The surprising truth about what closes deals: Insights from 2.5m sales conversations | Matt Dixon (author of The Challenger Sale and The JOLT Effect)

Matt Dixon (00:00):
We collected two and a half million sales calls and studied them with a machine learning platform at scale.

Lenny Rachitsky (00:05):
The big insight is that you're losing most of your sales deals, not to competition, but to indecision.

Matt Dixon (00:12):
And that indecision stems from their fear of failure. Dialing up the FOMO backfires 87% of the time. They're not afraid of missing out, they're afraid of messing up.

Lenny Rachitsky (00:20):
You just talk about how to actually leverage these insights to improve your sales process. You have something, I think you call it the JOLT method?

Matt Dixon (00:25):
Yeah, JOLT them forward. The first thing is we've got to judge their level of indecision. The second thing is we've got to offer a recommendation. The third thing is we've got to get them to start trusting us and we call it limit the exploration, and the T is we've got to de-risk the deal. We've got to take some risk off the table. 

Lenny Rachitsky (00:38):
Great segue to The Challenger Sale, which is basically this on steroids. 

Matt Dixon (00:41):
Most salespeople are trying to figure out what's keeping the customer up at night. The challenger approach is about showing the customer what should be keeping them up at night. What's a risk that they don't know about but you do. 

Lenny Rachitsky (00:51):
Holy moly, this is going to be the most action-packed, high-density podcast episode we've done. Today, my guest is Matt Dixon. Matt is one of the world's foremost experts in sales, known for his groundbreaking research into what makes the best salespeople different from everyone else. His first book, The Challenger Sale, was a number one Wall Street Journal bestseller and has sold over a million copies worldwide. His most recent book, The JOLT Effect, builds on his lessons and insights and will change how you do sales. 

(01:23):
In our conversation, Matt breaks down what you're probably doing wrong in your sales process based on research, into millions of sales conversations, and then how to tweak your process to be a lot more successful. This episode is for anyone that wants to improve their sales skills or improve the rate at which they close deals. 

(01:40):
With that, I bring you Matt Dixon and if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it helps the podcast tremendously. Matt, thank you so much for being here. Welcome to the podcast.

Matt Dixon (01:59):
It's great to be here. Thank you for the invitation, Lenny.

Lenny Rachitsky (02:01):
It's great to have you here. First of all, a huge thank you to April Dunford for connecting us. She's a huge fan of your work. She mentioned you a number of times on the podcast episode that she did. She's great. 

Matt Dixon (02:11):
Yeah, she's very nice. 

Lenny Rachitsky (02:12):
She's amazing. You basically spend your time researching salespeople and digging into what makes the best salespeople different from all the rest, and then synthesizing these lessons into these really actionable pieces of advice so that anyone can become better at sales, which to me feels like a dream come true even if I'm not a salesperson, even though many of us do sales part-time, but especially if you're a salesperson. 

(02:40):
First of all, just to give people a sense of the work that you do, could you just talk a bit about the research that went into the books that we're going to talk about, we're going to be focusing on The Challenger Sale and The JOLT Effect. What is the research they did?

Matt Dixon (02:53):
Yeah, sure. Just start with The Challenger, because that chronologically came first. We actually started that research study in, I think it was in late 2008 actually, and we published the initial results to, at the time I was working for a company called CEB, which was acquired by Gartner Group in 2017, a research organization, and then I was running the group that served heads of sales, business, business heads of sales around the world. We had five or 600 clients around the world, and we launched that study in '08. 

(03:24):
We published the initial results for our clients in '09. We kept collecting some data and then we published the book in 2011. The book was published off a data set of 6,000 salespeople, so we did an in-depth survey with 6,000 salespeople, as well as collected performance data on those 6,000 sellers. It was a global, cross industry, different types of companies as well, product companies, services companies, large, small, slow growth, fast growth, you name it.

(03:50):
Overtime, though, that research has been ongoing, so we've collected data. I think to date, on roughly a quarter million salespeople around the world that we continue to go back and not just validate the original findings, but look at how things are changing and do cuts of the data now that the data set's so big. That was a survey based piece of research we did. 

(04:11):
The JOLT Effect, we started that research in 2020, actually. It was actually in March of 2020, which I think is a time that everybody remembers with probably mixed emotions, most of them bad. I think though, you remember March was a time when people were getting into Tiger King and baking sourdough bread. A few months later, that got really old, but in the beginning it was kind of surprising and weird and this whole pandemic thing, but we actually thought because we're huge nerds, that this would be an interesting time to do a sales research project.

(04:44):
We had always been fascinated by what Professor Neil Rackham did back in the '70s and '80s and spin selling, and he and his research team sat in on 30 something thousand sales calls, physically sat in on these meetings and took notes. They're a team of psychologists to produce the research that went into spin selling, and so we always kind of aspire to get, if you will, at the coal face or where the rubber hits the road in sales, which is the sales conversation when that salesperson is sitting across from the customer. 

(05:11):
The problem with that is it's really hard to get people to pay for that kind of research, that kind of undertaking, and then let alone, getting invited into those meetings because a lot of the really critical sales meetings took place, of course, in the client's office. Until March of 2020 when that all changed and the entire sales process for every company on Earth went to Zoom and Teams and Webex and other virtual platforms.

(05:34):
We recruited several dozen companies across industry and around the world into a large global study, and we collected two and a half million sales calls and studied them with a machine learning platform at scale. That was a very different kind of research project and honestly, it's fun just as a researcher to look back on Challenger and the manual survey-based approach and the interviews and all this stuff to fast forward to today, being able to take advantage of large data sets and advance technology to study millions of sales conversations is pretty cool.

Lenny Rachitsky (06:07):
Amazing. Okay, so the second book, the most recent book, The JOLT Effect is based on these two and a half million sales conversations. 

Matt Dixon (06:13):
Mm-hmm. That's right.

Lenny Rachitsky (06:14):
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(08:05):
Let's dive into the insights from The JOLT Effect. The way that I understand is the big insight is that you're losing most of your sales deals not to competition, but to indecision. Basically, customers preferring to do nothing versus choosing something because they are afraid of making a mistake.

