The Challenger Customer: Chapter 3, section 2 (part 4 of 10)

Getting Paid For Insight

So imagine a scenario where a supplier teaches their customer something new, the customer then takes that insight, puts it out to bid, and the supplier’s direct competitor wins the business. That doesn’t feel so good. And we’d agree. In fact, we call that “free consulting.” Few suppliers ever sustainably grew their business falling into that particular trap.

Thus the term Commercial Insight (or what we’ve called elsewhere “Commercial Teaching”). It’s insight that meets the “frame-breaking” bar, but simultaneously leads the customer back to that particular supplier as the only one able to help them take action on that insight.

There are three questions a supplier must answer to do this well:

  1. What are we good at?
  2. What are we uniquely good at?
    1. This is where the pain kicks in, as most companies can successfully answer Question 1 but struggle mightily with Question 2
    2. Which of our unique capabilities is sustainable?

At its most basic level a true differentiator is unique, valuable, defensible, and sustainable.

Differentiators are not:

  1. Features and benefits common in a supplier’s market,
  2. Outcomes the supplier’s product generates, or
  3. Vague descriptions or overused descriptions that include anyof the following words: “innovative,” “green,” “user friendly,” or “solution.”

If we took all the names and logos off of your commercial content and gave it to a competitor to present to a customer, would that customer still necessarily have to buy from you?

A Very Different Kind of “Customer Understanding” 

The last ten years have seen an explosion of interest in “customer understanding” led in particular by marketing organizations seeking to ensure their company not only meets customer expectations but exceedsthem.

Not surprisingly, then, marketers have invested huge amounts of time, effort, and money developing a wide-ranging toolbox to determine whether their organization is “delivering a world-class customer experience,” designed to offer memorable “moments of delight” across “every possible customer touch point.”

Yet, as useful as those surveys are in retrospectively gauging company performance, it turns out they’re virtually useless for proactively building world-class Commercial Insight. Why? Because every one of those surveys is designed to test for the exact same thing: customers’ perceptions of the supplier.

But, you’ll remember, the key to Commercial Insight isn’t a story about the supplier at all. It’s a story about the customerand how they’ve missed something materially important in the performance of their business. … Because the only way to (diplomatically) tell a customer that they’re “wrong” is to first understand what they believe in the first place. That set of beliefs is something we like to call a “mental model.”

Building and Breaking Mental Models

The only way to change how a customer actsis to first change the way that that customer thinks. … Be that as it may, what we’ve consistently found in all of our research is that the best sales reps – Challenger Reps – and the best companies – Challenger organizations – see customers’ current mental models as their primary leverage point for driving customer behavior change. So rather than engaging customers in a debate on the merits of the supplier’s proposed solution, the best suppliers engage their customers in a discussion if the customer’s current beliefs. And in that discussion, they diplomatically, emphatically, culturally correctly, yet systematicallybreak down their customer’s current mental model, show them how it’s flawed or incomplete, and then articulate in very clear terms why a move the customer assumes would be too costly or too painful is actually less costly or painful than their current status quo.

It’s a careful, credible demonstration that the customer’s current mental model is not only flawed, but costing them money or exposing them to risk in ways they never fully realized. That, indeed, the pain of same is greater than the pain of change.

This is the true power of Commercial Insight when it’s done well. Not only does it paint a picture of how great life could be if they change, but far more important, it teaches customers that it’s not nearly as good as they think it is, were they to stay the same. At the same time, this is what virtually every supplier is currently missing in their current content creation efforts – a disciplined, systematic approach to understandingand then replacing a customer’s mental models.

Bottom line, the only way to get customers to think differently about you is to first get them to think differently about themselves.

Break Down the A, Then Build Up the B

To simplify what, admittedly, at first glance must feel like a relatively complex idea, let’s boil this down to two simple things: the customer’s currentbeliefs and behavior on the one hand, and their desiredbeliefs and behaviors on the other. … We represent this model with a large “A” connected by an arrow to a large “B.”

We like this model because it allows us to ask a very simple, but rather telling question: if you were to consider all of the collateral, all of the “pitch decks,” all of the content that your organization currently creates in an attempt to get customers to buy your solution, what’s it mostly about? Is it primarily about the A? Or is it largely about the B? … for most organizations, the predominant answer is, by far, the B.

[Competition between suppliers] by and large, is a battle for the B. But the strange thing is, more often than not, suppliers will win that battle but still lose the war. Customers will look them in the eye, emphatically agree that B is indeed better, but still not budge off their current behavior. … as one senior leader memorably told us, “If our value proposition got any ‘crisper,’ we’d have to write it on a cracker – but it’s stillnot enough!”

After studying this problem for the better part of five years, we’ve come to conclude the real challenge in changing customer buying behavior isn’t a better articulation of the benefits of B. it’s a better articulation of the pain of A. Without that, the B may seem great, but the A still remains “good enough.” Winning a solution sale, in other words, isn’t so much a batter for the B nearly so much as a battle for the A.

