Transcript

Adam Honig: Hello and welcome to Make it. Move it. Sell it. On this podcast, I talk with company leaders about how they’re modernizing the business of making, moving and selling products and of course having fun along the way. I’m your host Adam Honig, the CEO of Spiro.ai. We make amazing AI software for companies in the supply chain, but we’re not talking about that today. Instead today, we’re talking with Matt Dixon, the author of four Amazon Wall Street Journal, bestselling books including The Challenger Sale. We’ve invited Matt on the program today to discuss his latest bestseller, The JOLT Effect, and other topics. Welcome to the show Matt.

Matt Dixon: Hey Adam, great to be with you. Thanks for the invitation.

 Adam Honig: Yeah, super excited to have you here. Matt, maybe you could just tell us a little bit about your background and how you got to be this four-time bestselling author.

 Matt Dixon: It’s a bit of a circuitous path that led me to studying sales and customer experience. Actually, I won’t tell you my whole life story in the interest of time. After college, I went to grad school, I got a Ph.D. in political economy because I thought I wanted to be a university professor. But 51% of the way through that experience I fell victim to the sunken cost fallacy and decided to stick it out, finish the degree, but I knew I did not wanna teach in a university setting. Maybe one day, who knows? I did love research, I love data, I love storytelling, but I was more interested in research that applied to businesses. And so I ended up working at a company after grad school called Corporate Executive Board, then rebranded as CEB and then was acquired by Gartner in 2017. And I spent almost 20 years there most of that time running the sales, customer service and customer experience research practice. That’s how I got to where I am today. So still a researcher, but a very different subject matter.

 Adam Honig: I feel like when people think about sales books, they don’t often think about research.

Matt Dixon: You’re a hundred percent right, it’s a bummer actually. You know, I remember Neil Rackham who of course wrote Spin Selling, I think it’s kind of considered the gold standard of sales research. It gave birth to the entire solution-selling era back in the late seventies, early eighties. And he wrote the forward to the Challenger Sale. We actually went to go visit him and we sat in his office and he had like a thousand sales books in a bookshelf on the wall right behind him and he pointed to them and he said, “You know, I get one of these a week and I’m always asked to write the forward or give a book jacket quote. And the first thing I do is flip them open and see how many bar charts are in there and if there aren’t any bar charts I send a nice thank you but no thanks note to the author and it goes back on the shelf. Then if it does have a couple, then I sort of probe and try to understand what kind of research it is.” But it’s one of those things that he looks back on and he says is he feels like is a big miss for the sales establishment. The fact that there’s so much data in sales and we have known outcomes. Did our customer buy or did they not buy right? Did they buy more? Did they turn out? There’s things we can actually study with data, but most sales books are personal opinions and I think that was really a source of I think angst for Professor Rackham and I would agree with him there.

Adam Honig: What was the research that you were doing that led you to The JOLT Effect?

Matt Dixon: I’m gonna kind of out myself as a huge geek here because if we think back to March of 2020, which I think those early days where like the lockdown was kind of fun because we were watching Tiger King and learning to bake sourdough bread. I mean the fighting for toilet paper part, probably not so much fun, but it was a different experience and everyone’s kinda learning these new things and we’re adjusting to work from home and these sorts of new things, which then quickly became very old of course. But the moment in time was interesting for sales because sales, as you recall, Adam, went a hundred percent virtual overnight. It was always the case that some of our sales process happened on Zoom or Teams or whatever platform. But in a blink of an eye in March of 2020, we went a hundred percent virtual. All salespeople were called back in this case. So the home office, every sale, all the calls, all the meetings, all the important and mundane meetings were now happening on Zoom and involved the virtual platforms. And so my co-author Ted McKenna and I decided this was kind of a once in a lifetime opportunity to study sales in a very new way. 

And so we went out and we launched something, it was actually called the Sales Vaccine Project because what we decided was like hey, if scientists can figure out a way to inoculate us against COVID, we’re gonna figure out what’s wrong with sales and we can do it in the same time frame. We’re gonna use modern technology to do it. We reached out to several dozen companies and we harvested from them about two and a half million recorded sales conversations over the course of about 18 months. And we used a machine learning platform from a company called Tether, which takes unstructured data and then uses powerful machine learning to try to surface insights from it. And that was the approach we used to write the new book. So it was actually like Neil Rackham’s research that’s been selling but on a much bigger scale and with modern technology. And Neil flew around and spent 10 years sitting in on 32,000 sales calls. Ted and I sat in a room with the data scientist and studied two and a half million with the machine learning platform.