Matt Dixon (08:24):
Good summary. Yeah, [inaudible 00:08:25], if you're busy, you said it more succinctly. I've been doing this for a while now and you said it way more succinctly than I can. Just to back up for a little bit, I think one of the data points I always start with when I present the research on The JOLT Effect is that our analysis showed that anywhere between 40 and 60% of the average salesperson's qualified pipelines, these aren't just leads, sometimes bad leads that are thrown over to us by marketing, these are qualified opportunities. 

(08:53):
These are people we've met with, customers we've pursued, we've engaged, they're in the sales process, 40 to 60% of them will be ultimately marked as closed loss, no decision. That's actually, I think that number is actually on the rise, especially in places like SaaS and the broader tech sector over the past year and a half, but that's a really painful thing. 

(09:13):
If you think about as a salesperson, that for 46% of your deals, you're going to spend a lot of time, energy, resources, a lot of your company's money and their time and resources pursuing these opportunities where you eventually just get ghosted and you don't really know what happened, just like the customer, the opportunity evaporated on you, they ghosted you, they want radio silent. You don't really know what happened there. 

(09:35):
We decided to take this two and a half million sales call dataset, which you could have used to answer lots of different questions, but we were really fascinated by this question, maybe two, two questions. One is why do customers make no decision? Because you understand it's frustrating as a salesperson, but it's also puzzling for customers to do that. They go through the entire process to evaluate a solution, and many of those customers say, "Yeah, I want to buy," and then they ghost to the salesperson and it's so puzzling. 

(10:02):
Why would they waste their own time evaluating a solution than doing nothing? Then, the more important question is probably what are the very best salespeople do differently? What have they figured out to avoid that outcome? 

Lenny Rachitsky (10:13):
Cool, and we're going to talk about that latter part to help people understand why, because it sounds like, okay, I guess this happens, but help people understand why this happens. Why are people nervous to make a mistake and not make a decision at all?

Matt Dixon (10:24):
Let me maybe take us a step back, Lenny. There was a reason we actually even asked that question that you just asked, and the reason was this, when we looked at sales calls, if you think of the typical sales process or buying journey, it kind of moves through three phases. Phase number one, is the customer in their status quo. It's what they do today. They use your competitor's product. Maybe they do use a homegrown solution, maybe they never saw a need for a solution like yours, but that's their current state. 

(10:51):
Step two is we've got to get them to agree that the current state is no longer acceptable and they've got to move forward in a new and different way. We call that agreement on a vision. We've got to get their intent to move forward and to change, and that step number three is you got to get them to buy something. That's the action step where they execute the docuSign, they sign on the line that is dotted and they send the contract back. 

(11:11):
It's a simple three step process, and what we found in our analysis is one of the big places where a lot of deals fall out of that process is between intent and action. It's after the point where the customer says, "Yeah, Lenny, this sounds great. I'm sold. Let's talk." But before the point where that actually deal gets sold, a lot of deals kind of go sideways in that moment and the way this comes across in sales calls is that customers start, if you will, relitigating concerns that they had asked and you thought you'd address much earlier, like what might go wrong and is this really the right answer for us? 

(11:45):
These are things that are puzzling to salespeople because it feels like this thing is slipping through my fingers right before my eyes. I thought we had this closed. I thought you said you want to move forward and now you're asking questions that we addressed three months ago, what's going on? 

(11:58):
What salespeople tend to do, because they've grown up in a world where they've been told, the only reason the customer hesitates is because you haven't put to bed their status quo bias. We all know, we're all human beings, not just customers, but perhaps especially customers, are guilty of status quo bias, meaning we are prone to laziness and doing nothing because it's easier, it's inertia. It's easier to just keep doing more of the same than to change behavior. 

(12:23):
Change is really hard and salespeople have been taught that the status quo is their biggest competitor, and if the customer is starting to get cold feet, it's because they still think either what they're doing today is good enough, what you are proposing is not a compelling enough reason to change, or maybe it's just not a top priority for them or their organization. It's got to be one of those reasons. 

(12:43):
What salespeople have been armed to do is go out and dial up the FOMO and make the customer sweat a little bit. The first thing they do is they say, "Lenny, remember the demos and the proof of concept trial, how excited you were and those benefits, you got to pay for it. You're not going to get all those great benefits for your organization unless you sign the agreement." 

(13:03):
If that doesn't work, I'll try to kind of scare you into action by dialing up the fear, uncertainty and doubt and saying, "Lenny, you told me about these problems in your business. You guys are really struggling right now. By the way, did I mentioned, we're working with all of your competitors and they're seeing tremendous benefits from our product and you're going to be left in the dust and those problems you brought up with me, they're not going to solve themselves." 

(13:22):
I'm trying to create that burning platform a little bit for the customer and get them to realize the cost of their inaction. There is a cost of doing nothing, and if those two things don't work, what most salespeople go to is the 10% discount that's only good this quarter. It's like the price driven urgency. Maybe this will be the thing you need to just get you over the finish line. 

(13:43):
What we were so surprised by which led us to the question you asked, Lenny, was that 87% of the time when salespeople do that dial up the FOMO in those moments, especially with a customer who says that they're ready to move forward, but they start to backpedal and waffle and waiver and become hesitant dialing up the FOMO backfires 87% of the time. In other words, it increases the odds, the deal will be lost to no decision.

(14:06):
If it weren't for that finding, we never would've even bothered asking the question about why do people end up, why do we lose deals to no decision, why do customers make no decision, but this was really puzzling because it flew in the face of everything we talked about, including in Challenger, to be totally candid. We talked about how challengers are exceptional at breaking the customer's status quo bias by showing them the pain of same is worse than the pain of change. 

(14:29):
Again, overcoming that inertia, that not just individuals but organizations suffer from. Challengers are really good at that. Here, we see that the tactics that you might associate with challenging actually kind of backfire, which was, as the author of The Challenger, still a little bit troubling to me, but we'll come back to that, but I think what we realized was we got it right, but we got it kind of half right.

(14:50):
We went into the data and we asked a slightly different question, which is why are deals lost in no decision? What drives that? We found that actually, there are a lot of deals that are lost because the customer does actually prefer their status quo. That is status quo bias. They believe what they're going to say is good enough, what you're talking about, it's not a compelling enough reason to change or this is not a top priority. 

