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Today’s show featured an interview with Insight Revenue CEO Zach Gropper and Jonathan Tice, CRO of WebPros.
Find Zach on LinkedIn. Find Jonathan on LinkedIn.
ZACH’S TIP: “If you’re in a commercial leadership position, sales, marketing, go to the leaders across that team and make sure you have something on your calendar every week where you’re getting together and talking across those functions about your customer. It’s another way you can better align your organization. You’re all playing, it’s teams selling to buying teams, and that’s how you can be a better partner and build better quality business.”
JONATHAN’S TIP: Rethink your role around how do you drive value for the customer in ways that they can measure and quantify.”
THE PODCAST BEGINS HERE
Fred Diamond: We got Zach Gropper, who at one point spent a lot of his time at CEB and was involved with the Challenger Sale, and of course, the Challenger Book. People have heard this story before. The second thing that the Institute for Excellence in Sales ever did, it was back in 2012, we used to bring great speakers to the DC region. We still do, actually, we’re back to doing that. We brought a guy named Neil Rackham. Neil is the author of SPIN Selling and is one of the fathers of consultative sales. He was on our stage, he was the second speaker we ever had. About 30 minutes left to go in his presentation, he said, “Now everybody, you can’t take any notes.” He has a British accent. He said, “You can’t take any notes, but I’m going to talk to you about a book that I wrote the foreword to. It’s called The Challenger Sale.” Then he gave us six slides on what The Challenger Sale was all about.
We’re going to be talking today about some of the things we learned from that and some of the things that we’re now recommending people do, where we found some gaps over the year. Zach, why don’t you go first? I just teed up this thing called The Challenger Sale. In the 700 Sales Game Changers Podcast episodes that we’ve done, I’ve probably mentioned it at least 300 times. I want to let people also know that we’re going to be talking about your new report, the 2024 State of Revenue Report. We have a lot of things to cover here. I’m excited for this conversation. We’re going to go a lot of different ways.
One of the most popular words that we use on the Sales Game Changers Podcast is the V word, value, impact, value realization, et cetera. We’re going to be spending a lot of time on that. Zach, why don’t you get us caught up here? I’m excited to see you. I’m excited to see Jonathan as well. Zach, give us a brief intro and tell people what The Challenger Sale was for people who don’t know, for some of the newer people listening to the show.
Zachary Gropper: Thanks for having me on, it’s great to be here. It’s a great question because I think that journey changed a lot of lives and a lot of perspective on this whole industry, and particularly B2B sales. If we go back to the beginning, we did some really interesting research. I joined CEB in the year 2006 and actually was interestingly asked to help build a professional services arm to implement research. That model was a 1 to 100 model. You can share high brush strokes, but you can’t go in and help companies drive change. Our customers asked us to build out more of a solutions or professional services arm. I joined at the ground floor, one of the founding team of that business all those years back.
We had some really interesting research come out around what drives customer loyalty. That started coming out of the Great Recession. 2009, this work started coming out where CMOs were asking, is all our customers care about is price? We don’t believe loyalty exists anymore, sort of what’s old is new. Again, if we think back to some of those days, we actually looked at what was driving buying decisions, and ultimately what was leading to buying something for the first time doing repeat business with customers and then actually referring and advocating on their behalf. It’s really interesting how important those things are, especially that last one, these ways when it comes to growing business.
Now, that study really sent a huge ripple effect across the sales and marketing and other memberships. We followed it up by actually taking a look at, all right, customers say that there’s a certain experience that’s driving their business, but on the other side, what are the best salespeople on earth actually doing? Do those data points correlate? Do our customers actually practice what they preach in this regard? There was a study that came out that’s now known as The Challenger Study, which looked at I think, who knows to date how many salespeople in B2B were reviewed through the study, but it was well over 100,000. What the initial findings found was there was two main findings of that work, looking at how salespeople apologize for that, how salespeople actually chose to engage with customers.
