Insight Selling and the Challenger Sale

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Transcript Insight Selling and the Challenger Sale

INSIGHT SELLING

and the

CHALLENGER SALE

⎥ Insight Selling and the Challenger Sale - A primer ⎥

A primer

http://www.straligence.com/2012/09/24/insight-selling/

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⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

Executive summary

Customers don’t need you the way they used to.

Over the last three decades, B2B selling has evolved from a transactional (product-price) approach, to a relationship-based process, and to a solutions-based model. Today, this way of selling is being challenged by procurement-savvy teams that cut the grass under your best sales reps’ feet.

Solutions selling has been the holy grail for a long time… … but it has increasingly become a burden to both customers and suppliers Solutions selling is largely driven by suppliers’ attempt to escape a dramatically increasing commoditization of their products and services.

Selling ever bigger, more complex, disruptive, and expensive solutions requires a lot of “discovery” time and effort, from both sides. The result is a “solutions fatigue”: traditional, time-tested sales techniques have become a burden to both customers and suppliers, and an alarming number of half-completed deals remain on the table. This has lead customers to react and engage with suppliers in a very different way.

Can one type of sales rep make a difference?

The characteristics of Insight Selling Among different profiles of sales executives, the one that has a much higher chance of being successful today, particularly in complex sales, is the “Challenger”. This is the one who uses a deep understanding of a customer’s business to serve them and to teach them, pushing their thinking, and providing different views on how to manage and compete.

Insight Selling is about targeting customers that can act quickly and decisively, teaching them something new and provocative about how to compete in their market. Messages are tailored to the specific metrics and economics of the company and its key individuals. All along, the Challenger is in control of the sales, pressuring the decision making cycle.

The Insight Selling conversation in practice The best sales conversation present the customer with a compelling story about their business first, teaches them a new perspective, connects this with their reality, and then leads to how it can be realized via unique differentiating capabilities.

p. 5 p. 6 p. 7 p. 8 p. 9 p. 10

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

Executive summary

The advantages of Insight Selling Think about the possibilities By proactively proposing a solution tailored to specific customer needs and leveraging your unique capabilities, you are more in control. You are likely to gain faster widespread buy-in, to increase your chances to win the deal, while gaining the loyalty and respect of your customers.

p. 11

Insight selling gives you a “Blue Ocean” way of competing where you are in the lead of customer proposals and you play by your own rules.

p. 12

Winning at Insight Selling requires specific capabilities How can you build these capabilities?

Insight selling requires ad-hoc resources, processes, and tools in strategic planning, marketing (insight & ideas generation), sales and HR. Only a handful of large, often international, players are capable of hosting these capabilities in-house, particularly in terms of insight generation and the relative ability to create innovative proposals underlined by a deep industry and customer knowledge.

Choosing the right build, buy, rent and partner model depends on the economics of your business, the breadth of your target markets and your ability to enter an adjacent business in a sustainable way.

p. 13 p. 14

Partnering Partnering with a management consulting firm could be the most effective shortcut to building insight-selling capabilities.

p. 15

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

The problem

Customers don’t need you the way they used to.

Over the last three decades, B2B selling has evolved from a transactional (product-price) approach, to a relationship based process, and to a solutions-based model. Today, this way of selling is being challenged by procurement-savvy teams that cut the grass under your best sales reps’ feet.

Our legacy

B2B used to be about relationship, product, and solution selling

• • • • Since the 1980’s, best practices in B2B selling and marketing moved away from the traditional transactional and then relationship-based approach to a more solutions-oriented one.

Sales reps have become experts at discovering customers’ needs and at selling them “solutions” based on a relatively complex combination of products and services.

Part of the deal is to find and nurture an “anchor” within the customer organization who can help navigate the company and drive the deal to completion.

The whole process is focused on attaching your company’s solution to a customer problem, on justifying why it is better than the competition, and on providing “evidence and reference” to the expected benefits.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/ The new reality

Armed and skilled customers make you come short in the sales cycle

• • • • • In the current economic environment, B2B customers have learned to buy with greater care and reluctance than ever before. With increasingly sophisticated procurement teams and the help of procurement consultants, B2B customers can readily define solutions for themselves. According to a recent study*, nearly 60% of a typical purchasing decision – researching solutions, ranking options, setting requirements, benchmarking pricing, etc. - is completed before even having a conversation with your sales teams.