(15:11):
Those are all status quo preference reasons, but it turns out those are only 44% of the no decision losses, 56% of no decision losses are customers who want to buy but can't buy because they're stuck in this no man's land of indecision, and that indecision itself stems from their fear of failure, which you put your finger on earlier, and this is the part I found so fascinating, so we dug into the psych research. We read probably 30 years of cognitive psychology journal articles, many of them from Dutch universities, which I find very interesting, but a fairly very big into this stuff. 

(15:49):
A lot of the Kahneman and Tversky work around loss aversion and prospect theory, et cetera, and one of the big findings we came across is that there's actually a more powerful human bias, even more powerful than status quo bias that rears its ugly head and causes indecision, and that is called the omission bias. 

(16:06):
The omission bias is, if you get down to it, is the fact that people don't want to be blamed for making decisions that lead to a loss. In the human mind, there are two types of loss that we think about. We all like to avoid loss, but not all loss is created equal. There are losses that happen when we do nothing, and then there are losses that happened because we did something. 

(16:25):
We made a decision, we picked a vendor, we executed a contract, and then something bad happened. It turns out that in the human mind, people are okay with missing out. They are not okay with messing up and being blamed, and this is really powerful. It's even more powerful than status quo bias, as I said. 

(16:44):
The shorthand for salespeople is this, dialing up the FOMO can be very effective to overcome status quo bias, but knowing that every human being, including all of your customers, who I include in that definition of human beings are definitely afraid of being personally blamed if things go wrong. The FOMU actually matters more than the FOMO. The FOMU is the fear of messing up or in the not safe for work version of your podcast, I'd say FOFU, but your listeners can figure out what that stands for on their own, but this is really powerful for salespeople, right to understand. 

(17:16):
Look, if you are trying to scare your customer into action, you're going to miss out on these benefits. You're going to miss out on solving these problems. You're just going to pay more later if you don't say yes now. What you're really doing is using scare tactics, but you're trying to scare somebody who's already afraid. The problem is they're not afraid of the thing you think they're afraid of. They're not afraid of missing out, they're afraid of messing up. 

(17:36):
We've got to address that as salespeople. We've got to help instill the confidence in the customer that you're making a great decision. I've got your back. You're going to look like a hero, not like a fool and that's really what The JOLT Effect is about. It's about how the very best salespeople execute that. It wasn't that we're wrong with Challenger, it's just the story was kind of incomplete. 

(17:55):
You got to break status quo bias. If you don't do that, you're never going to have an indecision problem, but even once you overcome the customer's indifference and their status quo bias, you got to second battle you've got to fight, which is you've got to instill the confidence and make them feel good about this. Frankly, leap of faith they're about to take and their fear, you got to deal with the fear that if something goes wrong, they're worried that they're going to be blamed for it.

Lenny Rachitsky (18:16):
We're going to talk about this method you developed for how to actually do all the things you're talking about, but first, to make this even more real, what I'm thinking about is an example. Is a good example, maybe a CRM, like a better CRM product, say someone has Salesforce installed and now they're like, maybe there's probably something better out there we should probably evaluate. 

(18:34):
Then, I'm thinking from the perspective of a startup trying to build a better CRM. There's always this advice, you have to be 10 times better for anyone to pay any attention. I think that feeds into exactly what you're showing is it needs to be so much better that this fear is reduced. Can you just talk about maybe an example, whether it's that one or a different one to make this more concrete?

Matt Dixon (18:52):
We encountered a ton of examples. It's so interesting you mentioned startups and I think sometimes, I was actually with a big enterprise software company and I think when, and I presented this research to some of their sales leaders and one of the folks in the room said, "I'm really glad we are who we are, that we are the 800-pound gorilla, especially in a market like we're in right now," because as the old adage goes, it wasn't IBM, but the old adage is that nobody ever got fired for buying from IBM, right? 

(19:21):
This company is like the IBM of their space. They're the 800-pound gorilla. They've got the brand strength, the reputation, they're the safe choice. This team felt kind of comfortable or comforted, I should say by that fact, especially in a tight environment where it's a battle for deals and for mindshare and for wins out there in the market right now, especially in tech.

(19:42):
What I said is you've got to remember though, that may be true, and I would argue, and I think you're right, that for a startup, yeah, you've got to be 10 times better to get that mind share. It may be even better than that to get somebody to take a leap of faith with you. There is inherent risk in going with the unproven player, but I cautioned these folks and I said, "Now, remember, what are the things that drive fear of failure and indecision?" 

(20:08):
It turns out there are three big ones. The first one is have I made the right choice? I know I want to work with this vendor, but did I configure the solution of the proposal the right way, the right contract length, the right implementation, the right used cases, the right integrations, all that professional services or DIY, all those big questions.

(20:26):
The second thing that customers worry about in their second fear of failure is that they're going to learn something after the contract is signed that's going to make the decision look like not such a great decision. I'll give you a really specific example about this. I spoke to a tech company not too long ago, maybe a month ago, and they landed their biggest deal of their existence. It was an early stage company, seven-figure deal, game changer for this organization. Then, they beat out some big established competitors. This is a huge win. 

(20:54):
They went out. They celebrated. It was just totally amazing, their first big enterprise win and their first seven-figure deal and their first victory against some of these incumbents. Unfortunately, about two weeks after they won this deal, the new Gartner Magic Quadrant on their space came out and they were shown to be kind of, eh, right? They weren't the leader, but they were sort of middle of the pack.

(21:16):
All of a sudden, the client who signed the agreement, the CTO just got crap rained from everybody saying, "Did you see the Gartner Magic Quadrant? It looks like the company we just plunked down seven figures with was kind of seen as so-so by the Gartner analyst? Have we talked to these guys and those guys and why aren't we going with the leaders," and blah, blah, blah? 

(21:36):
They ended up backing out of the contract because the CTO said, "I'm spending every day talking to all the other key stakeholders trying to convince them that yes, we did all of our due diligence, but life is too short and we're probably going to end up going with one of the big players. We're sorry. I mean, that's such a painful story, but that's the customer is like they're going to keep doing research because they don't want to be surprised when some new piece of information comes to light. It's the second big fear of failure driver or failure driver. 

(22:03):
The third one is that the customers are worried they're just not going to see the ROI. They're not going to get the full benefits. You might project for them a 5X improvement in sales productivity. What if it comes in at two or three X and my name's on the agreement and the CFO comes asking why we didn't get the benefits we thought? In today's environment, that's not just egg on your face, you could get fired for that stuff. 