Adam Honig: That sounds like a little bit less of a painful approach to do it.

Matt Dixon: It turns out you get fewer frequent flyer miles doing it that way.

 Adam Honig: Well it wasn’t a good time to get the frequent flyer miles. So this is like an experiment that you could really only do at that one point in time.

 Matt Dixon: We may never go back to it. I mean I get asked a lot what I think will happen to virtual sales and I was just at a sales kickoff last week in Las Vegas, it was two, one in Las Vegas, one in Chicago and these were both for pretty big companies where this was the first time they were getting back together in three years. And I was asking them, how are you getting back out on the road? And I think it’s interesting because they said look, virtual has brought an element of productivity to sales because our customers in many cases like it. Before we really start to get serious and we’re still dating, like let’s stick to Zoom. But those really critical meetings it seems like are starting to go back to in-person and I think that’s good for customers, it’s good for salespeople. I think we’re back in this kind of hybrid mode and so you’re right, it was a window and time that I think is closed at least for the time being.

 Adam Honig: Let’s keep going with the story. So you were kind of going through all of this data. Were you looking to see how to challenge the status quo or was there sort of a thread that you were pulling at that you were going after?

 Matt Dixon: Problem with a big data set like that is you can look at it from lots of different angles and the angle Ted and I had become really interested in actually even prior to the pandemic was this no decision lost. So Ted and I spent a lot of time traveling around going to conferences, presenting at sales kickoffs and we’d always ask sales leaders, we present challengers, present some of our other work, but “What’s the thing that you’re feeling like you don’t have great insight on right now?” And it started as kind of a low hum in that it built to a crescendo and now today it’s like through the roof sales leaders talking about no decision losses. We actually found in our study just to share one data point that 40 to 60% of the average salesperson’s pipeline ends up lost to no decision. And the vast majority of those opportunities are customers who say they wanna move forward with us, they wanna buy from us, they wanna do business with us, they wanna abandon the status quo and they still end up doing nothing. And so it wasn’t really clear to us, clearly the research we’d done before hadn’t completely laid waste to that problem. It was like this zombie kept coming back and getting more powerful and growing. And so we felt like the world was looking for an answer. Why do customers choose to do nothing and what do best salespeople do differently to avoid that happening to them?

 Adam Honig: When I was reading the book, it really struck me that some of the thinking about it, like the idea that a customer could say yes and then still not go forward, that’s the worst thing that could possibly happen to a salesperson.

 Matt Dixon: It’s so painful. I mean you put yourself in the shoes of any salesperson out there and that is the definition of a head fake right? Your customer says they’re bought in, they do a pilot with your proof of concept, they check with your reference customers, they do all the machinations with legal and procurement and finance and you sharpen the ROI calculator, all this stuff and then they don’t do anything. And the real bummer of it is you sort of realize in retrospect that it happened but it’s not like the customer raises their hand and says “Hey, just wanna let you know I’m changing my mind, you can take us out of the pipeline.” What ends up happening is they slowly start to disengage or as my kids would say, they ghost us and they start to go radio silence. They start responding more intermittently to our emails and when they respond the responses get smaller and smaller and curter and curter, right? And then eventually the customer kind of goes dark and you don’t know why and your sales manager says, “We gotta stop spending time and money on this. This is a garbage truck, we gotta mark it as closed.” But you mark it as closed lost no decision because you don’t know why it is so frustrating.

Adam Honig: Everybody who’s been in sales has stories about that, that they never ever got over the hump. When I was reading the book, I was thinking about the sales process changing into my mind to be thinking about that there are really two phases, right? There’s the getting to yes and then there’s the getting to contract or I don’t know what the second phase would be called but when you actually get it closed. And that was an entirely new way of thinking about it for me.