To win a deal, you have to get ahead of the RFP. But even if you can, it is increasingly no longer sufficient. It is very likely that you will not get away of the RFP process and that you will have to play by rules set by your customers, or its procurement consultants.

Relationships continue to be key, but good relationships are more the result and not the cause of successful sales.

(*) CEB research, 2012 – Panel of 1,400 companies

The problem

Solutions selling has been the holy grail for a long time…

Solutions selling is largely driven by suppliers’ attempt to escape a dramatically increasing commoditization of their products and services.

The product-solutions selling continuum Most companies have the ambition to be positioned as solutions providers Silo-Based Product Sales Product Bundling Advice & Service Wrap Around Needs-Based Product Customization Customer Process Enhancement Fully Integrated Partnership Product Selling Solutions Selling Nature of relationship Selling skills Customer expectations

Supplier reacts to purchase orders Strong knowledge of product portfolio Quality product / service at good price Supplier viewed as a trusted advisor Boardroom-level engagement with customer Strategic insight on the customer’s business A shift to solution selling results in customers’ expecting you to actually “solve” a real problem and not just to supply a reliable product.

This implies that you not only understand the customer’s underlying problems or challenges as well if not better than they do themselves, but also that you can identify new and better means of addressing those challenges, articulate clear benefits form using limited resources, and determine the right metrics to measure success.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/ Straligence, Adapted from CEB research, 2012

The problem

… but it has increasingly become a burden to both customers and suppliers

Solutions Fatigue

The solutions-based discovering process has become a burden

• • • • What is keeping you up at night? What are your competing challenges?

The problem with providing an answer to these questions is that it can often take the feel of a protracted ping-pong match between the supplier and the customer.

The customer explains their needs, the rep summarizes their understanding, the customer confirms whether or not the rep got it right; a proposal is made, the customer reviews and amends it, and on and on.

This requires a huge amount of customer involvement at an early stage… before they see any value.

Customer buying trends

Customers have been taking initiatives and four major trends are emerging 1

•

Consensus-based sales

The payoff of complex solution is uncertain and C-level executives increasingly require the widespread support of their teams in a large purchase decision. This leads to even longer selling efforts to align the interests of all involved parties.

•

Greater demand for customization

A solution approach implies that customers look for an offer that is tailored to their needs. They see customization as part of the solution, and do not intend to pay a premium for it. To the sell-side, this implies longer times and higher efforts and costs.

•

Increased risk aversion

The uncertainty of a pay-off in large and complex deals pushes executives to ask for a shared-risk and reward agreement. Here the lead KPI is the performance of a customer’s business, not the one of the supplier’s product or service.

The rise of third party consultants

Customers increasingly rely to a neutral third-party to “extract maximum value” from the purchase decision, i.e. help them reduce the risks, costs and complexity linked to the solution. Needless to say, this adds pressure to the sales rep and can extend the sales cycle.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/ Straligence, Adapted from CEB research, 2012

Searching for a solution

Can one type of sales rep make a difference?

Among different profiles of sales executives, the one that has a much higher chance of being successful today, particularly in complex sales, is the “Challenger”. This is the one who uses a deep understanding of a customer’s business to serve them and to teach them, pushing their thinking, and providing different views on how to manage and compete.

Sales Profiles The Relationship Builder

• • • Builds & nurtures strong advocates in the customer organization.

Generous in giving time to help others.

Gets along with everyone.

7% The Problem Solver

• • • Highly reliable in responding to internal and external stakeholders.

Detail oriented.

Ensures that all problems are solved.

12% The Hard Worker

• Always willing to go the extra mile.

• Doesn’t give up easily.

• Self-motivated.

• Interested in feedback and development.

17% The Lone Wolf

• • • Tends to follow own instincts instead of the rules.

Self-assured.

Difficult to control.

25% The Challenger

• • • • Always has a different view.

Has a deep understanding of the customer’s business.

Loves to debate.

Pushes the customer.

39% Top performers Complexity of sales The highest percentage of top sales performers is found under the Challenger profile

High Low

In complex environments, the Challenger is by far the profile that is most likely to succeed. The Relationship Builder is highly unlikely to succeed in complex sales environments.

In environments with low complexity, the most successful profiles are the Hard Worker and the Lone Wolf.

INSIGHT SELLING 8

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/ Straligence, Adapted from CEB research, 2012

Insight selling

The Characteristics of Insight selling

Insight vs Solution Selling

Traditional solution selling is based on finding a hook to a recognized need. Insight selling challenges the customer and makes it aware of unknown needs.