(22:26):
This is the client who's really looking for that vendor to have their back and to assure them that they're going to see the benefits that are being projected and promised through the sale. What I said to this big enterprise tech company was, "Look, you guys, yes, it's tough to be a startup right now, early stage company, there's a lot of risks there, but who's offering more choices, them or you guys? You guys have a partner ecosystem. You have 20 different cloud products. You bought seven companies in the past three years. You have a cornucopia of options, which adds to the buyer's anxiety that they haven't chosen the right thing. 

(22:59):
Second, do you think there's more written about you guys or about them? You could fill a football stadium with all the coverage on you guys. I mean, everybody's got an opinion about you because you are the 800-pound gorilla and everybody's worked with you before and they have opinions, good and bad, and people want to leave no stone unturned. 

(23:17):
Then, lastly, it turns out you guys are a lot more expensive because you're trying to move from selling simple products like these ankle biters out there, these startups into selling big enterprise solutions. You guys are selling not seven-figure deals, eight-figure deals, nine-figure deals to your customers. That increases the customer's anxiety that I really have to see return on this. 

(23:36):
You, in many respects, are getting whipsawed by these factors in a way that the startups are not because they don't have as many choices. There's not as much coverage about that. The investment is lower, and so there's a little bit less risk for the customer. You guys aren't immune just because you're the big brand."

Lenny Rachitsky (23:53):
You're doing a great job making it clear why it's so nerve-racking to buying new software. There's just so many things that could hurt you as a person at a company. April Dunford, I think this is barred from your language that she talks about how it's actually more stressful these days to buy software than to sell software because of all these things you've talked about.

Matt Dixon (24:13):
Yeah, I think she's on point on that one. I mean, your customers are, yeah, they're really, really afraid of this not panning out. It was so interesting, and salespeople can think of so many different occasions where the purchase buying your product, just made all the sense in the world for the customer, it would make things so much better. It would solve such big problems for them. 

(24:37):
They're so dissatisfied with their current approach. It's just a no-brainer, and the customer will look at that and they will agree with you and they still won't make a decision because of the what-ifs, right?

Lenny Rachitsky (24:47):
Yeah. This is got to be very frustrating for founders to listen to and be like, "Come on, our product is so much better. What are you doing?" But I think this explains a lot of the challenges they're probably having. 

(24:58):
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(26:02):
It's a great segue to talking about how to actually leverage these insights to improve your sales process. You have something, I think you call it the JOLT method?

Matt Dixon (26:10):
Yes. Yeah.

Lenny Rachitsky (26:11):
Awesome. Let's get into it.

Matt Dixon (26:12):
The JOLT, it's an acronym. It just so happened it worked out that way, but I like it because it's memorable, but it also speaks to what's happening. Our customers' stuck in their indecisive state. They want to buy from us, but they just can't because worried about what might go wrong. You got to JOLT them forward. We got to JOLT them into action.

Lenny Rachitsky (26:12):
Beautiful. 

Matt Dixon (26:30):
How do we do it? The first thing is we've got to judge their level of indecision, we've got to figure out what we're dealing with. The second thing is we've got to offer a recommendation. The third thing is we've got to get them to stop doing endless research and start trusting us and limiting, we call limit the exploration, and the T is we've got to the derisk the deal. We've got to take some risk off the table, and we establish that safety net for the customer so they feel like we've got their back. 

(26:49):
Maybe we talk about each of those. I'll start with the J because it's first, but also I think the way, while it's kind of linear, I would encourage listeners don't think about this as a process where it's like I do step one, two, three, four, J-O-L-T. Think of it as it starts with the J, and the J tells you what the next step is. Is it the T? Is it the L? Is it the O? Is it the O, and then we got to deal with the T. Then, we got to go back to the O because it comes up again. 

(27:14):
Think of it as sort of the dividing rod. How do we figure out what's got the customer nervous? This is a really, really, really tricky thing because, and I've likened indecision to the carbon monoxide poisoning of sales. It's everywhere, but it's odorless, it's tasteless, but you need a carbon monoxide detector, and that's what the J is. 

(27:37):
How do we get fear of failure on the table? The problem with this is that, and I think most of your listeners will be familiar with this, everybody, especially customers suffers and senior executives especially, especially, suffer from what's called the Dunning-Kruger effect, which is they think they're better at things than they really are and decisiveness is one of those things that buyers will think they will say they think they're decisive. 

(28:00):
In fact, if you surveyed your customers, not that they recommend this, and you add 100 of them, if they consider themselves to be decisive folks, like 99 out of 100 will say, "Absolutely, yes, I make the tough calls. I manage from the gut. I live on the edge as an executive making those big calls," but the research tells a very different story. It turns out that 87% of buyers in our two and a half million sales calls we studied, either showed moderate or high levels of indecision. 

(28:25):
The folks who are not worried about fear or failure were 13%. Yeah, those people do exist. By the way, if you find one of those people, you should sell them everything as soon as possible because they're making the decision quite literally on the dollars and cents and the ROI and whether it makes sense for their business. It's a rational decision for them, but for the rest, they're dealing with a lot of emotion, and that emotion is all wrapped up with fear of failure. 

(28:48):
What's so tough about this is that it's not just Dunning-Kruger like we think we're more decisive than we really are, even if your customer knows that they're indecisive or they're worried about failing or how their boss is going to perceive them, if this purchase doesn't pan out, they don't like talking about it because it's embarrassing. They don't want to talk about like, "God, I got to tell you this better pay off because if it doesn't, I'm already on thin ice with my boss. She doesn't like me already. This is going to be the last straw." Nobody's going to say that stuff. 

(29:17):
How do we get on the table? One of the things we don't think works particularly well are classic open-ended questions like, "Lenny, do you find when you go to the Cheesecake factory, do you leave satisfied or hungry because you can't decide what to order?" I guess, it's not great approaches with customers, you'll end the sale pretty quickly because again, your customers find that kind of offensive. They'd like to think of themselves as decisive people. 

(29:39):
We found a technique, this is actually not in the book, we found it after we wrote the book, called pings and echoes that high performers use. Think of the way a surface ship might detect a submarine in the water using sonar. They send a ping out into the water and they're listening, if you will, using sonar for the reflection back and the reflection tells them, is it a friendly submarine, an enemy submarine? Is it just a whale? Is it heading towards us? Away from us? At what speed are they about to torpedo us? All that good stuff. 

