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This story has been reprinted with permission from Velocity magazine VoL. 17 Issue 3
REVISITING THE CHALLENGER SALE: “BREAKTHROUGH” BUILT ON A FLIMSY FOUNDATION
By Noel Capon
R.C Kopf Professor of International Marketing
Columbia Business School
Of all publications on success in sales appearing in this century and many decades previously, The Challenger Sale has perhaps generated more discussion and controversy among sales leaders, strategic account program directors and strategic account managers than any other. The reasons are twofold. First, the core message asserts that salespeople should challenge their customers, with the implication being that relationship building is far less important. Indeed, the authors entitle a Harvard Business Review summary “Selling Is Not About Relationships.” Many strategic account and sales professionals consider this in-your-face message as a direct affront to the focus of their careers. Second, The Challenger Sale is not just a thought piece; the authors claim that their conclusions are based on substantial data and analysis. (More on this ahead…) In his foreword to The Challenger Sale, Professor Neil Rackham, sales guru and author of SPIN Selling, observes that throughout history there have been only three real breakthroughs in sales. Rackham suggests that The Challenger Sale may be the fourth. When Rackham pronounces that this book “has all the initial signs that it may be game changing,” every sales and strategic account executive should sit up and take notice. But they should make their own judgments. Does this widely read and discussed volume actually represent the breakthrough that Rackham suggests, or is it just an interesting examination of sales that serves mainly as an infomercial for the Corporate Executive Board (sponsor of the research) and its affiliates? Under the auspices of CEB’s Sales Executive Council, the authors secured data from first-line sales managers on their field and telephone sales representatives — one “star performer” and two average performers per manager — from multiple companies, across many industries and from around the world. The authors based their initial findings on data collected from 700 sales representatives during the peak of the 2009 recession; later, as the economy improved, they expanded the database to more than 6,000. The authors secured scaled responses from sales managers on 44 variables in four categories: attitudes, skills/behavior, activities and knowledge. Unfortunately, for reasons about which we can only speculate, the authors identify only a partial sample of variables tested, representing about 50 percent of the total variables. We may reasonably ask: What are the other items? Why were they not tallied, let alone disclosed? Furthermore, the authors do not tell us how they scaled the items, nor do they provide basic statistics like means and standard deviations.
The Challenger Sale comprises two parts. The first reports results from the empirical study; the second focuses on building and implementing a new sales model based on those findings. Key skills in the Challenger model are teaching (the customer), tailoring (for individual influencers) and taking control (of the sale). In the book’s second part, Dixon and Adamson show how some CEB member companies have adopted the Challenger model and radically modified their sales training processes. Hence, The Challenger Sale is not just an interesting sales research study; true believers are shifting the focus of millions of sales-training dollars. The Challenger Sale is especially important for SAMA members inasmuch as the authors focus on the increasingly complex world of “solution selling,” where many strategic account managers spend much of their time. Without question, the model developed in The challenger Sale is interesting and innovative. But that is not the subject of this inquiry. The question I pro-pose to answer is the following: Is the Challenger model valid? Recall that the authors base The challenger Sale model on the results of their empirical study. If the foundation (i.e., the study) is strong, then a new approach to selling and redirection of sales training dollars may be appropriate. But if the foundation is shaky, sales leaders and strategic account program directors should think twice before modifying their organizations’ approaches. Notwithstanding its minimal treatment in the book — the empirical study gets just 15 of the book’s 214 pages, or about 7 percent — the study that forms the basis for The Challenger Sale falls squarely into the increasingly popular field of big data.
Dixon and Adamson report three major empirical findings.
Finding #1: There are five types of sales representatives. The authors identify Hard Workers (21% of the sample), Challengers (27%), Relationship Builders (21%), Lone Wolves (18%) and Reactive Problem Solvers (14%).
Finding #2: One clear winner and one clear loser. The authors correlate the five sales representative types to sales performance. The big news is that challengers (i.e., “the winners”) represent just 27 percent of the sample but a whopping 39 percent of high performers. Relationship Builders (i.e., “the losers”) make up 26 percent of the sample but just 7 percent of high performers. These findings constitute the foundation for part two of the book. The authors report corresponding results for the remaining three groups (sample/high performers): Lone Wolves (15/25), hard workers (15/17) and reactive problem solvers (14/12).
Finding #3: Challengers are the solution selling representative, not just the down-economy representative. This finding asserts that the superiority of Challengers the authors claim for the recessionary period also extends to complex sales environments. (Unfortunately, the authors do not tell us how they define and measure complexity.) The results show that Challengers make up a higher percentage of high performers in high- complexity sales environments versus low-complexity ones (54/20). For three of the remaining four sales types, the splits are reversed. (Lone Wolves made up about 25 percent of high performers in both high- and low-complexity sales environments.) The most troubling aspect of this finding is what is not reported. The authors tell us that the initial purpose of the study concerned sales performance during the recession — indeed, they collected their initial data during this period. This data forms the basis for the five-group model — and, more importantly, for the performance results showing the superiority of Challenger and the inferiority of the Relationship Builder. Later, as the economy improved, the authors extended data collection to more than 6,000 sales representatives. Although they assert that this data expansion did not change the original five-group model, nor the performance results, they offer no evidence whatsoever.
