesbenchmarkindex.com 2016-w workshop and request it right Andrew thanks for going the rounds with me today I hope our audience enjoyed it no problem I stretched but didn't have to kick anybody today maybe you once we leave but I think today was a good episode right so I also want to thank you our audience for tuning in this show has become very popular and it's you are audience that makes all of this possible so until the next time we wish you much success as you try to make your number this has been the SBI podcast for more information on SBI Services case studies the SBI team and how we work or to subscribe to our other offerings please visit us at sales Benchmark index.com