(30:08):
We want to do the same thing in sales. The way this works is that a salesperson will try to articulate but in a non, not to out the customer, but to get confirmation or refutation, if you will, that what they've articulated is actually a concern for their buyer. 

(30:25):
Hypothetically, let's imagine we're talking about a purchase and we've had a lot of great conversations. I've shown you a lot of demos. You guys have liked everything we've shown. We showed you partner options. We showed you different configurations. We did POC over here. We did a pilot over there. You guys are just eating it all up, but I'm kind of getting the sneaking feeling that you guys actually don't know what you want and we've shown you a lot and we've probably made that problem worse. 

(30:49):
What I might say to you is, "Lenny, I'm just curious if we could calibrate here for just a moment, and there's a reason I'm asking this, which is a lot of the customers at this point in our process of working together, they get almost overwhelmed with all the options, and look, I probably made this worse. We're very proud of what we do. I want to show you, paint the art of the possible, but I also know if we're going to do business together, you told me right away budgets are limited and you can't have it all. You've got to decide what's nice to happen and what's need to happen. I'm just curious, are you and your team clear on what would be in and out of the proposal?" 

(31:25):
What's going to happen is one of two things, one you might say, or a few things, you might say, "You know what? No, we don't know and we have liked everything you've shown us, but as you said, we can't have it all. So, we'd be really curious to know what do other companies like us start with? How do we get going? What are the things we can do without and we can maybe add later on down the road," or you might get the customer says, "No, no, no, we were just being polite. There's a lot of stuff you showed us that we're not actually that interested in. It's cool, but it's just not for us. We are very clear on what we want. 

(31:55):
So, let me share that with you now. However, what I'm really concerned about is once we get this kind of specked out and configured and priced, I'm going to take it to the CFO because I've got to get her approval on this and I can't build our business case on the claim you guys make about improving sales productivity by 10% because she'll laugh me out of her office. Help me get grounded in what's a believable outcome for us so that I can sell it and I can be confident we're going to actually hit it." 

(32:25):
Again, it's not designed to embarrass the customer, it's designed to get this on the table so it can be recognized and dealt with and contextualized. You're totally normal. Everybody struggles with this. There's a lot of stuff we throw in front of people and it ends up doing some harm. They don't know what to pick. Let me be of service and value to you. 

(32:42):
That's the first thing that we point to and that's going to tell us, okay, is it a choice problem? They're overwhelmed. They don't know what to choose, like that example we just used. Is it that they're just doing endless research and they feel like they haven't really come down the learning curve yet around this purchase or is it, no, I don't actually know that we're going to get what we're paying for here and we screw this stuff up every day of the week at twice a Sunday and I don't think it's going to be any different and then I'm going to get blamed, so help me manage the downside risk, but it tells us kind of where to go next on that journey, if that makes sense.

Lenny Rachitsky (33:12):
Yeah. Awesome. The advice there is basically get a sense of how clear they are internally on knowing exactly what they want that'll help them make a decision. There's kind of this moment of, okay, let's just help me understand the question, the way you phrased it, are you and your team clear on what would be in or out of this proposal?

Matt Dixon (33:31):
Yeah. That's just a one example. That's if I hypothesize that you're really struggling with what to choose. Now, my hypothesis might be, you know what you want. You've done plenty of research, but you're really worried about the ROI and you're just worried you just aren't going to be able to accomplish that. 

(33:47):
That ping might sound very different. It might be we've been having a discussion about, you've been asking for multiple terms of the ROI calculation and changing parameters and really trying to make it bulletproof, but a lot of customers struggle with that a little bit because that's a big thing. You're putting your name against that. Maybe we should have a conversation about whether that's a concern for you. Is there a believability gap? Is there an execution gap you're worried about on your side or on our side? 

(34:15):
Let's have a conversation about that so I can set the proper expectations so you feel really confident going to the CFO and lobbying for investment here. That ping could go in, but it's based on what I think is holding you up.

Lenny Rachitsky (34:28):
Got it. It's just like at this point, many customers have this question... 

Matt Dixon (34:32):
Yes. Yeah.

Lenny Rachitsky (34:33):
... and that maybe comes from the thing that you think is probably blocking them. 

Matt Dixon (34:36):
Yeah, I think that's perfect language. At this point, most customers like you, are thinking about this or they're worried about that, or they're getting a little anxious about this. Let's have a conversation about it.

Lenny Rachitsky (34:46):
Awesome. Okay, cool. Let's go to step two, offering your recommendation.

Matt Dixon (34:50):
Sure. Oh yeah. This was right with that example we talked about before. Options are really a double-edged sword. What we know from the research is that options are great early on. If you're meeting at the trade show and the customer's swinging by your booth or you're doing a first demo or first, let a thousand flowers bloom, but if you want the customer to actually make a decision, you've got to get the weed whacker out and call it down to a manageable set of choices. 

(35:17):
The science is very clear on this, that too many choices at some point will overwhelm the customer and it leads to a lot of bad outcomes. It leads to the customer not making a decision at all because they don't want to make the wrong decision. I don't want to work with you, but you put so many options in front of us. I don't want to be blamed if I choose the wrong one and it leads to things like post-decision dysfunction, which is, I thought I made the right decisions, but now I'm learning more and people are asking hard questions and maybe I need to go revisit this. Hey, Lenny, we're going to have to scrap that agreement and start over because I don't think we can figure this right way. 

(35:49):
We have to, there's a time and place to offer options, and there's a time and place to narrow choices up. The simple guidance here for salespeople is that you've got to shift your posture from asking the customer what they want and just diagnosing their needs, to actually recommending to them what they should do. Salespeople get a little bit anxious about this, I find, because they don't want to be seen as like, I told you to do A, but you're like, I don't want to do that. I want to do B and now I feel like we're at odds. 

(36:16):
They worry about that. Salespeople have grown up in this world that it's the customer's choice. The customers always right, let me just guide them, but they're the ones should make this decision, but sometimes the customer can't and they don't know enough about these decisions. We know the stuff because we eat, sleep, and breathe it every day as salespeople. We work in this industry, they don't. 