The first thing that we found is that all salespeople actually have a predominant way that they engage with their customers, whether it’s what they’re taught or what they naturally do, and that there were five different ways that salespeople would engage with customers. Then on the flip side of that, we found out the results. That there was one that did particularly poorly when it came to showing up in the top 20%, and one that did particularly well. In fact, almost five times more likely to be a high performer. On one side, you had what many people would think of as a traditional salesperson or relationship seller. On the other side, you had what we called the Challenger. We called them the Challenger because they actually took a very different approach to customer engagement.
In fact, they’re very comfortable with debating the customer, and they really were keen to learn more and understand the customer’s business, and really challenge the status quo. The interesting thing that came out of that and why there’s been 300 conversations on your podcast over the years is that that salesperson, though a small portion, less than 20% of the overall population size, was predominantly more likely to be a high performer. Significantly more so than the traditional relationship builder who many people hired for. Actually, if you put those two studies together, that Challenger actually was doing all of the things that the customer said drove their business, and it was leading with insight. It was adapting to their situation. It was helping them build essentially an objective view of trade-off decisions they had to make, and then ultimately be able to get and galvanize their own organization to be able to get the deal done in the first place.
Ultimately, that’s led to us publishing a book called The Challenger Sale, followed by The Challenger Customer, and other books. Worked very closely with Matt Dixon, Brent Adamson, and Timur Hicyilmaz, who actually did most of the research behind that sales practice as well.
Fred Diamond: We’ve had Matt Dixon and Brent Adamson, both have graced the IES stage over the years. We don’t need to do a complete review of The Challenger, but one of the things that I came away with was, and we talk about this a lot on the Sales Game Changers Podcast, is that your customers don’t need you anymore if you’re not bringing significant value. The V word, value, is something we talk about all the time as well. We’re going to get deep into that today because a part of your report that came out of the State of the Revenue Report in 2024 was that a lot of the sales professionals aren’t bringing that right now. Leaders even think that their people aren’t bringing that.
Jonathan Tice, it’s great to have you here today as well. Give us some of your thoughts on this as well. First of all, introduce yourself, and second of all, why are we having this conversation? We’re doing today’s interview in May of 2024, and we’re talking about the fact that sales professionals don’t always bring value to customers. It frustrates their leadership, frustrates their customers, probably frustrates their customers less because they can just tune them out. If a sales professional is not bringing any value, one of the statements in your report in the State of the Revenue Report says that only 8% of leaders are convinced that their AEs, account executives, know how to work with customers to establish both the ROI as well as the cost of an action associated with their solutions in order to deliver a business case. People are still evidently stuck in features, benefits, Jonathan.
Jonathan Tice: Thanks for having me on board. Just for some context and history. I’ve been in the B2B enterprise software/SaaS space for over 30 years. We’ve seen a few cycles. Fred, when you were at Compaq, I was at a company called Oracle and we were looking at this transformational effect of network computing and later the internet. We went through a mobile wave. Then if you recall back to 2009, the time period that we just referenced, customers were getting really proficient with what we were providing the market, and we weren’t offering much value. Hence your point around the commoditization effect on price. At that point in time, as I recalled it, going into the recession is, “Hey, where do I get the lowest price? Because I really don’t need you for much else.”
Fast forward to today, we have a similar dynamic coming through 2022 with the chaos and craziness of everything. The difference here is less on the price pressure as it is on cost of capital. Customers are saying, “How much money you want me to give you? When do I get it back? How quickly?” That’s the big difference, I think, is that the end zone for the vendor customer community in the 2009 era was, “Go live. I’ve installed the software, you’re live.” The big change that’s happened now is customers didn’t buy you to go live. They bought you to realize value, and now there’s this extra step that’s incumbent on the vendor community to make sure that the value is realized and realized in a sufficiently quick timeframe given the cost of capital.