Again, that’s the moment where you must tell the customer that they’re wrong. The A-to-B statement isn’t a story about the supplier; it’s a story about the customer. Done properly, it’s “supplier agnostic.”

Four Questions to Build Commercial Insight

  1. What are our sustainable, unique strengths?
  2. Of those unique strengths, which ones are currently underappreciated by our customers?
  3. What is it that the customer fails to fully understand about their business that leads them to underappreciate our unique, sustainable capability now?
  4. What would we have to teach that customer about their business that would lead them to value that capability more than they do now?

[These questions] provide productive work streams for members of the commercial team:

  • What kind of evidence would we need to credibly convince customers of what we’re saying?
  • How high is the “burden of proof” of our argument?
  • How much of that evidence do we have now?
  • How/where could we build or buy the evidence that we’re missing?

 

The Challenger Customer: Chapter 3, section 1 (part 3 of 10)

Chapter 3: The Art of Unteaching

If there is one simple truth of every B2B supplier today, it is that they’re all selling the same thing: Change. … But think about what that means. What’s the one thing most organizations would like to avoid at all costs unless they have absolutely no other choice? Change. Why? It’s expensive. It’s risky. It’s disruptive. It’s unknown. … most suppliers’ single biggest competitor today isn’t so much the competition but the customer’s own status quo.

But let’s consider for a moment whycustomers are delaying contact with sales reps for as long as they are [57 percent through the process]. … Because they can. … Left to their own devices, customers will always engage a supplier as late as they possibly can. … In a world of information accessibility, customers can get all of that on the internet. Talking directly to a supplier feels like a waste of time.

That’s exactly where teachingcomes in, convincingly proving to customers – and especially Mobilizers – that they dohave to talk to you. … In this world, suppliers’ teaching must:

  1. Capture the attention of a Mobilizer, in a way that
  2. Motivates them to champion a change in behavior, leading them to
  3. Rally the support of the other 4.4, around a vision that
  4. Leads that customer back to their unique solution.

We call it Commercial Insight. [It] can impact customer buying behavior across all three stages of that buying process irrespectiveof where it’s deployed. … But for Commercial Insight to have that kind of broad influence across the customer purchase, it must follow a precise set of design principles. … Commercial Insight isn’t designed to teachas much as to unteach.

Not Teaching, But Unteaching

“What kind of supplier content can bend the path across the customer’s ‘me’ to ‘we’ mountain? … Things that don’t matter: Being Accessible, Containing Interesting Facts or Anecdotes, Being Easy to Understand, Representing a Smart/Expert Perspective.

So what doeshave a statistically significant impact on changing a customer’s purchase direction? In our analysis we found only two drivers capable of reliably driving that kind of change:

  1. Teaching the customer something new and compelling about theirbusiness, and
  2. Providing customers with a compelling reason to take action

More specifically, information laying out not just the benefits of taking action, but the costs of inaction.

Insight is designed to demonstrate to customers that despite their ownlearning and their ownexpertise, they’ve missed something materially important to the performance of theirbusiness. … Insight, in other words, isn’t designed to just teachcustomers something new that they’ve never thought before, but to unteachthem something they already have.

Insight Is Not Thought Leadership

When it comes to insight, we find the term suffers from a strong “false-positive problem,” as much of what passes under the name of insight today falls into the much broader, and arguably much less valuable, category of “thought leadership”.

If we think of all the different kinds of content a supplier might produce in the name of insight, we find there are a number of different “layers” to that content, each separated by a boundary delineating that layer from the next.

Let’s start with “general information.” From there we look at “accepted information.” Accepted information is credible, it’s relevant, but frankly it’s just not all that interesting. It sounds more or less like everyone else’s information. … Clearly, if we want someone to actdifferently, we have to first get them to thinkdifferently. To do that, we’re going to have to show them something truly newsworthy. And that brings us into the third layer of information: “thought leadership.”

Interestingly, above all other categories of content we’ve laid out so far, thought leadership is the one that can really get a supplier in trouble. Not only because this is the kind of content most suppliers are creating, but because it’s the one most suppliers aspireto create. Virtually every marketer will tell you, their company strives to be a “thought leader” in their industry. … So what is thought leadership? It’s interesting, newsworthy, incremental information that customers themselves likely could not have discovered on their own.

But the real limitation of traditional thought leadership is that it doesn’t necessarily drive action. Readers learnbut they don’t necessarily do. People may be liking or retweeting the content, but it isn’t move them to action. That’s because most thought leadership is largely focused on presenting a newidea, rather than undermining an existing one.

So what else is there? Well, the next filter is “Be frame breaking.” This is the final bar we need to clear for our content to truly be called “insight.” But why that filter, “frame breaking?” What we find is that insight is something else entirely. It’s designed to upend the status quo. As such, insight isn’t’ about onething, it’s about two things. It doesn’t just convey an idea of what the customer couldbe doing (like thought leadership), but also conveys a story around what the customer is currentlydoing, explicitly laying out why that current behavior is costing the customer time or money in ways they never realized.

