Research Archives | Challenger Inc Challenger Sales Wed, 21 Feb 2024 22:17:10 +0000 en-US hourly 1 https://wordpress.org/?v=6.7.2 https://challengerinc.com/wp-content/uploads/2022/10/cropped-Challenger-favicon-48x48.jpg Research Archives | Challenger Inc 32 32 Growing B2B Buying Groups Are Driving Purchasing Gridlock https://challengerinc.com/blog/buying-group-gridlock/ Fri, 16 Feb 2024 14:39:56 +0000 https://challengerinc.com/?p=12158 The post Growing B2B Buying Groups Are Driving Purchasing Gridlock appeared first on Challenger Inc.

]]>

Since we began tracking B2B buying behavior more than ten years ago, the market, technology, and buying cycles all ballooned in complexity. Yes, your dad is right: everything used to be a lot less complicated. Anecdotally, we hear that sellers face significantly increased pressure to perform even as sales cycles elongate and new procurement processes take hold. Our ongoing research into customer behavior illuminated this in detail.

We also noticed that a painstaking customer buying process and a more difficult economic environment increasingly resulted in what we call “purchasing gridlock.” One major problem — the growing size of the B2B buying group — helps explain why your once-healthy pipeline highway now looks like a parking lot. Your sellers need to understand what customers want, and why sharpening their skills can clear the congestion.

Tracking growth in the average B2B buying group

In 2019, Challenger surveyed a large sample of B2B buyers and asked them to reflect on recent large purchases that included an interaction with a seller. The study aimed to see what, if anything, changed regarding buying behavior and drivers of loyalty since the original research.

While the research uncovered that many of the drivers of loyalty remained the same, it also revealed major developments in the size of buying groups. Specifically, the typical B2B buying group roughly doubled. When we track changes over time, we see it increase incrementally every few years from 5.4 in 2009 to 6.8 to 10.2 to just under a dozen in 2019.

a graphic showing how the size of the buying group grew since 2009

Challenger also found in 2019 that up to 38% of customer purchase attempts end in “no decision.” In other words, nearly 4 out of 10 would-be buyers in the study started a purchase process only to quit before deciding to change anything. In “The JOLT Effect,” authors Matt Dixon and Ted McKenna found medium-high levels of indecision present in nearly 90% of complex deals and that no decision loss accounts for 40-60% of all lost deals.

Together, this makes for an alarming development for sellers.

How economic realities contribute to B2B buying gridlock

The global economy slowly but steadily improved after the 2008 global financial crisis, which meant booming headcounts and investments. Then, in the early days of 2020, we saw major investments in technology as companies accelerated their digital transformations and accommodated remote work.

As companies looked to stabilize through the will-it-recede-or-won’t-it pandemic years of 2020-2024, they implemented stronger controls through functions such as procurement. Many buyers saw their budgets tightened or eliminated altogether. Then, as teams redistributed resources to meet demands, the question of “who owns what” led to an even squishier sales process.

Now, the typical B2B purchase process might involve a dozen people from several different departments and time zones. Selling a solution touching stakeholders across expanding go-to-market teams, for example, might involve gaining buy-in from VPs in three departments, individual stakeholders from operations to sales to marketing, and a chief revenue officer – as well as legal, procurement, and implementation teams.

Our virtual reality

Our research shows that buyer behavior and how sellers respond changed significantly after the pandemic. All that investment in emerging technology transformed our working conditions, making it easier than ever to invite new stakeholders to the (virtual) table. And while aligning calendars might seem easier with Outlook and GoogleCal, this pattern presents its own challenges for buyers and sellers when it comes to wrangling consensus from the buying group.

Customers may face the expectation of including more internal “experts” in every sale, which means building more consensus. Unless managers and sellers are trained to handle these large, complex, multi-stakeholder deals, they may be unprepared to push the deal forward. Remote work also complicates the landscape; when sellers can’t walk into an office, it can feel impossible to identify the real size and shape of the B2B buying group. The net effect is a shift toward many-to-many sales where sellers must coordinate many internal stakeholders to address the needs of many customers.

How gridlock contributes to no-decision losses

Challenger sellers know that identifying buyer types is a key part of an effective B2B sale. But in this environment, sellers struggle to tell Talkers and Mobilizers apart. They may also fail to address the concerns of Blockers effectively. With so much of the purchase process taking place behind closed doors, sellers can find themselves listening with “happy ears” and projecting a sale to close – only to find that it stalls in the final mile because someone in the buying group developed cold feet.

With so many voices and needs at play, gaining consensus is harder than ever before. In “The JOLT Effect,” Dixon and McKenna defined three roots of indecision. Buyers struggle to agree with each other, and in fact, each may bring a different concern (or a mix of them) to the deal – resulting in multiplying, compounding, ongoing indecision.

