Challenger Sale as a Revolutionary Approach for Manufacturers

Challenger Sale as a Revolutionary Approach for Manufacturers

The Evolution of Sales Techniques

Sales methodologies have seen three significant revolutions. The first was the hunter-farmer model, introduced by insurers in the late 19th century. The second came in 1925 with The Psychology of Selling by E.K. Strong, which laid the foundation for modern sales training and techniques like objection handling. The third revolution hit in the 1970s, when it became clear that the size and complexity of a sale required different approaches—selling a large order is a different game than selling a small one.

Now, it’s time for a new revolution: The Challenger Sale.

What is The Challenger Sale?

The Challenger Sale by Matthew Dixon and Brent Adamson is based on extensive research involving 6,000 salespeople across 90 organizations. Their work categorized salespeople into five profiles:

• The Hard Worker (21%): Motivated, resilient, and constantly striving for improvement.
• The Challenger (27%): Understands the customer’s business deeply, loves a good debate, and pushes customers to maximize value.
• The Relationship Builder (21%): Focuses on building strong internal advocates and is generous with time and support.
• The Lone Wolf (18%): Operates on instinct, confident, but difficult to manage.
• The Problem Solver (14%): Reliable, detail-oriented, and responsive to both internal and external needs.

Among these profiles, the Challenger stands out as the most effective, particularly in complex sales environments, such as those often found in the manufacturing sector. Understanding which types of salespeople you have in your organization can be a game-changer.

Discover Your Sales Profile

Selling Solutions vs. Products

In the manufacturing world, selling solutions rather than just products can set you apart. This approach bundles different products and services into a comprehensive offering, which brings several key advantages:

• Better Fit for Customer Needs: Solutions can be tailored to the unique challenges that manufacturing SMEs face, whether it’s optimizing production lines or streamlining supply chains.
• Competitive Advantage: Solutions are harder for competitors to replicate compared to individual products.
• Less Standardization: Focusing on the value of the solution rather than the product itself reduces price competition.

Today’s manufacturing clients expect you to solve real problems, not just provide a reliable product. To achieve this, you need to dig deep and ask the right questions—questions that get to the heart of their pain points. For example, “What keeps your operations manager up at night?” Asking these tough questions is crucial for uncovering the issues that matter most to your customers, especially when dealing with complex sales.

The more complex the sale, the more pronounced the differences between the types of salespeople become.

The Challenger Sales Profile

Challengers possess several qualities that make them highly effective in sales:

• They provide customers with unique insights that can transform their operations.
• They excel in two-way communication, actively listening and responding to customer needs.
• They understand what drives value for the customer and can identify the economic levers that matter most.
• They are comfortable discussing financials, including ROI, which is critical in manufacturing where investments must be justified.
• They can apply healthy pressure to ensure that deals move forward.

These competencies can be grouped into three core areas:

1. Teach: Educate the customer on how to improve their business.
2. Tailor: Customize your message to the customer’s specific situation.
3. Take Control: Assertively guide the conversation toward a successful outcome.

Challenger salespeople master these competencies and apply them effectively, even in high-pressure situations.

Four Key Principles of the Challenger Sale

1. Challengers Are Made, Not Born: While some may have a natural inclination, the skills required can be developed.
2. The Combination of Competencies is Key: Excelling in just one area isn’t enough; success comes from mastering all three core competencies.
3. Organizational Development: The Challenger Model should be implemented across the organization, not just at the individual level.
4. Long-Term Investment: Implementing the Challenger model isn’t about quick wins; it’s a long-term strategy that pays off over time.

What truly sets Challengers apart is their ability to teach clients something new, providing valuable insights that give them a competitive edge. While free, valuable advice is appreciated, it’s essential to ensure you’re not just offering free consultancy that allows your competitor to swoop in and take the business.

Educating During the Sales Conversation

In manufacturing, getting to the bottom of what a customer truly needs can be more challenging than it sounds. While it’s easy to think that customers know their needs, the reality is often the opposite. Most customers engage in a conversation with salespeople precisely because they aren’t sure what they need. This is particularly true for companies dealing with complex supply chains, intricate machinery, or customized solutions. A more effective tactic might be to guide the customer toward what they need, rather than waiting for them to articulate it themselves.