Matt Dixon: That’s a really good way to put it. For listeners, what we found was, and Adam you hit on this, I think every salesperson out there has been to sales training, read any sales book, by the way, including The Challenger Sale, would’ve come away with the conclusion that the only reason a customer would get cold feet is because you haven’t put the status quo to bed, right? They either believe that what they do today is good enough, they don’t believe your solution represents a more compelling alternative or maybe they just don’t think it’s a top priority. And so what we found is that salespeople do what they’ve been taught. The vast majority is like 75% of salespeople in our analysis go back when the customer starts to vibrate and get cold feet, they bust out their status quo hammer and they just go to town.

And so it’s three different approaches they use, the first one is re-articulate the rosy projection.  So Adam, you must have missed how cool our product is. Let me get you back into the demo and show you again because this is really awesome. You must have blinked when I showed you this last time or did you see how many zeros Adam are on that ROI projection because it’s really great. And if that doesn’t sway you, I put away the carrot, I bust out the stick and I try to create the burning platform and dial up the FUD if you’re uncertain and in doubt. These problems are not gonna solve themselves. And you told us your employees hate you for making them use this platform. Your customers hate you, everybody hates you, you know, these problems are not gonna solve themselves. So you try to make the customer squirm them a bit and make them realize the cost of their inaction.

If those two things don’t work, the last resort is always the expiring discount window. That price I quoted is only good this quarter or look in the world of supply chain, you know this better than I do, but limited inventory is also a compelling version of that, right? Like hey, we’ve only got X number of this in stock, I don’t know when we’re gonna get it back in stock and if you don’t buy now, sorry. And so I call those all kinds of FOMO-based reasons, right? We’re trying to get the customer to realize the cost of their inaction of doing nothing and we try to appeal the FOMO. Now what I would say to be very clear is in sales, as you said before, Adam, that is the first thing you gotta do because if the customer believes the status quo is good enough, they’re not gonna buy anything from you. So the first step in sales is always to do that. And whether you’re approached to do that is challenger or any other approach, it really doesn’t matter. But almost every sales, I would say actually every sales approach out there is focused on beating the status quo. But once we do that, the customer stops worrying about FOMO and what they start worrying about is FOMU. FOMU is the fear of messing up and they start to get wrapped around the axle, not around whether they’re gonna miss out but more around whether they’re gonna make a mistake. And not the cost of their inaction, but what might happen if they take action and it doesn’t pan out. 

And so we found there are a handful of very specific things. I don’t know if I picked the right version of the product, the right configuration of the platform, it all looks good to me.

I don’t know what to pick. That’s the first one, you call that evaluation problem. Second is the customer who feels like they haven’t done enough research and it’s the next white paper that’s gonna have all the answers, maybe a really savvy consumer. And the third version we call outcome uncertainty, this is the third fear they have, and this is where they feel like they’re gonna be left holding the bag. Not that you’re gonna take their money and steal it from them, but rather they might not get the ROI you’re projecting. Now you think about this in the current environment, nobody ever got fired for maintaining the status quo, but lots of people do get fired for trying to change it and it not working out. Especially right now where there’s so much scrutiny on big dollar decisions for companies, best case scenario you look like a fool, which nobody wants to look like. And worst case scenario, you could lose your job. And so the real simple way to think about it is, if you were to put a prospect of losing a 10% discount in front of your customer and the prospect of them losing their job for buying your product and having it now return the benefits, turns out they care a lot more about losing their job than they do about losing out on a discount. It’s kind of a shorthand.

 Adam Honig: I wanna go back to the FUD for a second because this is so ingrained in everybody. We were going through a deal analysis and we’re trying to apply the JOLT effect and we’re trying to come up with ways to progress the deal and every idea we’re coming up with we’re like no, that’s FUD. So what did the data show us about the impact of FUD when people were being indecisive?

 Matt Dixon: It’s interesting you asked about this. And I kind of skipped over this, so good catch, but we found that it actually backfires way more often than it works out. So when you have a customer who stated their intent to move forward and we try to use, I would call it FUD or FOMO-based approaches, like to try to push them forward and try to get them off the fence, you actually increase the likelihood they’re gonna do nothing. Which is so counterintuitive because as you said, that’s what we’ve been taught to do forever in sales and somebody asked me just the other day, “Well why does it make things worse?” And the simple reason is because we’re using fear-based approaches to try to sell to somebody who’s already scared and all you’re doing is giving them more to be worried about. I’m worried about looking like a fool to my boss and then you reminded me about the discount that I’m gonna miss out on. Or you remind me about the fact that my competitors are opening up a gap on me in the marketplace, like that’s not great. You know what, not gonna do anything, no, I’m paralyzed with fear.