That’s the key. The contrast. It’s the cost of current behavior juxtaposed to the potential of alternate action. Implicit in any good insight is the simple message: “Hey…you’re doing it wrong!” and done well, it causes your customer to say, “I have to change what I’m doing!” Thus the term “frame breaking.” … Customers’ reaction to well-designed thought leadership is: “Wow, they’re smart.” … Customers’ reaction to well-designed insight is: “Wow, I’m wrong.”

“Show me the page, show me the data point, the bar graph, the bullet point, the momentwhere you look your customer in the eye and tell them that they’re wrong.” If you can’t find that moment in your content – no matter how diplomatically formulated – chances are pretty good, you haven’t created insight at all.

 

The Challenger Customer: Chapter 1 (part 2 of 10)

Chapter 1: The Dark Side of Customer Consensus

Commercial leaders find themselves more frequently than ever before competing on little else but price.

As the head of sales and marketing at a global industrial fragrances company recently put it, “I just don’t understand. We’re the leading supplier in our industry.  Our products are world class, or brand second to none, and our salespeople are highly skilled. There’s not a single deal in our industry where we’re not invited to participate – we make it to the table every single time.  …. But even when we do, we’re always one of three suppliers at the table. Despite all of our commercial strength, we end up competing on nothing but price every single time. It’s killing our business. Our premium position simply can’t sustain that kind of margin erosion.”

Welcome to what we call the “1 of 3 Problem,” where a supplier commonly wins the battle for customer consideration – even preference – but ends up competing against two others on little but price nevertheless. [To fight it] They carefully redesign marking campaigns and sales collateral to better communicate the broad range of their company’s “best-in-class, cutting-edge solutions” and “unique ability to provide moments of deep customer delight.” … and yet … costly efforts to better articulate their company’s value is something akin to “Yeah, we knew that already.”

Today’s customers will often concede the point right up front, responding, “We totally agree! We think you guys are great! Your solution is by far the best, and we’d love to partner with you!” … so if we can get your solution at their price, then we’re good to go!”

There’s little evidence that today’s customers are any more willing to payfor that extra value even when they perceive it. At least not when they believe the next best alternative to be sufficiently “good enough.” … Most suppliers’ single biggest competitor isnt’ so much the competition’s ability to sell as their own customer’s willingness to settle.

Climbing the “Me to We” Mountain

If we think about the various stages customer stakeholders must pass through to move a purchase forward, we can narrow it down to three in particular, each crucially important:

  1. Problem Definition
  2. Solution Identification
  3. Supplier Selection

What we wanted to figure out is … when that purchase is most likely to fail. … One in particular stands out as especially difficult, and that’s Solutions Identification.

So while customer stakeholders might all agree they have a problem, there is going to be debate on the best way to solvethat problem. .. the place where they really need to rally agreement is around the specific solution to the customer’s problem, irrespectiveof supplier.

The analysis tells us the thing least likely to create disagreement is Supplier Selection (welcome back to the 1 of 3 problem) … [and every supplier is saying] That they’re the leading provider of whatever solution that customer is alreadylooking for.

So if a purchase decision is going to stall, more likely than not it’s going to stall far earlier than most suppliers would anticipate, particularly if they’re focused only on watching for signs of customer disagreement around the value of their offering. … so if reps do indeed manage to “get in earlier,” they need to take that opportunity to ehlp customers overcome the challenge they’re facing earlier. And that challenge has little to do with choosing a supplier and everything to do with deciding which problems are worth solving in the first place and what solutions are worth pursuing to solve them – all irrespectiveof supplier. … Suppliers’ biggest challenge in winning customer consensus has nothing to do with that supplier’s solution at all.

Even more troubling, much of the customer’s primary consensus challenge occurs far before most sellers are even present to address it in the first place.

Mind the Gap from 37 to 57

On average, customers are 57 percent of the way through a typical purchase process prior to proactively reaching out to a supplier’s sales rep for their direct input on whatever it is that they’re doing.

Now, that 57 percent number has huge implications for suppliers. If we consider what’s likely happening inside that 57 percent, changes are pretty good that customers are now doing on their ownmost of the things that suppliers were hoping to do with them together: They’re identifying a need. They’re prioritizing that need relative to others. They’re determining which capabilities they’ll require to address that need. They’re identifying which suppliers are best able to deliver that capability. In most cases, they’re conducting preliminary research on how much each of those suppliers cost. So by the time a supplier is called in at that 57 percent mark, more often than not there’s little left to discuss but price. As one senior leader memorably put it, “That 57 percent is a freight train to RFP Station. And we’re on it.”

We also asked customers to identify the point in a purchase process at which internal conflict most likely reaches a peak – or the “wailing and gnashing of teeth” hits a crescendo – and that deal is in the greatest danger of falling apart altogether. And thatnumber came back as 37 percent.