Research by CEB shows that only 38% of customer loyalty is driven by service and brand strength, with a mere 9% coming from the price-to-value ratio. The remaining 53% is driven by the purchase experience itself. Therefore, an effective sales process not only helps secure new business but also builds long-term loyalty among existing clients.

While it’s essential to have your service in order, it’s likely that your competitors do as well. In a market where differentiation is key, service alone won’t set you apart. The value of a sales conversation should be so significant that the customer would be willing to pay for the advice provided.

The most valuable factors, according to buyers, include:

1. The sales rep provides unique and valuable insights into the market.
2. The sales rep helps discover alternatives to current practices.
3. The sales rep offers actionable advice and consultancy.
4. The sales rep helps the customer avoid potential pitfalls.
5. The sales rep educates the customer on emerging issues.
6. The supplier makes the purchasing process straightforward.
7. The supplier offers comprehensive support across the entire organization.

Notice that the first five factors are all about educating the customer. This could be anything from insights into more efficient production processes to guidance on navigating supply chain disruptions.

To avoid giving away free consultancy, steer the conversation toward your unique strengths. Consider asking these thought-provoking questions to uncover what your organization does best:

• What costs our customers more money than they realize, and only we can solve?
• What opportunities are our customers missing that only we can address?
• Why should customers choose us over a competitor?
• What makes us unique compared to other providers?

Getting answers to these questions might not be easy, but they are essential for successfully implementing the Challenger sales model.

For more insight into aligning your strategy with your strengths, consider exploring the Hedgehog Concept.

The Challenger Sales Process

The Challenger Sale book outlines a six-step process that guides the conversation and builds a strong, compelling narrative for your solution:

1. The Warmer
2. The Reframe
3. Rational Drowning
4. Emotional Impact
5. A New Way
6. Your Solution

The Warmer

Begin the conversation by addressing a common challenge rather than making assumptions. For example: “Many of the manufacturing companies we speak with believe their sales process is well-organized. However, one issue that consistently comes up is that their sales reps struggle with prospecting and cold outreach to new customers. How does this resonate with your experience?” This approach acknowledges a shared pain point and sets the stage for a discussion about how to overcome this specific challenge.

The Reframe

After warming up the conversation, shift the focus away from yourself. Instead, surprise your conversation partner with a new perspective on the challenge you identified earlier. This could be an opportunity or a risk they hadn’t fully considered. For example: “By automating your sales process, you can attract three times more customers on average.” The goal is to elicit a response like, “I hadn’t looked at it that way before,” rather than just agreement. If the client says, “That’s absolutely right” or “That keeps me up at night,” you’ve likely failed to add value to the conversation—something relationship builders often struggle with.

Rational Drowning

At this stage, present hard evidence of how much money your potential client is losing or missing out on by not addressing their challenges. Use tools like online calculators to demonstrate the ROI of the solution, not just your product. For instance: “The average opportunity cost of not having an automated sales process in your industry is 140,000 euros.” Many salespeople make the mistake of selling their product too early; this phase is about selling the solution’s value.

Emotional Impact

Ensure that your potential client can relate to your story by connecting it to their experiences. Thoroughly research your conversation partner and provide an example from a similar company that they can easily relate to. In the manufacturing sector, this might mean discussing a company that optimized its supply chain or reduced downtime with a similar solution.

Understanding your target audience and knowing where your strengths lie is crucial for successfully implementing the Challenger model.

A New Way

In this phase, your goal is to convince the customer of the necessity of the solution—without yet pitching your company. The focus should be on changing their behavior or approach, not just on altering what they buy. The reaction you want here is, “You’re right, we should do that.”

Your Solution

Only in the final step do you start talking about yourself and your solution. While it may feel counterintuitive to wait until this stage, patience is key. The customer isn’t interested in you; they’re interested in solving their problems. Your solution should naturally follow from what you’ve taught the client up to this point.

Steps to Build a Strong Sales Narrative

To craft an effective sales narrative, follow these steps:

1. Your Solution: Identify where you excel.
2. The Reframe: Use the insights from step 6 (Your Solution) to create this new perspective.
3. Rational Drowning: Demonstrate the ROI of the insight provided in step 2 (The Reframe).