(36:35):
We are in a much better position to be able to guide them toward, you know what? You don't really need X, Y, and Z. You can leave that out of the proposal. Companies like you, they get started in this way. Let me put three options in front of you. I would go with the middle one because I really think that's going to be the best for you in the first year, and then we can expand from there.

(36:54):
Here's an analogy, I'll often tell people to think about the last time they went to a fancy restaurant and they looked at a menu with some expensive entrees and everything looked delicious, but they didn't know what to order, so you asked the wait person what they recommend. How helpful is it if that wait person says to you, "Well, what are you in the mood to eat tonight?" It's no help at all, right? You're no closer to a decision. They basically just dump the problem back on your lap.

(37:17):
But what a great way people do is they say, "If you want my opinion, I love this dish and I'd probably say it's our most popular. We sell out of it every night. We've still got it. So you're in luck. It's a lot of food though, it's a big portion. If you're in the mood for something lighter, there's a vegetarian option. It doesn't get as much play on Yelp, but I love this one. It's absolutely delicious. It's one of our kind of dark horse favorites, if you will, but remember, everything we make here is delicious. If you don't like those choices, you're not going to go wrong with any of them, but those are just my favorites." 

(37:46):
Now, what happens in that moment is what psychologists call the delegation effect, which is rather than the burden of a bad decision being solely on the shoulders of the decider, that burden is now shared. Now, think about it, if you order the dish the wait person recommended and you don't like it, whose fault is it? Well, technically it's your fault because you ordered it, but it's also kind of their fault because they recommended it. 

(38:07):
You feel like there's some safety in getting that recommendation, that endorsement. It's a really simple example, but it works in complex sales as well. Customers are looking for somebody to share in the risk and the burden of making a bad decision and having that partner who's guiding them toward what they should care about and what they shouldn't care about, what they should consider and what they should take out of the proposal, is actually very reassuring and comforting them and it increases the odds of getting some kind of decision from them.

Lenny Rachitsky (38:35):
Amazing. This is a great segue to The Challenger Sale, which we're going to talk about, but let's get through the last two steps and then we'll talk about The Challenger Sale, which is basically this on steroids, this idea on steroids.

Matt Dixon (38:45):
The last two, so L is about this customer who's doing endless amounts of research. Every salesperson has seen this customer, they're never happy with the number of reference calls or the amount of research they've done. They want to talk to more and more people. They're just in information overload mode and/or what we might call analysis paralysis mode because at some point, they're never satisfied with, they always feel like all the answers will be in the next white paper they read or the next reference call they do, or the next person on LinkedIn they talk to. 

(39:15):
What salespeople need to do to stop that, you got to understand I think why customers do that. They don't want to be surprised. That is the main reason, but they also don't trust the salesperson to be forthcoming. They believe the salesperson is paid to sell them more than they need, to put one over on them, hide the dirty laundry, only talk about the things that work in the platform, not the things that don't work. 

(39:37):
You're not going to get introduce any of the customers who hate you. You're only going to introduce the customers who love you, and we know we're going to say great things about us. That's what the customer thinks. That is what is in the customer's mind. You've got to actually shift, get the customer to stop trying to be an expert and start trusting you as an expert. There are two keys to that. 

(39:57):
The first one is you've got to establish some trust. I know that sounds like a platitude, but we found in the analysis, there are specific things that great salespeople do very early on. They are brutally transparent with customers about like, "Hey, I know you were interested in this capability. I got to be honest, we get mixed reviews on that. It's kind of an early capability for us. We're still trying to iron out the kinks," or "I know you are interested in this used case, but I have to be honest, we're actually not the best in the market at that. Our competitors much better at that than we are." 

(40:26):
These kinds of moments show the customer that you're not here to put one over on them. You're here to get them to a great decision. It kind of makes no difference to the salesperson, whether the customer buys from them, doesn't buy from them, it buys from a competitor. You just want to help them get to a great decision. That's step number one is building that trust. 

(40:42):
Step number two is you got to demonstrate some expertise. What we see in so many sales interactions, especially in tech, is that salespeople will show up with the clown car of experts, the subject matter experts, the solutions engineers, the product people, the executive sponsors, and then they will just punt to these people. 

(41:00):
What happens in that moment is dangerous for the salesperson. The customer, it sounds like they're loving it, right? They're loving that. I'm talking to the people who really know their stuff, but what's also happening in that moment is the salesperson is actively getting delegated down to the person they sound like. If they don't sound like any more than a glorified emcee or a coordinator, then that's kind of all the customer will perceive them as. 

(41:21):
What right or ability would you have to guide the customer on what to choose if you've offered no value or expertise? You don't have to be as deep as the product people. You're not going to be, you're a salesperson, you're not a product person, but you do have to be deeper on than the customer, and you do have to demonstrate that expertise. Those are the keys, again, the customer to stop trying to be an expert and start trusting you as their expert.

(41:43):
Then, the T is taking risk off the table. Two keys to doing that, I think the first one happens really early actually, and that is resetting the customer's expectations. Average salespeople love when they get an inbound lead from a customer who says, "Hey, I saw that case study on your website of the customer who got the 10X improvement in sales productivity, and we want that. That sounds great." That company's in our industry, amazing. That's a slam dunk business case for us. 

(42:09):
The average salesperson's thinking like, "If you're excited about that, I'm not going to talk you out of it because that means you're going to be excited to take in the CFO and excited to sign the agreement and get going." 

(42:16):
What great salespeople do though is they know that while they'll stand by those claims, those case studies, those proof points, they try to kind of under-promise and over-deliver and they might say something along the lines of, "You know Lenny, absolutely, that is a great case. I was involved in that sale, but what we also need to understand is everything went perfectly. They resourced it to the hilt. They had no integration issues, no hiccups. It was beautiful and seamless. I don't think you and I can think of many technology implementations that happened that way. 

(42:45):
What I'd rather we do is build your business case around a 5X improvement in sales productivity because we see that at least that, in 100% of our implementations. Then, let's set up to over-deliver against that because I think we're going to do better than that based on what I know about your organization, easily 6, 7, 8, 9%, maybe even 10, but we don't want you to just walking in and promising 10X improvement sales productivity. If we finish the year and we're at 7X, if the CFO is now asking her questions when in absolute terms, she should be thrilled with 7X, right? Let's make sure we set ourselves up for success." 