 Adam Honig: When the customers are being indecisive, the FOMO-based approach is not helping. Giving the end of the quarter discount, telling them about limited availability, all that’s doing is ratcheting up the anxiety and causing them to get into a further spiral of indecision. 

Matt Dixon: That’s right because at the end of the day they care a lot less about any of those things. So many of those things are about FOMO but it’s all about trying to sell the customer on how they’re gonna succeed by making this decision. But what they’re really worried about in that moment is not failing. It’s not that they’re not convinced that this is a good decision, they are convinced. They are convinced that the status quo stinks, they are convinced that you’re a great solution provider, and they are convinced it is a priority and it needs addressing in their organization. But what if I pick the wrong thing and that becomes an irreversible decision? What if I look like a fool because I didn’t do all my homework and it was like the Gardner Magic Quadrant reporter, the analyst report I didn’t read that had all the answers. Or what if I didn’t get any assurance of success? There’s no guarantee here and I built a business case on a 10 x ROI and we only got 2 or 3 x and then I have egg on my face, again, best case, worst case, I could lose my job. So in sales we’ve gotta have a beat the status quo playbook but you’ve also got a playbook for overcoming indecision. Because when your customer shifts gears from being wrapped around being the vice grip of the status quo, when you’ve broken that, the thing that they then start to worry about is have I picked the right thing? Have I done enough homework? Do I have any assurance of success? Those are the sources of indecisions. 

So we need a playbook for overcoming customer indecision. The simple way I’d put it is beating the status quo is about dialing up the fear of not purchasing, showing the customer the cost of their inaction. We’ve gotta do that in sales as I said before. But overcoming indecision is actually about dialing down the fear of purchasing. How do we get them to feel like I’m making a great decision? I’m dealing with a trusted advisor here who’s guided me to choose the right thing to I don’t have to be an expert because Adam’s my expert and I trust him to get me to the right decision. The most important thing to him is not overselling me and not telling me stuff I don’t need and hiding the dirty laundry, he’s trying to get me to make the right decision for me and for my organization. Whether that’s buying from Adam’s company, buying from Adam’s competitor or doing nothing. His sole objective is to help me get to the right outcome and he has de-risked this purchase. I feel great. In fact we’re gonna overperform, I’m gonna look like a hero, not like a fool when I signed this contract.

 Adam Honig: One of the strategies that you mentioned in the book is to try to limit the risk, so essentially make the deal size smaller. And I feel like that also goes against sales training. Aren’t we always trying to maximize the opportunity?

 Matt Dixon: As we got into these behaviors, I’ll just tell listeners and Adam knows this and others who’ve read the book know this, but JOLT is actually an acronym. We like it because it’s memorable but it also speaks to what’s happening. We’re trying to jolt our customer forward out of their stuck indecisive state and get them to take action. So we’ve gotta judge the level of indecision, we’ve gotta offer a recommendation, we’ve gotta limit their exploration and then we’ve gotta take risk off the table. And you went to that last one, taking risk off the table, which I find it’s interesting of all of those, that’s one that gets a lot of attention because it feels like I could go do this, but some of the advice is counterintuitive. There’s a couple things that we found there. And this is in the same company, Adam, we’d look at high performers versus average performers, there’s a couple of different techniques that the high performers use that the average performers absolutely do not, they go the other direction. One of them is around deal size as you mentioned before. 

Look, our customer’s eyes always get bigger than their stomach. So like we’re talking about this, we should get Europe involved and we should get APAC, oh we should do it as enterprise-wide and oh you know, we’re gonna want that integration. We want this other thing, we want this too. Give me everything on the menu. The average salesperson’s like – this is great because we went from a hundred thousand dollars contract value to like a million. I’m gonna make my year by going to Cancun, this is gonna be awesome.

But your high performer looks at that and says first of all, that is a deal it’s gonna take forever to get through the gauntlet of finance procurement and get everyone on board. So the sales process as you went from a hundred thousand dollars to a million like multiplied exponentially. But the other thing, and this is the more interesting thing when you interview high performers, they’ll often say that puts a lot of pressure on the customer because when they sign that million-dollar deal, all eyes are on them. When they start small, it earns them this kind of safe space to get some things wrong early on but figure things out, get some runs on the board and then expand from there. Now if you look at overall performance or high performers up by definition are selling a lot more, but they actually sell a lot more in a land and expand kind of way predominantly versus trying to eat the whole elephant in one bite, right? Try to take down this massive deal right up front.