Target customer Info requirements Engagement timing Focus of the conversation Flow of information Solution Selling

Has a clear vision and established demands.

What need is the customer seeking to address?

After the customer has identified a problem that the supplier can solve.

Ask, understand the customer’s need and find a “hook” for your solution.

Asking questions so that the customer can steer you through the purchasing process.

Insight Selling

Is agile, has emerging demands, or is in a state of flux.

What unrecognized need does the customer have?

Before the customer has pinpointed a problem.

Offer provocative insight about what the customer should do.

Coach the customer about how to buy, and support it through the process.

TARGET TEACH 9

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/ • • Targeting based on the potential for change, not to buy. Focus on customers that can act quickly and decisively, that are not paralyzed by structures or relationships that hamper change.

Firms where demand is emerging, pushed by organizational or market/industry drivers. • • Delivering insight that reframes the way customers think about their business and their needs. Teaching customers something new, thought provocative, and valuable about how to compete in their market.

TAILOR

• • Communicate sales messages in the context of the customer, focusing on customer value drivers, economics and performance indicators.

Messages are tailored to different types of functions and individuals within an organization.

TAKE CONTROL

• • Using control, diplomacy, and empathy, the Challenger pushes the customer out of its comfort zone, focusing on the value added, not on price discounts.

Challengers pressure the customer’s decision making cycle to reach a decision more quickly and kill ‘indecision inertia”.

Insight selling

Insight selling in practice

The best sales conversation present the customer with a compelling story about their business first, teaches them a new perspective, connects this with their reality, and then leads to how it can be realized via unique differentiating capabilities.

The insight-based sales pitch Warm up Reframe Rationalize Bind emotionally Present what’s needed Why your solution is unique 1

• • •

Build credibility: “I know your world”

Present industry challenges experienced by similar companies.

Introduce your assessment of the customer’s key challenges.

Leverage benchmarking.

2 Surprise with a new perspective, making them wanting more

• Introduce a new perspective that connects challenges to either a bigger problem or a bigger opportunity than the one the customer ever realized.

3 Leverage Fear Uncertainty & Doubt via data based on value drivers

• • Lay out the business case why the new perspective is worth considering.

Leverage data that directly connects to the customer’s economic drivers, i.e. present ROI in terms of solving the challenge, not on buying a solution.

4 Make the customer see the challenge /opportunity as their own

• Paint a picture of how other companies went down the same road by connecting the pains in the story to the pains in the customer organization.

5 Present the capabilities required to seize the opportunity

• Point by point review of the specific capabilities the customer would need to grow, to save money, or to mitigate risks.

6 Demonstrate how your solution is better than anyone else’s

• Introduce the capabilities that are truly unique to your organization and that can help the customer seize the opportunity and/or face the challenge.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

Insight selling

The advantages of Insight selling

By proactively proposing a solution tailored to specific customer needs and leveraging your unique capabilities, you are more in control. You are likely to gain faster widespread buy-in, to increase your chances to win the deal, while gaining the loyalty and respect of your customers.

Before the deal

You proactively pitch to your own unique strengths Accelerate time to decision

• Much of the heavy lifting is done before individual reps go in front of the customer, considerably reducing “solution-fatigue”.

Increase and accelerate widespread support

• With a pitch tailored to the specific interests of the company, those who most benefit from it become your internal advocates and allies within the customer organization. They help you sell your proposal to the different stakeholders.

Increase your chances of winning

• As you craft a proposal that combines customer’s challenges and your unique capabilities, you are less likely to go through a competitive bid, incl.

the formalities of the procurement department and/or third parties.

Take control

• As you are being proactive, you are more in control of the sales process, guiding the customer on how to make it happen.

After the deal

Insight selling strongly drives customer’s loyalty DECISION MAKERS

Greatest drivers of loyalty Weakest drivers of loyalty • preferences • Helps me shorten

mines

the buying cycle Matches communication to my • 

Helps me avoid potential land

Collaborates with other suppliers  • Supplier has widespread support across my organization

Helps me navigate alternatives

  • Supplier is easy to buy from

Offers unique, valuable perspectives on the the market Educates me on new issues and outcomes

• Portrays a realistic picture of purchase costs & difficulties 

Provides ongoing advice or consultation

• • Excels in diagnosing our specific needs Remains readily accessible • Helps me improve my professional standing and meet KPIs 

Helps me quantify financial value

• • Proactively accelerates decision making Supplier adjusts to our unique needs and specifications • Advocates for me within the organization • Demonstrates a high level of professionalism Weakest drivers of loyalty Greatest drivers of loyalty

END USERS AND INFLUENCERS 11

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/ Straligence, Adapted from CEB research, 2012

Insight selling

Think about the possibilities

Insight selling gives you a “Blue Ocean” way of competing where you are in the lead of customer proposals and you play by your own rules.