Fred Diamond: Zach, I want to go back to you. Why are we in this situation? Why are we having this conversation in May of 2024? There were so many data points in the state of the revenue report, which is driving what you’re doing in a lot of ways to help sales organizations understand what they should be doing.
Zachary Gropper: It’s a convergence of a few things, and it’s a little bit different in different industries, but I think when you ask, a lot of this research has been out for a long time. It’s been revalidated, and as I would say, it’s more important than ever before. Why haven’t folks just adopted this and been able to move on successfully? There’s a learning curve and there’s a cyclical effect. Especially if you look at the cost of capital now is very high, it was not for a while. Quite simply we see a lot of sales organizations that could get away with order-taking style of behavior, simply because there was so much money flowing.
If you look at the growth of certain SaaS and tech companies especially, they didn’t have to go back to the fundamentals of what is hard about sales. Really understanding your customer, really delivering something differentiated. You could get by with a mediocre product at a somewhat competitive price, and if you built a sales machine, you could get out there and get a crazy valuation and people were getting rich. I think part of that has affected how I think a lot of SaaS companies are really struggling to sell and are really focused on only features and benefit selling.
We, if you talked to Neil Rackham, spent many years looking at how companies moved away from features and benefit selling, trying to be more solution oriented for their customers, have more strategic relationships. A little bit of that got lost though. On the other side, what you find is the customer though, many people have heard that 57% data point of how late you get involved in the actual buying process with your sales team directly. Nowadays it’s closer to 70%. I think there’s a lot of other things that have happened that are making sales harder. It’s not just the cost of capital, it’s the fact that with automation and all the technology that’s available, customers are just getting inundated. There’s just been so many more companies competing in every single space because the barriers of entry became so low. Suddenly, you’ve got customers that are just not only overwhelmed with information, which can be empowering, but also they’re inundated from every angle, and so they’re trying to put up defense walls. What we see now is customers pushing more and more away, so much so that if you look at recent Gartner data, you’ll see 75% of customers don’t want to talk to a salesperson at all. That’s not B2C, that’s B2B.
But at the flip side of that, you actually see that customers who don’t engage with salespeople are not until late in the process, 60% of the time, they regret their decision, 45% of the time, they heavily regret what they bought. This is a lose-lose on both sides. In fact, the likelihood of getting quality business is significantly higher if you have a salesperson involved earlier. I think this is the main question, is how do you move from this lose-lose environment, which is bad for the customer and bad for your business, and flip over to the other side, which is, “Hey, we’re solving there with deeper challenges, we’re building trusted relationships, and we’re actually working in a partnership and not just a vendor who’s going to get replaced by the next cheap shiny object that comes along”?
Fred Diamond: I’ve spoken to many customers about that. Originally in the book it said the 57, I think, was the play, 57% down the road and now 70%. We’re talking here about software as a service solutions, enterprise solutions. Jonathan, you mentioned you were at Oracle. The stuff that we’re talking about here, most of it’s complex. There is thought that needs to go into it. There is context. A lot of the companies that we’re selling our technology to have been buying things for 20, 30, 50, some cases 70 years. It’s not like making a decision where everything’s different. There’s legacy that is still involved, if you will. It’s not just what’s going to help me now, it’s what’s going to help me in context. I’ve spoken to a lot of customers who said, like you said, corroborating Zach, that they wish they had a salesperson involved earlier, but not a salesperson who’s just trying to make the transaction, but a true partner.
Jonathan, I want to follow up with something what you just said before. One of the results of the State of the Revenue Report that you all published, and I encourage people to get it, we’ll put a link in the show notes, the struggle to create the business case. Zach made a really good point where customers are being inundated. We talk a lot about you’re, in some cases, the 50th priority to the customer. There’s internal and peer and family and all those kinds of things. You may not get the time to create and present a sound, concise, et cetera, type of a business case, but you have to.
