Doug has wanted to have this conversation for about 10 years now. Today we’re welcoming our first ever guest, Matt Dixon, to the show. If you don’t know who Matt is, he is a Founding Partner at DCMi and is Wall Street Journal’s bestselling co-author of The Challenger Sale. He has a new book out called The JOLT Effect which Doug gets into, and the conversation today goes on to talk about selling in today’s world.
Information on Matt Dixon:
Wall Street Journal bestselling co-author of The Challenger Sale, The Effortless Experience, The Challenger Customer and The JOLT Effect; Founding Partner at DCMi
Tell everyone about the new book - The JOLT Effect. And Doug is curious to know, how much does Matt view it as a continuation of the sale challenger/customer element?
Matt would say it isn’t purposefully a prequel or sequel or a chapter in the story. What they tried to do is focus on what is the customer buying behavior challenge. What they found is good salespeople have their backs up against the wall at any given time and that’s evolved. The Challenger sale was written more than a decade ago was written to figure out how to deal with this challenge of customer learning on their own and boxing us out of the buying process.
Today’s customers are almost 60% of the way through the buying journey before they ever pick up the phone or request a demo or send an email to have a conversation, which puts a salesperson in a very tough spot. Customers have already decided who’s on their short list and have formed their mental model about who you are and what you can do for them. And now they’re forcing you to compete on price. All those things you were taught to do as a salesperson to go in and diagnose needs and talk about your value proposition are kind of gone.
The Challenger Customer is about a second problem of consensus buying which Matt thinks has gotten a lot worse over the past couple years. There is zero cost to a customer inviting everyone in their organization to a demo because there’s no cost to doing it over Zoom. The Challenger Customer discusses a story about how we navigate that area of consensus buying.
The JOLT Effect is about a problem that Matt would argue has always been around, but has gotten worse in recent years. It’s the customer who goes through the entire buying process and then chooses to do nothing. They often express their intent to move forward, agree that they should abandon their status quo, agree that what they’re doing today is suboptimal and that your solution is a far superior alternative, and still do nothing.
If you’re a manager for your team, Matt and his team found that anywhere between 40-60% of all deals are lost to no decision. This is a problem that is going to get worse in the next couple of years because the things that drive customer indecision get worse when the pressure is high. Matt believes there are secular trends that are making this problem of no decision worse for the average salesperson moving forward, so JOLT is about why customers choose to do nothing.
Doug enjoys the approach to research for these books because far too often we go in with a hypothesis and figure out what we would like the data to prove. With JOLT the issue with status quo bias has been attributed to the fact it’s easier to not make a change. Not only are they wasting resources, they’re killing your forecasting.
For those reading, what Matt and Doug are talking about is unlike challenger and challenger customer, they used a modern approach to sales research, but all of that changed in 2020. It was a golden opportunity to study sales in a way that hasn’t been done before. Matt and his co-author had always been fans of Neil Rackham’s work on spin selling, and they ended up targeting several dozen companies with machine learning. They were able to collect two and a half million sales calls and transcribed them all and used machine learning to study them. They looked at everything through the lens of what motivates someone to do nothing.
What do the best salespeople do to avoid it? The conventional wisdom out there is when those customers who say they want to move forward start to wobble, they start to show signs of cold feet, they start to talk themselves out of what they’ve already agreed to. The conventional wisdom has always been in sales that you must not have put to bed the customer’s status quo or maybe you haven’t fully convinced them of your solution. What Matt tells salespeople to do is go back and beat the status quo. They did it in many different ways. The first way is kind of positive; bust out the carrot and pain the rosy ROI projection. They tell the customer they must not really understand how awesome the solution is. If that doesn’t work, they put away the carrot and bust out the stick. They try to scare the customer into action. It wasn’t surprising to see that the vast majority of salespeople, when the customer showed signs of cold feet, they would go back and try to hammer the status quo. Something surprising they found is that this backfires more often than it works. When trying to use the carrot or stick approach, it makes it more likely that the customer will actually do nothing. There’s a bigger question to ask which is, what motivates a customer to actually do nothing?
When you ask that question what you find is there are two reasons. The first is the one we’re familiar with, that they have status quo bias that they prefer what they do today and they don’t think your solution is a compelling enough alternative. That’s only 44% of decisions. The other 56% of decisions is driven by something else entirely and that is, not preference for the status quo. It’s indecision about changing it.
What’s the difference?
When you look at indecision about changing the status quo, there are 3 drivers they found. The first is the customer who doesn’t know what to pick. They have a lot of options and they’re afraid of picking the wrong one. The second driver is a lack of information. The third driver is what they call outcome on certainty, so this is where the customer feels like they just might not get what they’re paying for. No one gets fired for maintaining the status quo, but lots of people get fired for trying to change it and having it backfire and blow up in their face.