• Imagine if you could: Know your customers’ industry as well as, or even better than, they know it themselves.

• Combine the strengths of a management consulting and research firm with your unique business capabilities.

• Trigger a series of workshops together with key customer executives to challenge the status quo and imagine new opportunities.

• Proactively propose insightful solutions to multiple industries and customers, widening your portfolio of opportunities and increasing your win rates.

• Keep competitors at bay by proposing solutions that strongly fit your unique capabilities with the economics and operational/growth targets of your customers.

• Turn the sales process upside-down by having customers come to you for your unique advantage instead of having your sales-reps make cold calls.

Imagine if you had the insight and capabilities of a management consulting firm in your go to market model.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

Organizing for Insight Selling

Winning at Insight Selling requires specific capabilities

Area / Function Capability / Requirements Multinational player Large national player Small – Medium player Strategic Planning

• Differentiating capabilities that are clearly defined, understood and communicated.

• Target industries and customers segmented also based on needs.

Insight & Ideas Generation Machine

(Marketing, Sales, R&D, Operations, Accounts Mgmt, etc.) • • • • • Ability to leverage insight and supporting data across industries and markets.

Ability to generate and quantify customer-specific insight, incl. competitive, financial, operational challenges.

Innovation capabilities to define a new point of view on the customer’s business, products, business model, etc.

Ability to quantify the economic impact of your proposal on your customer’s bottom line.

Ability to define the impact of your proposal on your customer’s organization.

Sales Post-Sales HR

• Processes and sales metrics adapted to insight selling.

• • • • Sales culture supporting insight-selling and “Challengers”.

Performance metrics and processes that include a link to the customer’s business or operational performance.

Recruitment process optimized to hire “Challengers”.

Marketing and business development staff capable of supporting sales rep in the identification of new opportunities and the generation of new insight and proposals.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

Organizing for Insight Selling

How can you build these capabilities?

Build Buy Rent Description / Example

• • Recruit industry professionals and consultants in view of creating a dedicated team responsible for generating insight and supporting your sales reps.

Equip the team with the industry databases, knowledge tools, and processes required to perform their analysis.

• • Acquire a specialized consultancy with the skills and resources to generate insight in the markets you compete in.

Acquire and extend the industry databases and knowledge tools required to generate insight.

• • Partner with a consulting firm that is capable of covering your industries with rented resources and tools.

Ad-hoc collaboration, typically on a time and material basis.

JV / Alliance

• • Relatively independent go-to-market JV leveraging the capabilities of the consulting firm and your key competences.

Collaboration based on a shared risk-revenue model.

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

Issues, who is it for

• • Time and effort required to build the team and supporting processes and tools.

Suitable if you are restricting your activities to a highly specialized niche market.

• • Potential cultural mismatch jeopardizing effectiveness and return on investment.

your Suitable if you are restricting your activities to a specific market and have a high-margin business justifying the investment.

• • Address conflicts of interest cased by the core business of the partner, i.e. consulting activities with your target customers.

Suitable for ad-hoc, large strategic pursuits, and new market / services development.

• • Willingness of consulting firm to limit its services to your company and your markets.

Suitable if you cover a large number of customers in multiple industries.

Opportunity

Partnering

Partnering with a management consulting firm could be the most effective shortcut to building insight-selling capabilities.

Your teams Consulting firm’s services

Solution specialists Ad-hoc research on customer industries, markets and customers Co-development of insight with your marketing, sales and technical staff INSIGHT-BASED GO TO MARKET Sales Development of industry thought leadership collateral for sales & marketing efforts Marketing and business development support Facilitation of innovation workshops with your customers and your staff Collaboration with your teams on proactive proposals and on answering competitive bids

Collaboration mode

On demand, based on your specific needs Medium to long term partnership linked to a specific industry / market Partnerships – Joint Venture

⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/

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⎥ Insight Selling and the Challenger Sale - A primer ⎥ http://www.straligence.com/2012/09/24/insight-selling/