The great salespeople that we’re talking to now, they just don’t walk in and wing it, or they don’t think about their story in the car or two minutes before they hit the Zoom button. They’ve done research. I want to talk in detail about that. But Jonathan, give me some of your insights into creating the business case and what the sales professionals should be doing, and also, what leadership should be doing to lead their people to create the sound business case, which we know is going to get them business.
Jonathan Tice: Let me actually start with the third bullet on page four of this report, which everyone I think should read and internalize. We just talked about how the buyer doesn’t engage the sales organization of 57%, now 70%, and you know why? We’ve lost complete touch with the buyer journey. Why would they engage if they don’t see any value? The third bullet point basically says, only 6% of organizations believe that their sales team can deliver messages that communicate unique insights that solve the business problem, the customer’s problem. Because when customers are in the early stages of their buyer journey, and their buyer journey is they realize they have a problem, their number one job to be done is focused on, what is this problem? Who else is this problem? How might I approach this problem? Is this problem even worth solving given today’s economics?
If they were to reach out to a vendor, what’s the only thing they know how to do based on how we’ve been training? Do you want a demo? No wonder you wouldn’t involve that. This is not a challenge just for the sales organization. This is the entire go-to market alignment, that frankly starts with product. Product’s job is to be able to articulate how to calculate the value that will be realized if you use the offering effectively. Marketing should be solely focused on, if you’ve got this problem, we’re the people you need to talk to. We’ll tell you later how we solve the problem. That’s what the sales engagement’s for. Sales job is, “Hey, is this a problem we’re solving today? Do you have the support for it? How fast can we get to the realization?”
Now, this is where everything breaks out, is we dump this on CS, and we call this thing called onboarding, which is training, and the success criteria was, yes, they know how to use the system and everyone fell asleep, whether they realized value. When you looked at the churn that happened through 2023, the vast majority was the customer didn’t realize value in the first 90 days. You see the systemic issue where nobody’s actually focusing on the customer realizing value. Hence why would the customer, hence the risk of this remorse for not getting more engaged earlier. But quite frankly, to your point on leadership, leadership needs to rethink their go-to market around the customer’s journey to go from insight to value realization, not awareness, engagement, pipeline conversion, close one, over to you guys, CS. Because that’s a losing formula that will drive you out of business.
Fred Diamond: I want to follow up with Zach, and then, Jonathan, I want you to chime in as well. A lot of times on the Sales Game Changers Podcast, I interview VPs of sales at enterprise and business-to-business and business-to-government customers. I want to talk for the next little bit of time here about what’s really going on at the customer site. There was a follow up book to The Challenger Sale, of course, The Challenger Customer. A lot of people were listening, and Jonathan, as you were talking, if you’re a sales professional and you’re sending out emails and you’re doing LinkedIn stuff and you’re praying that someone’s going to reply, and then someone does reply, that’s a win. It’s like, good, they replied. Now I have an opportunity to go in scheduling the demo or shooting out the bullets that I need to get across.
Give us some deep insight here guys on what is really going on at customers right now. We were doing a lot of the podcast in the heat of the pandemic, and we used to say that everybody on the planet is going through three things. How is the pandemic impacting them from a health and family and job change, and then how it was impacting them financially, of course, and then how it was impacting them, whatever the third thing was. That’s still the case. Everyone’s still going through things. We have a lot of people who are new to sales. Zach, Jonathan, give us your insights into what B2B enterprise customers, the director of IT at a hospital. You’re right, it’s different on circumstance, situation, et cetera, but give us some salient points on what they see as value and what sales professionals should be bringing them for value.
Zachary Gropper: I think you make a great point, which is, you can hold the mirror up to yourself and realize, if you think of the human, it’s still humans buying from humans for the most part in B2B, and hopefully will be for a while. That person, their company is likely in a stressed state right now. If you think about their job, their team has probably been cut back, their budget has probably been cut back. They’re being asked to do more with less in most cases. At the end of the day, they’re in a situation where they feel that duress. If they’re talking to you, you’re either there to help them solve the problem or in some ways you’re part of the problem.