There are several serious questions where data would be very helpful. Are the groups formed from the initial data of 700 reps identical to those formed from the entire database of more than 6,000? Are the performance patterns identical for recessionary data and improved-economy data? And, in addition to reporting high-versus-low-complexity data, why did the authors not report down-economy-versus-improving-economy data? Could it be the case that the clustering procedure actually yielded different groups? Or did the superiority of Challengers disappear as the economy improved? Enquiring minds want to know and would like to see the analyses! The authors certainly collected sufficient data to test their findings on a holdout sample; regrettably, they do not appear to have done so.
Over and above the matters discussed thus far, my concerns with the conclusions in The Challenger Sale are tri-fold: omitted variables, methodology and results, and performance analysis.
As Dixon and Adamson point out, they let the data in the empirical study speak for itself. They begin the study sans hypotheses. Of course, they had some ideas about the selling process; the 44 original questionnaire items had to have come from somewhere. But the absence of any theoretical framework whatsoever heightens the probability that questions they should have asked did not get asked, leading to invalid —or at least incomplete — results. As a simple example, consider a framework in which we view the strategic account manager/salesperson as occupying a boundary role between the supplier and customer. In this framework, high performance flows from successfully working both sides of the boundary.
The Challenger Sale’s authors correctly emphasize that the sales representative must offer unique and differentiated value propositions to customers, tailored to various influencers, such that the decision maker acts positively on the sales representative’s proposal with organizational consensus. Who could disagree? But the authors virtually ignore the appropriate behavior for securing internal supplier support and resources to implement value propositions. But this factor is especially critical for solution selling in complex sales environments. It’s one thing to persuade the customer about a value proposition; it’s quite another to secure the necessary internal commitments to deliver on that value proposition. In addition to his/her own relation-ships, the strategic account manager/ sales representative must orchestrate an entire set of other cross-boundary and internal relationships in which she may or may not be an active participant — across geographies, across functions and across managerial levels.
Methodology and Results
Dixon and Adamson quite rightly reason that 44 variables are too many to work with analytically. They correctly select factor analysis as a worth-while variable-reduction procedure to secure a manageable number of factors. Regrettably, they do not tell us the complete set of variables (only 25 of 44), the precise variable-reduction procedure or the number of factors extracted. Nor do they supply any data on the factors whatsoever. The authors then tell us that they used these factors to develop the five groups of sales representatives — but not how they accomplished this task, nor how they selected five as the appropriate number of groups. This omission is a serious matter inasmuch as the more conventional approach to forming groups of objects (i.e., sales representative types) in a study like this is cluster analysis. (Factor analysis is appropriate for variable reduction but generally not for forming groups.) Cluster analysis also provides procedures for selecting the appropriate number of groups. The Challenger Sale, in its entirety, is virtually devoid of data and results, despite claims of being a major empirical study. Indeed, the book contains little more data than appears in this review. Of course, I am well aware that to fill a managerial book with excessive statistics would be imprudent; that’s a sure way to turn off readers. But appendices are a viable option; unfortunately, the authors do not use this approach to back up their arguments. This is regrettable. Sales leaders and strategic account program directors who elect to follow The Challenger Sale’s prescriptions must do so on faith. Many senior sales executives are well prepared to take reasoned risks and embark on new directions if presented with persuasive arguments. I do not know any successful sales executives who bet the firm’s resources on faith alone.
The most controversial and far-reaching assertion in The Challenger Sale is that Challengers’ performance is far superior to Relationship Builders’ performance. Unfortunately, the authors ignore actual sales-versus-sales budget performance data they collected; they rely entirely on sales managers to select “star” and “core” performers. Selection by sales managers introduces bias, since we do not know the criteria they used or if any such criteria were even articulated.
In their performance discussions, the authors virtually ignore Lone Wolves, despite the fact that these sales representatives are just as successful as Challengers. In a passing comment, the authors argue that Lone Wolves are so difficult to manage that no sales leader would seek to replicate what they do. This argument seems like a cop out. Lone Wolves are almost as numerous as Challengers, and, what-ever it is they’re doing, they’re about as successful as their Challenger counterparts. Wouldn’t it be worthwhile to investigate how they operate? Although this article is a sharp critique and raises serious questions about The Challenger Sale model’s validity, the authors remind us of several important issues about sales success. First, if sales leaders are able to improve performance in the bulk of their sales forces by even a small amount, overall performance may increase dramatically. Second, delivering unique differentiated value to customers is not the same as satisfying their expressed needs. Indeed, in many cases, satisfying expressed needs is merely table stakes for entering a relationship. (For more on this subject, see “A case for the unknown” on page 37.) Third, Marketing’s role in the enterprise is to segment actual and potential customers based on value requirements, rather than by simple demographics. By working with Sales Operations, Marketing helps drive delivery of critical insights to sales representatives and strategic account managers, thus providing advantage over competitors in designing effective solutions.
That said, The Challenger Sale is interesting and provocative. But the methodological flaws, lack of explanation and dearth of reported results do not allow us to support the authors’ assertions. Sales leaders and strategic account program directors should think seriously about the issues Dixon and Adamson raise, but they should not take the results on faith. Certainly, The Challenger Sale has provided a considerable service by injecting a new dimension into the discussion of sales success. But by no means is The Challenger Sale the fourth break-through that Professor Rackham sug-gests it may be. Indeed, The Challenger Sale gives us no reason to doubt that effort spent in building customer relationships is a critical element in achieving sales success. ■
Noel Capon is R.C. Kopf Professor of International Marketing, Columbia Business School; a member of the SAMA Board of Directors; and president of Wessex Press (www.axcesscapon.com). Capon is the author of several books, including “Key Account Management and Planning.”