Doug has a piece of trivia - did you know that the word decide and the word homicide have the same Latin root? And they both mean the same thing?
The root “cide” means to kill, so when you’re deciding you are killing your options. One thing Doug has taught salespeople for decades is that customers don’t want to say yes, so we do all these things to prevent them from saying no. But the thing is they don’t want to say no either because that’s closing an alternative. We are biologically programmed to take the path of least resistance and not making a decision is easier than making a decision, so it manifests itself as status quo bias.
How much is indecision and is this trend just a byproduct? How much is the consensus driven element within the decision?
Matt thinks these things bleed together, but when they were doing customer research, they were looking for the stakeholder that could get the disorganized buying committee to agree to do more than the lowest common denominator. They were studying who has the ability to break the status quo bias of this group. In many respects this amplifies the status quo bias of individuals. Even a mobilizer is likely to suffer from sources of indecision. Just because they’re a mobilizer doesn’t make them someone who will depart from the status quo.
One thing they go into some detail on in the book is that they found in the data where customers get so wrapped around the axle with these problems and they cannot move forward and they choose to do nothing. This idea of loss aversion and prospect theory. Salespeople try to play to that fear, and how the customer might lose out to doing nothing. What they found was if you unpack it one level deeper, there’s two types of loss that people are worried about. One is the loss from doing nothing and the other is the loss from doing something. They found that the loss from doing something is heavier on the mind.
How do you get the customer more comfortable with the fact that they are not making a huge mistake and as a salesperson you have to understand when it’s time to use your status quo hammer and when it’s time to overcome indecision?
One way to do it is you de-risk the purchase for the customer. The best sales people actually encourage the customer. Start a little bit smaller and structure the contract so you can scale it up quickly.
Customers no longer care about succeeding, they really care about not failing. Doug goes into a conversation about why the product fails and he does it early. His goal is to come up with at least twice the number of reasons for why something will fail. The status quo creates a paradigm feeling of certainty. It feels like there’s no change. For all of the benefit you’re doing to bring, there is uncertainty. Doug calls this the Cujo effect. If you read the book, Cujo was the scariest dog you’ve ever seen, but in the movie it was a Bernard. The problem is when we’re talking about the future, we’re dealing with the imagination.
The average salesperson isn’t going to open Pandora’s box of failure points and get it all on the table, but when you do it, it is such a powerful moment because the customer sees you as on their side. It’s a technique that builds a foundation of trust.
One of the things where Doug has a challenge working with salespeople is that salespeople have a tendency to think of their solution to the lens of a maximizer. When you're making decisions, it's important to be comfortable with “good enough.” Satisficers make decisions more easily, but maximizers are more likely to find the small nuances of distinction. How do you balance that?
Matt talks about it from the lens of behavior in JOLT Playbook. The J stands for judge, the level of indecision. Offer your recommendation to limit the exploration, take the risk off the table but if you go to the judging level of indecision the first thing you have to understand as a salesperson it is not just about qualifying or disqualifying or forecasting an opportunity based on their ability to buy. There are lots of opportunities that look great on paper. You have to assess your opportunity on the ability to decide as well. There are three parts: 1 is what the breadth of their indecision is, the second is depth, so the customer's personal level of indecisiveness and the third thing is the amplifiers that tend to be contextual.
How do we get customers to stop spinning their wheels with endless amounts of research and analysis paralysis, taking risk off the table? How do you get them comfortable? There is a safety net here. You're not taking a leap of faith. The default approach for salespeople is to throw more and more and more at the customer. And when the customer is uncertain about what to pick, you ask questions to get them to figure out for themselves what is most important. But that just leads to what Matt found in the data is actually all you do is diagnose and get the customer to try to lead them to the decision and get them to make it themselves. All you have to do is ask great questions and lead them there.
Diagnosis comes from the process. What happened is we act like we're surprised that the customer is indecisive. We act like we're surprised that they don't know how to decide. Nine times out of ten we do not have good decision criteria. Oftentimes our customers won't tell us who they are considering. They keep it a secret. Salespeople have ways of finding out who else is in the mix.
What Matt teaches is, have we named the problem? Do we have decision criteria? The salesperson's job is not to move forward until the decision criteria is defined. You don't go to make recommendations. We have to ask, why change? Why change now? Why change with you? What's happening is we're allowing that all to be completed to the end. Some of that is because of quotas, so the decision gets conflated which makes the decision even harder.
Laying the groundwork happens really early on in the sale. One of the dangers is the idea of no decision. This idea of customer indecision is not synonymous with this thing that happens until the eleventh hour where the customer hesitates. When you start engaging with that customer and you find out they don't understand their own buying criteria, they're not going through a structured learning process. The first order of business is to beat the status quo because if they don't agree that there's a reason to change and leave the status quo, you're not selling anything.
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