Adam Honig: Going back to what you said a minute ago, there are many other steps I guess before you get to that point. Really identifying where the indecision is. And the other one that I really love is making a recommendation as a salesperson. 

 Matt Dixon: I would tell you on that one, that’s another one that I think salespeople, almost every salesperson I’ve spoken to, irrespective of performance…And we put a lot in front of our customers, all kinds of different options: contract length, premium versions, basic versions, standard versions, different ways to roll out your solution, all kinds of partner integrations. There’s all kinds of stuff, we love options. But when you ask salespeople, what do your happiest customers buy? What is the version that they buy that you would tell every customer just go by? They know they’ve just been taught in sales training that they shouldn’t tell the customer that, they should go back to diagnose the customer’s needs. So Adam, when you say like, “Boy this all looks great, I’m not really sure what to pick. I don’t know what to take out the shopping cart and what to take out of the proposal.” The best approach is for me to say, “Well Adam, let’s talk about why you reached out to us. Let’s go back to basics here, what are you trying to solve for?” My hope is by asking you good questions, you’ll figure it out yourself. 

The metaphor I’d use or the analogy I’d use is it’s like if you go to a restaurant and you look at a menu and it’s got 20 great dishes and the waiter/waitress comes over and you ask “What do you recommend?” And they say, “Well sir, what are you interested in eating tonight?” And you’re like, that is so unhelpful. Versus a different waiter/waitress comes up and says, “Adam, you know what, this dish is my favorite on the menu. If you’re in the mood for something lighter, there’s this option as well, but truth be told, everything we make here is great. You really can’t go wrong.” Now what’s really interesting what happens, and this is true in selling million dollar solutions, it’s true ordering $30 entrees, something happens called a delegation effect. And what that means is that I am able to shift the blame to the person who made the recommendation. So if I order the dish, the waiter/waitress recommends and I don’t like it, it’s kind of on them, it’s not just on me. And the same thing is true in sales. Like when we are able to make a recommendation, it’s a personal recommendation, we advocate for it. Our customer is thinking, okay, now it’s not all on me because you told me other companies like me always go with this configuration. And so it’s a psychological effect but it is quite powerful and it does get our customers to take things outta the cart and move forward and make a decision.

 Adam Honig:  I’ve also noticed that the waiter who makes the recommendation seems to pick the second highest price entree almost every time. Not the highest, the second highest because they don’t want to appear biased in the decision or something like that. A lot of the people who listen to this podcast are in the manufacturing and related industries. A lot of them are involved in the buying process and signing up new suppliers. How do you think this impacts them?

Matt Dixon: Our sales people hate in no decision losses, but our customers think about all the time and energy they waste all the resources from their side. The buying committees they arrange, the time they use up from their business customers from legal and procurements and finance and all these folks who have to get involved to evaluate a solution only to end up doing nothing. It’s a big productivity loss for buyers as well. And so I think one of the things that’s interesting is in the research, this probably won’t surprise you, but we found that the vast majority of customers think they’re very decisive, but the data shows that they’re actually really not. We found that somewhere between 85 and 90% of all opportunities had customers who are either moderately or highly indecisive. But 85 to 90% of those customers would describe themselves as very decisive. So we are not very self-aware when it comes to this stuff. And I think for buyers there are a couple of things that we need to be aware of. So we talk about some different personality types. And this is true, if I’m a buyer and I’m running a buying committee and the last thing you want is to spend six months of that buying committee’s time to end up doing nothing. You wanna make a decision, whether that decision is to stay the course and stick with your status quo. Buy from this vendor, maybe buy from a competitor, who knows, but you wanna make a decision. Having no decision is a terrible outcome for a customer. And so you need to be aware of the indecision markers amongst the people on the buying committee. 