I think a lot of times what happens on the customer side, and we don’t realize this when we engage at the frontline, it’s this person is part of a system of a team that’s actually making a decision about a very big problem or a situation in that business. But if we’re getting in very late in the process in particular, by the time that person has come to us, then obviously there’s a lot of things that have happened before they got there. If we had no involvement or our business had no involvement, and that’s our whole cross-functional go-to market team, and actually teaching them about how to look at that problem, and where are the potential solutions, and what should the needs and requirements be, the only value they actually see from us at that point is they want the demo and the price.
That’s the last mile. Then they have all the leverage. At that point, there’s very little we can do unless we’re very disruptive, which isn’t exactly what they want, but at the end of the day, hopefully they appreciate for us being personal trainers and not bartenders is one way of looking at it. But actually what’s happening is there’s more than 10 people, maybe even more than 12 people in most buying groups in B2B right now. Everybody has a different role. I think one of the things we’ve learned is there are use case level things that they may call you about, but at the end of the day, those are attached to other strategies within the business. If we do not have visibility into what the CFO is actually trying to do, who’s much more involved in all the decisions now, then we’re not going to be able to help our buyer actually achieve success.
You probably have talked to, and you mentioned our good friend Matt Dixon, Ted McKenna, they wrote a book called The JOLT Effect. We actually work closely with them implementing some of those principles. More than 50% of deals aren’t even getting done these days. Why is that? Well, a lot of it has to do with what’s going on simply in your customer’s world. They are unable to get their group of individuals to agree on enough things that are actually going to set them up for success. Even if they do, not everybody actually feels that they can take that risk on. They’re taking a risk in working with you. By the way, they’ve been burned many, many times before over several years. There’s a lack of trust, there’s a lack of faith, and there’s a lack of inspiration on that buying group side to even go ahead and do anything innovative.
We can either let them fall prey to their own devices, or we can play a totally different role in that engagement, and we can actually help them do something which is very hard, which is drive change. At the end of the day, I like a lot of what Jonathan was saying about really our job here is to help them buy well and actually help them drive change. If you want to actually boil it down, that is what’s value. If we go back to this idea, we’re talking about insight, what does insight mean? Insight means that you can look into the future of what they’re trying to do in a journey with their business. Your business ideally has been built to actually help companies like that go along that journey. But you’ve got to move in those lines together with their team. You’ve got to guide them there, but you’ve got to do it thinking about their best interest, and you’ve got to build trust and you’ve got to show them that. If you’re not doing that, then you’re just a problem that’s in the way, which is why they don’t want to deal with salespeople anymore.
Fred Diamond: Jonathan, how about you? What is your response to that?
Jonathan Tice: Well, Zach covers it all beautifully. Let me just drill into two areas. The first one is our roles being both the vendor side and the customer side is around effective change management. Often what’s not talked about as we embrace new technologies is what’s the cost of inaction? What happens if you do nothing today? Quite frankly, if they can afford to do nothing today, they will do nothing today. Because in 2024 and 2025, only the biggest problems get funding. The goal on both sides is to make the problem we’re working on the biggest possible problem to get funded. It does get the resource commitments to the board. Then it’s this pragmatic realization that it involves change, it involves embracing new methods. If the enlightened vendor community can share, here’s a best practice for how you go from A to B, and here is how we can forecast the time it’s going to take to go from A to B, but here’s what you need to do.
Often salespeople go, “That’s implementation. That’s not my ball game.” Well, the reality is, is you don’t get a deal unless you can prove that the world after the change is more valuable to the customer. I’ll even argue, is quantifiably valuable with dollars and cents and is predictable to the date, you can forecast the date that that gets realized. Just by saying that, that’s a transformation of how we as salespeople engage with customers. If you do it right in the early stages, you realize that the journey continues together. It’s not this us/them, not this, give me the lowest price thing, because price, arguably, is the lowest cost of the overall change.