Marketing and sales need to work closely together, though this collaboration doesn’t always happen seamlessly. The Challenger sales model serves as an excellent bridge between these two functions.

Your pitch should be BOLD:

• Big
• Outperforming
• Leading-edge
• Difficult

Be cautious of relationship builders who might soften your pitch. Avoid using a “Who We Are” slide in your presentation; instead, let the insights from “The Reframe” step do the heavy lifting.

Customization in the Sales Process

In the world of manufacturing, the purchasing process often involves multiple stakeholders, each with different priorities and concerns. As a result, it has become increasingly important to deliver customized messages that resonate with each group involved. Typically, these stakeholders can be divided into three categories:

• End Users
• Influencers
• Decision-Makers (Executives and Buyers)

For decision-makers, it’s crucial that they have broad support within their organization—this means buy-in from end users, influencers, and other executives alike. End users, on the other hand, often value learning something new that can make their job easier or more efficient. For salespeople working with manufacturing companies, this requires engaging with multiple individuals within the customer’s organization and tailoring the sales pitch accordingly.

Of course, crafting an entirely new pitch for every meeting would be time-consuming and inefficient. This is why segmentation is key. By identifying your top 20% of customers and analyzing what they have in common, you can sharply segment your audience. The more precise your segmentation, the less you’ll need to adjust your pitch for each conversation.

You can tailor your narrative at different levels, depending on who you’re speaking with:

• Industry: Highlight industry-specific challenges and how your solution addresses them.
• Company: Focus on the company’s unique situation, such as its growth stage or market position.
• Role: Speak to the specific needs and KPIs of the person’s role within the organization.
• Individual: Address the personal drivers of the conversation partner, such as their career goals or decision-making style.

A Challenger sales approach tailors its pitch to both the individual motivations of the conversation partner and the economic drivers of the organization as a whole. The better you understand your target audience, the easier it is to make this connection.

One effective strategy for this is working with personas. Part two of our Commercial Toolbox can help you create detailed profiles for each role, ensuring your message is on point.

Taking Control During Sales Conversations

In the manufacturing industry, where deals often involve significant investment and long-term relationships, it’s critical for salespeople to take control of the conversation early. Challengers naturally excel in this area. They confidently discuss financials because they trust that their solution will deliver a positive ROI. While many people instinctively try to reduce tension in a conversation and find common ground, Challengers understand that pushing the client respectfully but firmly is often necessary to drive the conversation forward.

Three Common Misconceptions About Taking Control in Sales

1. Taking Control is Synonymous with Negotiating

The truth is, salespeople must take control from the very first conversation, not just when negotiations begin. In fact, 20% of prospects conduct due diligence on price only because they’re already in advanced discussions with a competitor. This means that if you wait too long to engage with decision-makers, you may already be out of the running. It’s vital to gain early access to decision-makers; if they’re not willing to invest energy in the collaboration, why should you?

To succeed, identify the interests of each stakeholder and understand the KPIs they are measured against. Tailor your solution to address these factors. A helpful approach is to create a persona card for each role, so you can adjust your pitch accordingly.

1. Salespeople Only Take Control When It Comes to Money

A true Challenger doesn’t wait until the negotiation stage to take control. Instead, they start providing new insights and guiding the conversation from the first interaction. If you wait until negotiations begin, your attempt to take control will likely come across as forced or insincere.

1. Salespeople Become Aggressive When Told to Take Control

Taking control does not mean being aggressive. It’s about being assertive. Unfortunately, relationship builders often fall into the trap of being too passive, which is why they tend to struggle in complex sales processes. Interestingly, 75% of salespeople believe that buyers have more power than they do, while 75% of buyers think the opposite. The reality likely lies somewhere in the middle, hinging on the confidence of the salesperson. When your sales team is convinced that your solution offers a positive ROI and that your company is the best—or only—option to deliver it, it becomes easier to stand firm and push back when necessary.

Negotiation Strategies

The best salespeople think several moves ahead, much like a chess player. Successful negotiation requires not just responding to the client’s requests but anticipating their needs and guiding the conversation toward a mutually beneficial outcome.