Group conflict peaks at 37 percent. That’s the summit of the “me to we” mountain where that deal is most likely to die. And you’ll remember, that peak centers around Solution Identification, not Supplier Selection – a problem most suppliers infrequently address. … If a purchase decision is most likely to stall at 37 percent, but a supplier sales rep isn’t likely to be called in until 57 percent … how many times have sellers lost before they could ever attempt to win?

That gap has hugely important implications for suppliers. … Customer consensus isn’t a sales challenge, it is a commercialchallenge. … B2B marketers are going to have to find ways to anticipatecustomer disconnects far earlier in the purchase process and avert them proactively.

 

 

The Challenger Customer (part 1 of 10)

The Challenger Customer: Selling to the Hidden Influencer Who Can Multiply Your Results

By: Matthew Dixon, Brent Adamson, Pat Spenner and Nick Toman of CEB (2011)

[Pigeonhole] A Practical Principal Book

[Premise] Sequel to the Challenger Sale that integrates a marketing message into the sales process.  The message must be delivered to a ‘Mobilizer’, which is effectively a Challenger partner within the organization.

Chapters

Introduction: The Hardest Part of Selling Solutions (p1-2)

  1. The Dark Side of Customer Consensus (p3-34)
  2. The Mobilizer (p35-56)
  3. The Art of Unteaching (p57- 82)
  4. Building Commercial Insight (p83-100)
  5. Commercial Insight in Action (p101-116)
  6. Teaching Mobilizers Where They Learn (p117-134)
  7. Two Types of Tailoring (p135-156)
  8. Taking Control of Consensus Creation (p157-182)
  9. Making Collective Learning Happen (p183-208)
  10. Shifting to a Challenger Commercial Model: Implications and Implementation Lessons (p209-254)

Acknowledgements (p255-260)
Index (p261)

[Key Points] The Challenger Customer

This is a book of surprises.

Chief among them is the surprising decline of historically effective selling strategies that now fail to generate anything near hoped-for returns.

Despite suppliers’ improved ability to convey their unique value, there’s strong evidence that today’s customers are less willing than ever before to actually payfor that value, even when they perceive it – at least not when they believe the next best, less expensive alternative is “good enough” to meet their needs. While today’s suppliers may win the battle for awareness, consideration, recommendation, and even preference, they still lose when it comes to what matters most: getting paid. As exasperating as it seems, the very solutions most companies developed to escape commoditization have themselves become commoditized in the eyes of their customers.

… there was a second part to this story. It turns out, the far bigger story isn’t about suppliers’ struggle to sellSolutions, it’s the customer’s struggle to buy them. … the severe dysfunction that is bred by the ever-expanding number of individuals who need to weigh in before a deal is signed.

In the end, what has long seemed to salespeople like a well-designed strategy to “stick it to suppliers” or beat them up on price is more often than not a function of a far less insister but arguably infinitely more intractable problem: the inability of customer stakeholders themselvesto achieve broad agreement on a common course of action in the first place.

It’s not just thatyou challenge, but whoyou challenge that really matters. To win today, you need a Challenger insidethe customer organization. … We call them Mobilizers, and this is their story.

 

 

The Challenger Sale: Chapter 5, section 2 (part 4 of 4)

Developing a Purposeful Choreography

So if you’re going to build Challenger reps and ask them to teach your customers, for many companies one of the first steps will inevitably have to be a pretty significant review of the materials you provide them with to do that.

So how do you build a Commercial Teaching message? The place to begin is actually at the end with step 6, your solution. You can’t build a compelling story unless you first know what it’s building to. … By helping customers think differently about theircompany, you ultimately want them to think differently about your company.

Once you’ve established clarity around step 6 – Your Solution – your next stop in building a powerful Commercial Teaching conversation is step 2 – the Reframe. You need to identify the core insight, or ah-ha! moment, that will get your customer to say, “Wow, I never thought about it that way before.”

To get there, start with the unique benefits you’ve identified for step 6 and then ask yourself, “Why don’t my customers value those benefits already?” What is it about how they view their world that precludes them from appreciating those benefits as much as we think they either could or should? That’s the view you need to change. And to change it, you’ll need to provide them with an alternate view (the Reframe), and then convince them that that alternate view – were they to pursue it – could either save or make them more money than they realized (step 3). After that, it’s simply a matter of fleshing out the rest of the story to create a logical and compelling path from step 2 to step 6.

Put it all together and you get: “What’s currently costing our customers more money than they realize, that only we can help them fix?” The answer to that question is the heart and soul of your Commercial Teaching pitch.

Building the Insight Generation Machine

Commercial Teaching places significant guardrails around the sales interaction to provide real support for the rep. … First, the customer’s needs are prescoped.… Second, the conversation is prescribed. … Finally, the solution the rep is working toward is predefined. … Of course, this approach still requires great skill than the simple world of transactional selling. But compare it with a world of classic solution selling or “consultive selling” where reps are expected to figure all of this out on their own.