So there’s a whole bunch we talk about in the book, for instance, one of them we talk about is this idea of compensatory and non-compensatory selection. That in simple terms is the difference between people who can prioritize what’s important. So if you think about any product or any solution that we’re evaluating, there’s a whole bunch of attributes, right? There’s price, there’s quality, there’s user reviews, reference clients, ROI projection, there’s all kinds of stuff we can consider. And not every vendor is perfect across the board. Anybody in your buying committee who is only happy with perfection across the board, that person is gonna get your buying committee wrapped around the axle of indecision because that person’s a maximizer, not a satisfier. What you want is satisficers who are content with good enough, but you also want them to be non-compensatory selectors. So what that means is you need them to be able to articulate across all of these attributes, which are the ones that are most important to us, what are the must-have criteria? We’re only gonna put these companies on our shortlist because these are the most important things for our business. 

These other things, we just need them to be good enough on par with everyone else. And these other things candidly are not important to us at all. Could you articulate those things and is there agreement across your buying committee as to what those things are? Now the extent to which again, everyone’s like, well it’s gotta be perfect across the board, that’s a recipe for no decision. The extent to which there’s disagreement on your buying committee around what those must-have criteria are versus the nice to have, that’s also a recipe for no decision. So as a buyer I think you can also use some of these techniques as you’re saying Adam, to assess the landscape within your own organization so you don’t end up in that wasteland of no decision, which again is a big time suck for customers as well.

 Adam Honig: Now that you need more ideas for future research. But I wonder about the companies that are more decisive, whether they tend to grow faster or have more profitability and whether they are a better buyer with less indecision. This is like the dream of all sales people. You can go to the customer and be like, listen, customers who are decisive, that’s really gonna move them forward.

 Matt Dixon: Yeah, it’s a really good question, it’s a really good hypothesis. I would imagine that that’s probably true. And it’s interesting you talk in our work about this idea of, again, I mentioned this earlier, but how do salespeople help instill the confidence? I pick the right thing, I’ve done plenty of research or I’m talking to a salesperson who’s a subject matter expert, they’re a trust advisor, I trust them. I don’t need to read everything, Adam already read it all, he’s gonna tell me what I need to know, what I don’t. Because his only objective is for me to make a good decision for me and for my organization and he’s got my back. I’m not gonna be left holding in the bag and look like a hero, not like a fool. These are things that we can do in terms of driving that lower propensity for deals to be lost no decisions instilling that confidence. But another term I actually like is this idea of self-efficacy. And what’s interesting about this is self-efficacy is you can be confident that you don’t know anything. So confidence is a fine concept, but I could be very, very confident that we are absolutely hosed or that like, I don’t know what I’m doing, right? That’s not the kind of confidence we want.

Self-efficacy I like because it’s about being positive that we can do this and get the returns. And what I might say is that I suspect that the most successful companies out there, they may be more decisive than the average because decisiveness can happen in multiple different ways. It’s like we all agree, which itself can sometimes be dangerous or is decisiveness driven from a hierarchical way. Think about Steve Jobs and what we read about him, right? It was very much a this is the way it’s gonna be and you had this big personality kind of driving the organization of making the really tough calls at every step. You might find those organizations out there, but I think what you would find is you might or might not, I should say, but what you would find is that the really successful organizations have a sense of self-efficacy. So we know that we can do this and we know we can get this done. That’s the thing that I would probably look at. But I’ve still got flashbacks from the last research, so I don’t know if I’m ready to take on the next one yet.

 Adam Honig:  You should definitely take a break from that. I really appreciate your coming on the show. The JOLT Effect is, like I said when we were talking earlier, I felt like it was written for me when I was reading. It’s amazing. I definitely recommend everybody take a look. Well I really appreciate your writing the book though, awesome read, great concepts. I took away so much from it. People can find out more about the JOLT Effect at jolteffect.com. Is that the best resource?

 Matt Dixon: It’s a great spot. There’s a lot more about the book and the research and a ton of free tools on there as well, coaching tools and otherwise that readers can go download and check out. And then a lot more information about how you can bring some of these skills to your own sales team.

 Adam Honig: I’m sure everybody on the podcast really will appreciate that. Well, as a reminder, listeners can find every episode of the Make it. Move it. Sell it. podcast at Spiro.ai/podcast, be sure to subscribe. I don’t know, Matt, do you think people should give the episode a high ranking or something like that?

 Matt Dixon: I’m gonna offer a recommendation, I would say yes.

 Adam Honig: Thanks everybody for tuning in and we look forward to the next episode.