(43:18):
The other thing you've got to do though is establish some safety net options. There are lots of different shapes and forms. These can take everything from before the deal is closed, pulling the implementation team onto the call, or the customer success team or the account management team so we can start roadmapping, "Hey, as soon as we get signature, here's how we're going to spend our next six months together to make sure you guys are getting all the value you expect, if not more. Here's what we got to do. Here are the stage gates, here are the owners, here are the metrics we're going to monitor. Here's how often we're going to connect with each other." 

(43:48):
Instills a lot of confidence with the customer because it feels like, "Oh, you guys have done this before, right? You've been there, you've done that. You've helped other customers like me get value." Everything from that kind of stuff to adding in professional services support, especially like you think about a tech purchase. I'm not saying give it away for free, but you will find that high-performing salespeople will also add on professional services, but it is not just because selling more, which they are because they're high-performing salespeople. It's the way they position that.

(44:13):
They usually position it as an insurance policy. "Hey, I know you guys want to DIY this. This is one of the great things about our solution. You totally can. You got all the training support, all the videos, you got all the enablement content you need, but I know this is a big priority for you, and I think it would be really smart to carve out a slug of professional services hours that way our A team is lined up in case anything slips and if it does, we get you back up on track because the last thing we want is for you guys to be upset that you're losing ground and you're not going to deliver on the outcomes that you promised to your boss. So, let's set that up." 

(44:44):
There's lots of different ways we can create those opt out clauses in some industries are an option. Not very common in B2B, but in some cases, you can offer those or specialized contract carve outs for instance. There's lots of different things we can do to create that safety net where the customer doesn't feel like they're jumping out of an airplane by themselves, but you are the tandem skydiving instructor that's going to guide them safely to the ground.

Lenny Rachitsky (45:05):
Amazing. All of this, especially this last step, is coming from, they're probably not going to decide on anything that that's what you're fighting is help them...

Matt Dixon (45:13):
That's right. That's right. 

Lenny Rachitsky (45:13):
... be less worried about messing up.

Matt Dixon (45:15):
Yeah, that's right. 

Lenny Rachitsky (45:16):
I especially love this point about under promising and over delivering because so much of, and most of this is B2B SaaS software that you're working with, right? Like B2B SaaS companies?

Matt Dixon (45:26):
Our dataset cut across, I think that it might just be that SaaS is the place where we're seeing the most indecision these days, but it's not suggest it's kind of an easy target, but it is rife within indecision these days, and unfortunately I think it's also rife with a lot of these missteps that salespeople make that actually make things worse, but we had data from manufacturing firms, services businesses that cut across. This was prevalent and consistent across industries.

Lenny Rachitsky (45:57):
With the under promising and over delivering, I think that's especially powerful for where most companies want to get to is net revenue retention being higher than 100% where you can expand larger within the org and it makes sense to help them set up base, feel like, wow, this is so much better than we even thought it was going to be, versus...

Matt Dixon (45:57):
Absolutely. Yeah.

Lenny Rachitsky (46:15):
... it's not delivering what we thought. Amazing. Okay. Any last piece of wisdom to leave listeners with around The JOLT Effect before we move on to The Challenger Sale?

Matt Dixon (46:25):
The only thing I would suggest is that for anybody, I mean, I think just do it is this, is that you should hit the pause button when the customer, because the customers, we all know, are going to get cold feet, often late stage, and it can be very frustrating. The knee jerk reaction for almost every salesperson out there, this happened in our analysis, 75% of salespeople we studied, would immediately go out to dialing up the FOMO. 

(46:47):
Go back to doing that. You're not going to get these benefits. You're going to be stuck in this terrible state of affairs you're in right now. Dial up the cost of inaction, or let's try to use some price base or other delivery window-based urgency driver to get the customer to move forward. But just remember that if the customer's already convinced that the status quo is suboptimal, and you've already got the intent that basically again, you're using fear on top of a customer, selling into a customer who's already afraid and you're actually making it worse. 

(47:17):
Hitting the pause button and just reflecting a little bit on what's really going on here. Is it that they're indifferent or is it that they're indecisive? Those are actually two very different things.

Lenny Rachitsky (47:26):
Amazing. I know you have a meeting in 10 minutes, so this is going to be the most action-packed, high-density podcast episode we've done. We've got 10 minutes talk about Challenger Sale. 

Matt Dixon (47:33):
Sure.

Lenny Rachitsky (47:33):
First of all, how many copies of this book have you sold at this point?

Matt Dixon (47:37):
I think it's about a million. 

Lenny Rachitsky (47:39):
Holy moly. 

Matt Dixon (47:39):
Yeah. 

Lenny Rachitsky (47:39):
That's insane.

Matt Dixon (47:39):
That's a lot, yeah.

Lenny Rachitsky (47:42):
Okay, so it's a legendary book in the world of sales. I imagine many people have heard of it, at least some people know the teachings. Let's spend a little time there. If I were to summarize the big insight of the book, basically it's the best salespeople challenge their prospects thinking and teach them about the market and what they should be doing versus just helping them get what they want.

Matt Dixon (47:59):
Yeah, very well said. I think one of, just like the FOMO, FOMU kind of shorthand, here's a shorthand I'd give to salespeople is most salespeople are trying to figure out what's keeping the customer up at night, right? It's classic solution selling needs, diagnosis, et cetera. 

(48:15):
The Challenger approach is about showing the customer what should be keeping them up at night. What is the thing you know that they need to know? What is the way that other customers are using your solution to generate returns and benefit for their organization? What's the risk that they don't know about but you do because by the way, you're going to talk to 10 times more customers, or I say you're going to talk to 10 of that customer in a week or 10 times more than a week than they will all year. 

(48:42):
You are a window into the outside world for them, and that's what challengers really understand. It's not free consulting though, because if you remember from the Challenger Sale, it's not just about bringing these provocative ideas that reframe the customer's understanding of the world. It's about leading to your unique benefits. What you're really trying to do is create a fire and then be the only person in town who sells the fire extinguisher that'll put it out.

Lenny Rachitsky (49:05):
Is there an example you could share of a Challenger sale type of sale?

Matt Dixon (49:08):
Yeah, we wrote a sequel to The Challenger Sale called The Challenger Customer. In that book, we talk about a case from a company called Dentsply. Dentsply, as the name would suggest, manufactures or produces dental supplies, right? They sell equipment and product into dental practices and dental offices. 