  1. Identify your unique benefits
  2. Develop commercial insight that challenges customers’ thinking
  3. Package commercial insight in compelling messages that “lead to”
  4. Equip reps to challenge customer

Concrete Teaching provides a concrete and very actionable road map for .. getting the two functions of sales and marketing to work together in the first place. … Most companies fail to define an agreed-upon framework for what the two functions should actually do together in the first place.  …consider from the opposite perspective: What shouldn’tthey do together?

Make sure your Teaching Pitch is Bold

As soon as you’re not looking, Relationship Builders will take out their belt sanders and smooth out the edges of your sharp pitch. They’ll soften it until you barely recognize it, pushing it to the SAFE end of the continuum. … Remember, while Relationship Builders seek to reduce or defuse tension, Challengers constructively use tension to their advantage.

The Challenger Sale: Chapter 5, section 1 (part 3 of 4)

Chapter 5: Teaching for Differentiation (Part 2): How to Build Insight-Led Conversations

If you were to map a world-class teaching conversation – or teaching “pitch” – you’d find it moves through six discreet steps, each building directly to the next. … Frankly, it isn’t so much about delivering a formal presentation as it’s about telling a compelling story.

Step 1: The Warmer

Lay out what you’re seeing and hearing as key challenges at similar companies. If you have it, this is a great place to provide bench-marking data. … anecdotes from other companies that capture the challenges most likely of highest concern to your customer in ways that corroborate their own experience. … Conclude your review by asking for their reactions:

“We’ve worked with a number of companies similar to yours, and we’ve found that these three challenges come up again and again as by far the most troubling. Is that what you’re seeing too, or would you add something else to the list?”

What you’re saying to your customer is, “I understand your world,” and “I’m not here to waste your time asking you to teach me about your business.” It’s an approach we’ve dubbed “Hypothesis-Based Selling.” … it makes the entire sale both faster and easier for them. … A Commercial Teaching pitch cuts right to the chase. It honors the customer’s time and shows that you’ve done your homework.

So what’s next? What are you going to do with the goodwill you’ve just established? Present your solution? Lay out your “value proposition”? That’s the lastthing you want to do now! Although it is the next step they’re probably expecting, and it’s absolutely the next thing a core-performing rep would do – and without a doubt what your competitor’s sales rep did when he was sitting in the same customer’s office an hour earlier.

Think about it. You just got your customer to warm up to you by talking about their business. Why in the world would you want to ruin all that goodwill by spouting off about yourbusiness? You haven’t yet given them a reason to care. Instead, now you go to a place your customer never saw coming: the Reframe.

Step 2: The Reframe

This is the central moment of a Commercial Teaching pitch.  Mind you, you’re not expect to actually come up with the insight in the moment. … that kind of spontaneous flash of brilliance is not only too hard, it’s actually a bad idea. … Rather, the Reframe is simply about the insight itself. It’s just the headline. And like any good headline, your goal is to catch your customer off guard with an unexpected viewpoint – to surprise them, make them curious, and get them wanting to hear more.

Remember, the reaction you’re looking for here is … “Huh, I never thought of it that way before.” … If you’re doing a reframe, then be sure you really reframe. This is not the place to be timid, as the entire pitch rests on your ability to surprise your customer and make them curious for more information. You’ve just bought yourself another five minutes. So what’s next? Well, you’ve shown your customer a different way to think about their business, now you’ve got to show them why it matters.

Step 3: Rational Drowning

Rational Drowning is where you lay out the business case for why the Reframe in step 2 is worth your customer’s time and attention.

So now it’s time for the data, graphs, tables, and charts you need to quantify for the customer the true, often hidden, cost of the problem or size of the opportunity they’d completely overlooked. Rational Drowning is the numbers-driven rationale for why your customer should think differently about their business, but presented specifically in a way designed to make them squirm a little bit – to feel like their drowning.

Putting steps 2 and 3 together, you’ve got to show them something new, and show them why it matters. This is what good teaching is all about. Great teaching, however, requires something else: emotional impact.

Step 4: Emotional Impact

Emotional Impact is all about making absolutely sure that the customer sees themselves in the story you’re telling. … Simply repeating the business case in greater detail will never get you past the “we’re different” response. That’s because you’re solving for the wrong problem. The problem isn’t that you’ve failed to make a logical presentation, the problem is that you’ve failed to make an emotional connection.

Now you’ve got to make it personal. And this is where a Challenger rep’s storytelling ability really comes into play. … You’ve got to paint a picture of how other companies just like the customer’s went down a similarly painful path by engaging in behavior that the customer will immediately recognize as typical of their own company.

