This article is an excerpt from the Shortform summary of "The Challenger Sale" by Matthew Dixon and Brent Adamson. Shortform has the world's best summaries of books you should be reading.
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What is commercial teaching? How can it help you make sales?
Commercial teaching is when a sales rep teaches a customer something new about the business. This, in turn generates more business for the supplies.
But why engage in commercial teaching? When you use commercial teaching, you build customer loyalty and get the customer to think about their needs using an important challenger sales method.
Why Use Commercial Teaching?
CEB surveyed companies to learn what customers were looking for in a business-to-business (B2B) supplier. Specifically, researchers asked companies why they might choose one supplier over another, or what made them loyal to a supplier. The most important thing was the sales experience—not the product and service or price.
It’s not what you sell but how you sell it that counts the most. This is where your commercial teaching pitch comes in.
The study found that only 38% of customer loyalty stems from brand and service. Typically, these factors keep a supplier in the game, but they don’t build sales or loyalty. Customers often don’t see much difference between competitors’ products, yet reps often spend time highlighting small differences.
Price isn’t a significant factor in customer loyalty either. Only 9% of customer loyalty is attributable to offering the best price. Discounting alone won’t get customers to buy more or continue buying from a company.
In contrast, 53% of customer loyalty is attributable to outperforming the competition in the sales experience itself. A customer’s loyalty is won during the sales call.
In surveys, customers saw huge differences between suppliers in the conversations they had with reps. They saw some reps as wasting their time by talking about small product differences; in contrast, others provided interesting, unique, and valuable information.
The next section looks deeper into the sales experience.
The Four Rules
Teaching doesn’t mean free consulting. Reps must ensure their teaching leads to more business for their company, not for a competitor. To do so, they must engage in Commercial Teaching, defined as teaching customers something new about their business that leads to business for the supplier.
There are four Commercial Teaching requirements:
- Link to your company’s unique strengths.
- Challenge the customer’s assumptions.
- Prompt the customer to act.
- Segment customers based on needs.
Rule 1: Link to Your Company’s Unique Strengths
A Commercial Teaching pitch must connect insights to the areas in which your company outperforms the competition.
You want the conversation to go like this: you share an important insight that requires action; the customer asks, “How can I make that happen?”; you respond, “Here’s how we can help you do that better than anyone else.” Teach the customer not only to want help, but to want your help.
Doing this well requires two things:
1) You must actually be able to help. You’ll frustrate customers, or drive them to the competition, if you teach them about a problem without offering a solution.
2) You need to know what your company’s unique strengths are. While this sounds straightforward, many companies struggle to pinpoint what they do well, let alone what they do best.
In a recent survey of B2B customers, CEB found that only 35% could verify they were truly preferred over the competition. And of the preferred companies’ purported unique benefits, customers saw only half of them as relevant to their needs. In other words, only 14% of a company’s unique benefits were seen as such by the customer.
Agreeing on your company’s unique strengths is often the hardest part of implementing Commercial Teaching. Most companies cite being innovative, customer-focused, solutions-oriented, and so on. But those aren’t unique qualities because most companies cite them.
If you can’t connect the insights you teach to your company’s strengths, you’re providing your customers with free consulting.
Rule 2: Challenge the Customer’s Assumptions
Your insights must not only connect directly to your company’s strengths, but they must also resonate with the customer by being directly relevant to his world.
To resonate, the insight you present has to challenge the customer’s assumptions. It must reframe how he thinks about his business, operates his business, or competes. In contrast, validating what the customer already knows doesn’t give him any value.
This may sound like a high bar. However, most suppliers really do know a customer’s business better than the customer does when it comes to the supplier’s capability or area of expertise. For instance, a company selling printers to a hospital knows more than the hospital about information management in a hospital setting (although not more about health care). A company that sells packaged foods knows more about how consumers buy groceries than most retailers know.
If you’ve successfully reframed your customer’s thinking, the reaction will be equivalent to, “I never thought of it that way before.” If you haven’t changed the customer’s thinking, but only validated it, the reaction will be something like, ”That’s it exactly—I totally agree.” When they get the latter response, Relationship Builders often feel good about making a connection. But agreement doesn’t win the customer’s business.
Challenger reps want the customer to stop and think about what an insight means to his business or wonder what else he’s missing. That’s the point where you’ve given the customer something of value. It’s the turning point of an effective Commercial Teaching conversation.
Rule 3: Prompt the Customer to Act
It’s not enough to change the customer’s thinking—you have to get the customer to act.
Most reps try to make the case for action by focusing on how the customer can save money with the supplier’s solution over time (the ROI). However, in a Commercial Teaching pitch, the initial focus of the conversation is on the customer’s business, not the supplier’s solution. The rep must show why the insight shared with the customer requires action in the first place, especially when it runs counter to conventional wisdom.
The way to use numbers to prompt action in Commercial Teaching is to help the customer calculate the cost of failing to act on the insight you’ve taught—either the money they’re wasting or the money or benefit they’re missing out on.
Rule 4: Segment Customers Based on Need
A Commercial Teaching pitch is a great business strategy, but to apply it effectively and efficiently, sales reps need expert market research and analysis from their organization. To deliver unique, relevant insights to individual customers about their business, reps need data and analysis that are widely applicable. This is where organizational support is crucial.
Marketing departments should research customer segments and generate insights linked to solutions and applicable to specific segments. Reps can then approach customers with a handful of scripted insights and diagnostic questions that help them present the right insight for the customer.
However, generating insights useful for Commercial Teaching requires marketing professionals to think differently about segmentation. (Shortform note: Market segmentation is dividing a target market into smaller groups of customers that share common characteristics.)
Segmenting customers by common needs is more useful than traditional segmentation by, for instance, geography or industry. Reps can apply the same insights to customers across various industries by focusing on needs they have in common, for instance, improving cash flow, reducing employee turnover, or improving workplace safety. In each case, reps can help the customer think about the need or problem differently (reframe), explain the costs of inaction, and propose action linked to the supplier’s solution.
Commercial teaching is an important part of the challenger sales approach. Using commercial teaching, you can build long lasting sales relationships and create new business.
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- Why the best salespeople take control of the sale and challenge the customer's thinking
- How to package your company with a key insight to spark an "a-ha" moment
- How to get the organizational support you need to maintain your sales edge