If you can get the customer to realize that the benefits and the value they can realize as a result of that change are a 5x, then the price is marginalized. You actually protect your price quite well if you take this approach. But more importantly, the senior executives don’t want to know the details. They just want to know what’s the date that I start realizing the value you just talked about? I hear very few vendors in the community that can actually prescribe or forecast that date. When we do it, it’s a totally different alignment. It’s how much faster can we move that date forward? What is it we can do differently? How do we embrace this differently? What if we tried this and it becomes much more of a collaborative relationship?
Fred Diamond: Gentlemen, before I ask you for your final action step, Zach, I want to ask you one final question. At the conclusions of the report, the 2024 State of Revenue Report, you talked about becoming a trusted authority and performing exhaustive research, et cetera, and we kind of touched on that. You also talked about community building. Describe what that means, and then I’m going to ask you both for your final thoughts.
Zachary Gropper: As we think about how buyers are setting needs and requirements and informing themselves, it’s what are the waterholes that they’re learning in? This direct hand-to-hand combat, which is still you don’t have to spend more than three seconds on LinkedIn to get a point of view of how outbound needs to work, or it’s dead. But at the end of the day, we see it’s obviously there’s a blended model of how folks learn. Going to market through partners and actually using a community, I think if you look at CEB, the world that we built with that business and how Gartner’s set up today, it was building a community of people who could have shared value and learn about issues together by pooling their resources.
I’m actually a chapter head within the Pavilion community, which has been a very valuable part of my life. Obviously a lot of VPs of sales out there, they learn from their peers that way about what should their tech stack look like? What should I be engaging with around different ways we go to market? It’s not just being part of a community. Companies need to think about what value can we add to the point of view of that community to ideally make sure that we can partner with as many folks as possible. It’s not an if, but when. I think everyone has to figure out how they’re leveraging their networks and actually teaching customers as they’re learning in a high value way and not just spamming and automating and inundating them kind of way.
Fred Diamond: Gentlemen, you’ve given us a lot of great insights, a lot of great ideas. This was a great conversation. Give us a final action step, something specific that listeners should do right now to take their sales career to the next level after listening to the show or reading the transcript. Zach, since you just gave us a great answer, Jonathan, why don’t you go first, something nice, concise, crisp that people should do right now?
Jonathan Tice: Peter Drucker once said, one of my favorite authors, “The purpose of a company is to create a customer.” If he were alive today, he would change that quote to say, “The purpose of the company is to help your customer realize value.” Every function across the board, you called out sales, and we’ll talk about it further, is that rethink your role around how do you drive value for the customer in ways that they can measure and quantify. It’s not a notional business case, it’s actual impact. To do that, you need to understand the process, you need to understand what the cost of an action is, and what the cost of enabling change and the benefits of that.
Then the other part of that is, it’s your job to make sure that that value gets realized independent of who ends up doing it. A lot of people are hands off. If you hope to get any expansion business, that first piece of business has to be realized. That’s a big part of that transformation of value insight to realization that Insight Revenue’s done an excellent job of their frameworks to help manage that overall conversation transition.
Fred Diamond: Zach, why don’t you bring us home? Give us your final action step people should implement right now to take their sales career to the next level.
Zachary Gropper: If you’re in a commercial leadership position, sales, marketing, it’s go to the leaders across that team and make sure you have something on your calendar every week where you’re getting together and talking across those functions about your customer. We run a lot of workshops, we call it Elevate the Conversation, where we bring in cross-functional teams, really just talk about what are the emerging trends really that are affecting them? How are we best differentiated to actually solve those problems? Then how are we actually taking those ideas and actually bringing that into their learning process in a way that’s super high value and also unique and differentiated? That’s one way you can cut through the noise. It’s another way you can better align your organization. You’re all playing, it’s teams selling to buying teams, and that’s how you can be a better partner and build better quality business. It starts with the alignment and then it’s converting that into something of value, as Jonathan so articulately said, for the customer.
Transcribed by Mariana Badillo