“I understand you’re a little bit different, but let me give you a sense of how we’ve seen this play out at similar companies …” And for this to work, whatever you say next has to feelimmediately familiar (which is another reason why a deep understanding of the customer must be acquired priorto the sales call, not just during it). The reactions you’re looking for are a rueful shake of the head, a wry smile, a thoughtful faraway look. Why? Because you’re looking for the customer to replay the same scenario in their head as it actually happened to them in their own companyjust last week. Ideally, the customer’s response to your story is something like, “Wow, it’s like you work here or something. Yeah, we do that all the time. It just kills us.” And that is how you slay the dragon of “we’re just different”: by creating an emotional connection between the pain in the story you’re telling and the pain your customer feels every day inside their own organization. If your customer still thinks they’re different after step 4, you either have the wrong customer or the wrong story.

Step 5: A New Way

As tempting as it might be at this point to launch into a review of how you can help, step 5 is still about the solution, not about the supplier. … It is deeply tempting to talk specifically about how you can help. For most reps it simply feels like the obvious thing to do. But step 5 isn’t a story about how much better customers’ lives would be if they bought your stuff (which is what most reps want to talk about), it’s about showing customers how much better their life would be if they just acted differently. It’s about behaving differently, not buying differently.

Don’t rush this. Before they buy your solution, the customer has to buy the solution.

Step 6: Your Solution

If step 5 is about getting customers bought in to acting differently, the goals of step 6 is to demonstrate how your solution is better able than anyone else’s to equip them to act differently. In many ways, of all six steps, this one is the most straightforward, as it’s what reps have been trained to do from the very beginning. This is where you lay out the specific ways you can deliver the solution they’ve just agreed to in step 5 better than anyone else.

Where does the supplierfirst enter the conversation? Notice it’s not until the very end in Step 6. … If, on the other hand, you’re going to take sixty minutes of your customer’s precious time for a face-to-face meeting, you’d better make sure that whatever you do with that time is valuable to your customer.

 

The Challenger Sale: Chapter 4 (Part 2 of 4)

The Challenger Sale

Key argument is against “relationship selling” and towards “commercial teaching.”

Chapter 4: Teach for Differentiation (Part 1): Why Insight Matters

Over the last fifteen years, most sales training has centered on a core principle: The shortest path to sales success is a deep understanding of customers’ needs. … It sounds great on paper, but this approach suffers one major problem: It doesn’t work nearly as well today as it used to. … this approach is based on a deeply flawed assumption: that customers actually knowwhat they need in the first place.

But what if customers truly don’t know what they need? What if customers’ single greatest need – ironically – is to figure outexactly what they need.

If this were true, rather than asking customers what they need, the better sales technique might in fact be to tellcustomers 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’’ word as well as the customers know it themselves, but by actually knowing their customers’ world betterthan their customers know it themselves, teaching them what they don’t know but should.

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. [an example company improved customer service dramatically, but saw no improvement in customer loyalty. This is because so did everyone else. The industry as a whole improved. Customer service was not a differentiator, it’s now the cost of admission]

So while we spend much of our time emphasizing subtle differences, customers tend to focus first on the general similarities.

That’s the real bombshell finding of this work. Loyalty isn’t won in the 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.  … 53 percent of customer loyalty is attributed to your ability to outperform the competition in the sales experience itself.

Seven attributes (out of 50) ranked the highest for importance of impact:

  • 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

Each of these attributes speaks directly to an urgent need of the customer not to buysomething, 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.

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. … And the best reps win not by “discovering” what customers already know they need, but by teaching them a new way of thinking altogether.

Not just any teaching. Commercial teaching.

“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.

It’s one thing to challenge customers with new ideas, and another thing altogether to ensure you get paid for it.

Commercial Teaching must ultimately: 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 is what we want. Commercial teaching has four key rules:

  1. Lead to your unique strengths
  2. Challenge customers’ assumptions
  3. Catalyze action
  4. Scale across customers

Commercial Teaching Rule #1: Lead to Your Unique Strengths

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.

 

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 want help but to want your help.

There are two important caveats: you’ve got to make sure you actually canhelp. Second, you actually have to know what your unique strengths are.

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.

Commercial Teaching Rule #2: Challenge Customers’ Assumptions

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”.

If your customer reacts to your sales pitch with something like, “Yes, I totally agree! That’s exactlywhat’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. … you made a “connection” but rapport and reframe are not the same thing.

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.” … They’re clearly telling you they’re engaged, maybe even a little unsettled.

Still, just because we’ve helped them seethings differently doesn’t mean we’ve necessary persuaded them to dothings differently. That’s next and it’s just as important.

Commercial Teaching Rule #3: Catalyze Action

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.

 

Commercial Teaching Rule #4: Scale Across Customers

Provide your sales reps with a manageably small set of well-scripted insights along with two or three easy-to-remember diagnostic questions design to map the right insight to the right customer.

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.