(49:27):
Years ago, Dentsply had developed, we all know, I think your listeners can all relate to this, when you go to the dentist and the hygienist is polishing your teeth or they're using the water pick, or unfortunately, maybe the dentist is using the drill. That wand has a very heavy power cord that's attached to it and it's attached to this power base and that it feeds water through there and electrical current and all those things. 

(49:51):
Dentsply had developed the world's first lightweight, ergonomic, cordless wand that drill bits could be attached to cleaning, implements, et cetera and it was a total breakthrough. Actually, when they unveiled it was pretty interesting, they gave, you remember the scene in Pulp Fiction where they opened the briefcase and then it emanates like a light emits from it. They gave all their salespeople like this little aluminum briefcase thing with this eggshell foam and a wand in there. 

(50:19):
I can't remember what it's called. Let's call it the XP-9000 Wand, but it had one demo wand in there and they would go around to dental offices and be like, "Ah." It was lit, literally, it had blue lighting inside... 

Lenny Rachitsky (50:30):
Wow.

Matt Dixon (50:30):
... and it was really cool, the reveal and they'd take it out and they give it to the dentist or the head of the dental office and they would hold it and be like, "What? It's so much lighter and it's ergonomic and this thing is cordless? It's amazing. It's a revolution." Then, the first thing they would ask is, "How much is it?"

(50:47):
When they told them it costs like three times more than the current old-fashioned wands they're using with the heavy cord, they would gently put it back in the briefcase, close the briefcase, say, "Can you give me a price on new drill bits or new like polishing attachments?" They couldn't get anybody to want to pay for this thing that was much more expensive than the old one. 

(51:06):
They did a lot of work and they figured out, they knew that this was unique. They knew this was a unique product. Nobody else in the market made this. They're the only supplier who had figured this out, total innovation, but they hadn't given the customer reason to want to pay a premium for that innovation until they figured out the connection between the equipment that hygienists use and absenteeism and workers' comp. 

(51:32):
It turns out that one of the biggest professions that where you get carpal tunnel syndrome, shoulder and neck and lower back injuries is being a dental hygienist. The reason is that they're standing, holding that heavy wand being dragged down by that heavy cord at an awkward angle all day long. That's why dental offices really struggle to keep hygienists showing up, not calling in sick, not out for months at a time for reconstructive shoulder surgery, not with exorbitant health benefits claims and workers' comp claims. 

(52:08):
They came in and they revised their sales pitch. Now, when they come into the dental office, they sit down, they say, "I'd like to talk to you about your hygienist workforce. Are you guys seeing higher turnover? Have you seen any absenteeism due to carpal or lower back or neck or shoulder injuries? What are you guys doing about that? What's the cost to your business?" 

(52:26):
They get the dentist talking and the way they start talking about, "It is not just the insurance and workers' comp costs, it's stuff like when my hygienists get injured, and it's a repetitive motion business and job, when they get injured and they call in sick, I've got to reschedule all these cleanings and all these appointments, and that's a bunch of upset customers who end up then going to the practice down the street or saying bad things about me on Google reviews or what have you." 

(52:52):
There's all kinds of ripple effects for the dentist. The cost of losing a hygienist is massive and the market for hiring them is very, very tight. What Dentsply does is start the conversation there, and then they say, "One of the things that we figured out is that, based on our own independent research, one of the primary drivers of all these bad outcomes, absenteeism, repetitive motion injuries, is related to the equipment that hygienists use. It's because they're holding that old fashioned heavy wand, attached to that big heavy power cable at an awkward angle doing repetitive motion all day, but what if you could solve for that? What if that was no longer a problem?" 

(53:33):
The dentist says, "Well, how would you solve for that? There's no other technology." "That's what we got. We've had the same equipment for 30 years. Let me show you the new XP-9000. We're world's first cordless, lightweight, ergonomic drill. We can show you that it is far preferred by hygienists because they don't get injured as often because it's much easier to hold and it doesn't put stress on the joints and pinch points, if you will, where hygienists tend to experience these injuries." 

(53:58):
It's just a simple example, but you see, again, they're still selling a fancy wand, but before, they were leading with it. Let me show you this and talk about the features, benefits, and that led to how much does it cost. Now, they're leading to it. They're starting with an insight and giving the customer a reason to care about solving this business problem, and it turns out the only way to solve it is buying this XP-9000 drill from Dentsply.

Lenny Rachitsky (54:22):
The key lesson from this book, and I know we don't have a ton of time to dig into it, is start with an insight they may not be aware of. Give them a sense of where the things are going. Help them learn something about the future and the problems that they need to know about that they may not be aware of, and then transition to here is how we can solve that for you.

Matt Dixon (54:40):
Yeah, that's exactly right. Make sure those connections are really tight, right? Getting this right starts with answering the question, why should the customer buy from you instead of your competitor? It's not because you're more customer-centric or more innovative and possible to prove your competitors claim the same thing. It's not that you're the leading global solution provider of whatever you sell. 

(54:59):
It starts with the product or the way you deliver the product or something about your service delivery that only your company does you are only capable of. Nobody else can touch with the barge pole. Then, the second question is, what would have to be true for the customer to want to pay us for that, to pay a premium ideally? That's the core components, if you will, of a challenge or a conversation.

Lenny Rachitsky (55:21):
Amazing. Matt, I promised I let you out here in time. Final questions, where can folks find your books if they want to dig in further and how can listeners be useful to you?

Matt Dixon (55:32):
Well, thank you for the offer. I love being connected with folks who heard me on shows like this one. If you heard me on the podcast, "Hey, I heard you on Lenny's Show," shoot me a LinkedIn invite. I'm pretty active there, love being connected with folks, so please reach out to me. 

(55:45):
If you want to learn more about JOLT Effect, so we do a lot of workshops and training around that methodology, visit jolteffect.com. There's a ton of, there's also a lot of free tools on there that you can download that help you put some of these concepts into practice with your sales teams or if you're an individual seller. Then, of course, the books are available everywhere. Good books are sold, which I think is on the internet these days. 

Lenny Rachitsky (56:10):
Amazing. Matt, thank you so much for being here.

Matt Dixon (56:11):
Thanks, Lenny. It was a blast. Thank you.

Lenny Rachitsky (56:14):
Bye everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.