Steps for Effective Negotiation:

1. Acknowledge and Shift: Recognize the customer’s position, but gently steer the conversation toward a direction that benefits both parties.
2. Deepen and Broaden: Dive deeper into the customer’s needs and expand the scope of the discussion to uncover more opportunities for value creation.
3. Discover and Compare: Identify the customer’s options and draw comparisons that highlight the advantages of your solution.
4. Concede According to Plan: Make concessions strategically, according to a pre-determined plan, rather than incrementally.

Avoid giving away too much in small steps, as this can set a poor foundation for the relationship and lead the customer to continually ask for discounts. However, also avoid the opposite extreme of a “take it or leave it” approach, which can shut down negotiations.

Instead, aim for a win-win situation by laying all aspects of the offer on the table and negotiating from there. Concessions should come from both sides to foster a healthy relationship. Throughout the entire process, maintain control with clear and assertive requests. If you wait until the negotiation stage to take control, it will feel disingenuous. Here are a couple of examples:

• “I want to meet the key decision-makers at our next meeting.”
• “We’ve agreed to start in two weeks. I’ll need a signature next week to get the process underway.”

The Role of the Sales Manager

Sales management in the manufacturing sector demands more than just being good at selling; it requires excellence in technical knowledge, leadership and management tasks. Effective management is the foundation of successful sales leadership, especially in manufacturing, where the sales process is often complex and involves multiple stakeholders. If a sales manager lacks these foundational management skills, they’re not suited for the role.

Once these basics are in place, the focus can shift to four other key aspects of successful sales management:

1. Selling: Accounts for 26.6% of success
2. Coaching: Accounts for 28.0% of success
3. Resource Allocation: Accounts for 16.2% of success
4. Sales Innovation: Accounts for 29.2% of success (at the deal level)

Surprisingly, sales innovation is the most critical factor for the success of sales managers—but only when the fundamentals are in place. This involves approaching potential customers in new and creative ways and ensuring that deals are closed effectively, all while protecting the company’s margins.

The Difference Between Training and Coaching

• Training: Focuses on teaching competencies.
• Coaching: Focuses on helping salespeople utilize those competencies effectively.

Coaching is a long-term, individualized process that requires structured and formal sessions. As a sales leader, your energy is best focused on your average-performing salespeople. The reality is that low performers are unlikely to reach the desired level, and high performers are already excelling, so there’s little incremental gain to be made by focusing on them. Instead, coaching your middle-tier salespeople can yield the most significant improvements.

In addition to boosting performance, coaching plays a crucial role in retaining employees. Poor coaching and management are common reasons why talented people leave organizations.

However, it’s essential not to get too caught up in efficiency (resource allocation), even though it’s important. Effectiveness, particularly in the form of sales innovation, will bring you greater long-term value.

To drive sales innovation, an open mindset is necessary. However, several common biases can hinder this process:

1. Practical Bias: The tendency to discard ideas that seem unrealistic.
2. Confirmation Bias: The tendency to seek confirmation for our existing beliefs and ideas.
3. Exportability Bias: The belief that if something doesn’t work here, it won’t work anywhere.
4. Legacy Bias: The assumption that the way we’ve always done things is the best way.
5. First Conclusion Bias: The inclination to accept the first explanation offered as the best or only choice.
6. Personal Preference Bias: The assumption that if I wouldn’t buy it, the customer won’t either.

Regularly remind your sales managers that these biases exist and encourage them to challenge their thinking to foster more innovative solutions.

Potential Drawbacks of the Challenger Sale Method

While the Challenger Sale method can be incredibly effective, it does come with its challenges. To implement this method effectively, salespeople need to have a profound understanding of the customer’s business. This requires not just commercial and technical knowledge, but also a solid grasp of economic and business fundamentals—a combination that is not always common in sales teams.

For the Challenger Sale method to work, your organization must clearly understand what makes it unique and where it excels. If you cannot articulate these strengths clearly, you won’t be able to leverage them effectively in your sales conversations.

Additionally, there’s a risk that you may come across as overly meddlesome or intrusive if not executed correctly. The insights you provide at the beginning of the conversation must be spot-on and establish your credibility immediately. If not, the Challenger model can backfire. To be credible, your organization needs a profound understanding of your target audience, their specific pain points, and the ability to offer unique insights that resonate with them. Developing this level of understanding takes time and is not something that can be learned overnight.