 

The Challenger Sale (part 1 of 4)

The Challenger Sale: Taking Control of the Customer Conversation

By: Matthew Dixon and Brent Adamson of CEB (2011)

[Pigeonhole] A Practical Principal Book

[Premise] B2B Sales have evolved to the point where sales processes are commoditized, so companies need to look to have a different approach. The authors suggest a few type of salesperson styles exist, and that one of those styles – the ‘Challenger’ – will be the most successful.  In addition to the personality and sales type, there is also a prescribed sales method to apply. As the name implies, the sales rep is encouraged to challenge the customer’s assumptions and present their product in a new light.

Chapters

Introduction (p1-4)

  1. The Evolving Journey of Solution Selling (p5-13)
  2. The Challenger (Part 1): A New Model for High Performance (p14-29)
  3. The Challenger (Part 2): Exporting the Model to the Core (p31-43)
  4. Teaching for Differentiation (Part 1): Why Insight Matters (p44-64)
  5. Teaching for Differentiation (Part 2): How to Build Insight-Led Conversations (p65-100)
  6. Tailoring for Resonance (p101-118)
  7. Taking Control of the Sale (p119-139)
  8. The Manager and the Challenger Selling Model (p140-169)
  9. Implementation Lessons from the Early Adopters (p170-186

Afterword (p187-196)
Acknowledgements (p197-204)
Appendix A: Challenger Coaching Guide (excerpt) (p205-207)
Appendix B: Selling Style Self-Diagnostic (p208-209)
Appendix C: Challenger Hiring Guide: Key Questions to Ask in the Interview (p210-214)
Index: (p215)

[Key Points] – Sales reps should perform “Commercial Teaching” with “Commercial Insights” and choreograph the process to scale.

Healthcare “Syntopical”: Compiled Thoughts (part 15 of 15)

Insurance is about Risk vs Benefit

The Healthcare exchange spreads the risk around, so it also owns the benefits from health people – this is a bad deal for a healthy workforce.

In order to gain from being healthy, you must assume the risk – but there are protections against real risk.

Self-insurance means the company pays for all the healthcare costs (high risk) – but if people adjust their mindset and use healthcare in the manner of an informed consumer, the program has very low costs.

There is a specific approach (mindset shift) to keeping utilization costs low, but first, the company needs to mitigate their risk.

  • Stop-loss insurance to cover against a major incident
  • Aggregate-loss insurance to cover against cumulative incidents
  • Any high-risk individuals, or if the company has a very bad year – the company can always defer to the public health exchange

_________________

Create a Health Reimbursement Account (HRA) for the company to draw from for medical use. This is a pool of money that covers the deductible for Stop-loss, but is pre-tax and earns interest when it’s not being used.

Create Health Savings Accounts (HSA) for individuals to draw from for their share of the costs. This is an account that accumulates over time if it is not used, but is pre-tax going in, and tax-free if used for specific medical expenses.

The company must incentives the employees to use a carefully curated network:

  • Carefully Selected Centers for rare but critical procedures
  • Carefully Selected Quality Hospitals for in-patient care
  • Carefully Selected Physicians, professionals and Urgent Care facilities for primary and out-patient care

Use primary care providers that are incentivized to direct patients to the least invasive approach to a desired outcome.

Primary, in-patient and specialty care are selected using visible pricing and quality scores

Pharmaceutical co-pays are based on 1 of 2 tiered pricing systems

Outside providers are necessary to set up the curated network and to process claims

Healthcare “Syntopical”: Cracking Health Costs 3 (part 14 of 15)

Chapter 5: Your Employee’s Health is Too Important

The following are some reasons for this overtreatment that I’ve collected over the years:

  1. Like most people, most doctors get paid more for doing more.
  2. Doctors often don’t keep up with advances in medicine.
  3. The patient wants surgery, and the doctor figures that the patient will simply get it from someone else if he declines to perform it
  4. The surgeon believes his professional judgement and experience trumps science.
  5. A doctor looks at a patient and sees a blocked artery. He or she wants to fix that artery, often with little regard for the fact that the patient may be too feeble for the surgery or that a nonsurgical medical alternative might be equally effective and even safer for the patient.
  6. Like people in many professions, doctors often have employers.
  7. The official government-established rules are distorted to enhance the income of “proceduralists” (specialists doing procedures)
  8. A doctor can get in more malpractice hot water by doing less than by doing more.

 

Chapter 7: The Company-Sponsored Centers of Excellence Model

Establish direct contracts between employers and clinics and hospitals that have achieved outstanding levels of success in managing the care for the very sickest members of your workforce. We refer to these organizations as “Company-Sponsored Centers of Excellence” (CSCOEs), to specifically distinguish them from marketing-oriented models where a well-known hospital anchors a local network using the (often self-designated) moniker of “center of excellence.”

What to look for in a CSCOE:

  1. Doctors and hospital facilities fully integrated (same organization)
  2. Fully salaried doctors, especially surgeons, with no “productivity bonuses”
  3. Doctors accountable for finding the safest and least invasive treatment to achieve desired patient outcome
  4. Patient tracking to observe long-term outcomes
  5. Transparent pricing such as providing global fees
  6. Stay away from academic health systems (University of … )
  7. A ‘medical destination’ program including logistics for your people being flown in
  8. Non-profit

 

Chapter 8: Hospital Safety: How to Get Your Employees Back to Work in One Piece

Hospitals probably constitute about 50 percent of your overall healthcare spend. … We’ve already provided half the strategy to reduce that percentage: medical travel through CSCOEs. But what about the many hospital admissions that don’t justify flying people out of town – people who may end up in unsafe hospitals right in town?

Using a high-deductible plan might help control some other expenses. But nearly every inpatient stay exhausts the allowed annual deductible, saddling your company with the rest of the bill. That means even if your employees become adept at shopping for outpatient care, lab, radiology, and physician services, they will still have little or no incentive to shop for the most price—competitive hospital.

So here you have very high-priced suppliers producing a slipshod product … and yet your only strategy today is to try not to use them by instead using wellness programs that, as previous chapters showed, may create more provider interaction. I suspect the following are the barriers preventing you from being more assertive with provider organizations:

  1. “I can’t pretend to know more than the doctors and nurses”
  2. “I don’t know how to evaluate the quality of a hospital”
  3. “My health plan handles my relationship with hospitals. I don’t need to get involved”
  4. “My business doesn’t have enough purchasing leverage to influence hospitals”

Action Steps:

  1. Determine your frequent lower-cost procedures
  2. Review those procedures against the Leapfrog scores at the hospitals in which those procedures were done
  3. Do some simple arithmetic to see what these lower scores are costing you and, through great chance of harm, your employees
  4. Tell your employees which hospitals are better than which other ones
  5. Nudge your employees financially toward the higher quality hospitals
  6. Let the hospitals know you’ve done this

 

Chapter 9: Real Care Coordination: The Only Other Way to Save Money

Quantum Health model, which we will call the “care coordination model” in order to avoid plugging a particular vendor, has subsequently become even more popular as a way to control benefits expense

  • Customer service for all benefits issues including eligibility, coverage, and claims
  • Provider services
  • Utilizations management including Precertification, Concurrent inpatient review/case management and Retrospective review
  • Case management
  • Disease management
  • Wellness programs (for employees that insist)

Think of the care coordination model as an ACO run for employers rather than by providers

How to Select a Coordinated Care Vendor:

  1. “Which of the functions listed above will be provided by you?”
  2. “Are all functions accessed by plan members (employees and dependents) and providers though a single-point service process – one toll-free number, website, and other access channels?”
  3. “How fully integrated are member services, patient advocacy, and care management functions in the vendor’s operation?”
  4. “How many calls do you CSAs handle?”
  5. “Explain the role-blending in your organization and give specific examples”
  6. “Does the IT/data system reflect a horizontal coordination of care platform?”
  7. “What specialized staff development methodologies do you use to foster care coordination?”
  8. “What specialized preadmission, post-discharge, and transition-of-care programs are included in the vendor’s program?”
  9. “Are post-discharge care management and disease management integrated?”
  10. “How are people who did not just get discharged referred into programs?”
  11. “What do you report on?”
  12. “How do you interface with Company-Sponsored Centers of Excellence”
  13. “How do you validly measure and guarantee outcomes?”

Although care coordination is a fast-growing field, you can see why more self-insured employers don’t do it. It requires actual work. … The total administrative fee (carrier plus care coordination vendor) is also higher with care coordination, since a care coordination vendor is doing much more. But that doesn’t mean it costs more. … And of course, you will actually be doing something.

 

KEY DETAILS

  • Charge a higher monthly contribution to employees who do not do something of ‘wellness value’
  • ‘Subsidize’ healthy food options or ‘tax’ poor food options
  • Use ‘specialty pharmacies’ for ‘specialty medications’
  • Set up drug co-pays by category, not by price
  • Negotiate Spread with your PBM
  • Stay out of PCMHs forever and ACOs for now
  • Set up CSCOEs for the very sickest outliers of your workforce
  • Pay the employee’s $250 co-pay if they use a high-performing hospital for in-patient care

 

 

RESOURCES

  • com for Proof of ‘wellness value’
  • Companies that use CSCOEs: BP, Burger King, Hershey, Lowes, Walmart, Pepsi, Boeing
  • BridgeHealth Medical to set up a CSCOE for small companies
  • Laurus Strategies to set up a CSCOE
  • Leapfrog for High-performing hospital scores
  • com for Care coordination model vendors
  • Healthways for well-being vendor (as opposed to wellness)
  • Gallup-Healthways Well-Being Index (WBI) for well-being measurement and Well-Being Assessment (WBA) for individuals
  • Ascentia Health Care Solutions for tools for physicians by physicians
  • “Private Exchanges” to compare to standard, Public Exchanges. Rates will probably be the same, but services may differ drastically.