  • Choice overload happens when prospects fail to prioritize their needs – or the needs of competing stakeholders. As buying groups multiply, those needs may compete so intensely that they simply cancel each other out, leading to a no-decision loss.
  • Information overload occurs when sellers blindly send resources to their buyers instead of curating them to address their specific concerns. For sellers, the key moment lies in recognizing the tipping point between helpful answers and information overload. With large, opaque buying groups, this may be particularly difficult.
  • Expectations overload stems from a lack of trust, either in the outcomes the seller presents as possible or in their company’s ability to achieve them. If internal politics, difficult procurement processes, or past failed implementations are on their minds, members of a B2B buying group may balk.

In reality, the signs of looming indecision often present themselves in a sale cycle from the very first call. To effectively overcome indecision, sellers must recognize and respond to those cues throughout the sales process, and that comes down to building seller skills.

an image showing how the buyers journey looks in b2b sales

Developing seller skills solves gridlocked buying

It’s up to sales leaders to educate their sellers with the tools and skills they need to successfully engage and close deals with large buying groups. Again, we can turn to our 2019 buyer survey, which reveals that the increasing size of B2B buying groups isn’t just a headache for sellers, but for customers, too. Customers need support to help them navigate these challenges, and the wisest sales organizations are equipping sellers and their managers with new skills aimed at this new sales challenge.a graphic showing the results of a study question involving the top five most important seller skills according to buyers

While some sellers may struggle to wrangle a large buying group, truly skilled sellers approach the purchase process with a commercial insight specifically designed to position them as trusted advisors. They come armed with the experience and skills necessary to guide buyers through the purchase process – including helping them make decisions using an updated playbook, addressing different stakeholders’ needs, and building support across the organization. Building and enforcing these skills in frontline sellers and sales leaders enables organizations to clear the congestion in their pipelines and avoid new gridlock before it begins.

The post Growing B2B Buying Groups Are Driving Purchasing Gridlock appeared first on Challenger Inc.

]]>
The State of Sales Compensation: Good News? https://challengerinc.com/blog/the-state-of-sales-compensation-good-news/ Mon, 07 Mar 2022 22:52:47 +0000 https://challengerinc.com/?p=11634 Ovid once said, “Fertilior seges est alenis semper in agris,” which translates to “The harvest is always more fruitful in […]

The post The State of Sales Compensation: Good News? appeared first on Challenger Inc.

]]>
Ovid once said, “Fertilior seges est alenis semper in agris,” which translates to “The harvest is always more fruitful in another man’s fields.” So, theoretically at least, it’s perfectly okay to peer enviously into your neighbor’s yard. The real question is: How worthwhile is it to covet what you don’t have? But, like the question, the answer is not so simple.

According to the 2022 Bravado State of Sales Compensation Guide, which has been collected from Bravado’s network—comprised of 150,000+ individual Sales Professionals from over 11,000 different companies and 82 countries around the world—only 47% of sales teams hit quota in the most recent year. What’s interesting, if you peek over the fence, is that salespeople are making more money than ever before. At the same time, however, the industry has never been more unpredictable.

2021 Recap

In 2021, it was easier to sell with a larger sales team. Companies with over 100+ reps did the best, with 55% of those larger teams hitting quota. On the flip side, scaling sales teams (26-100 reps) did the worst, with only 44% of them hitting quota.

On the best sales teams, 75%+ of members hit their quota. Unfortunately, this is extremely rare. Only 1 in 4 sales teams had 75%+ of their members hit Quota.

Companies with fewer than 10, or more than 100 sales reps, had the most successful teams while, on the flip side, 54% of sales reps missed their Quota in 2021.

Average tenure in sales is declining, as sales turnover is higher than turnover in any other function. The fact is, even though the number of open sales roles is growing, and with higher pay to boot, unrealistic quotas are driving more sales reps to leave their jobs.

Compensation for Sales Development Representatives

But 2021 wasn’t all bad. With salaries collected from Sales Development Reps split by Base Salary and On-Target Earnings, and from 11,000+ sales teams, the average compensation rose by 35% in 2021, with 11% in just Q4 alone.

Geographically, and proving it’s not just a new music town, the city with the highest median pay for SDRs is Austin, with OTE above $100K. Breaking it down even further, SDRs with 3+ years of experience can make on average $10K more than their peers with 2 years or less experience.

Compensation for Account Executives

And there’s also good news regarding Account Exec salaries. Across 11,000+ sales teams, with salaries collected from AEs split by Base Salary and OTE, the average compensation rose by 40% in 2021 and 17% in just Q4 alone.

Geographically, and somehow with winter weather in mind, the top 3 cities with the highest median pay for AEs are Chicago, the San Francisco Bay area, and Boston, with OTEs above $200K. And by years of experience, the average AE’s pay doubles in the first 10 years of their career.

On average, Enterprise Account Execs make nearly $200K in OTE, compared to their Small and Midsize Business counterparts who make $120K in OTE.

And according to our respondents, it pays to learn a sales methodology. Of the $250k+ earners, half are trained in the Challenger method.

2022 Remote Work Trends

Regarding working remote, because this affects a lot of us, 39% of sales professionals will not return to an office. Accordingly, by providing employees the option to work from home, employers open themselves up to a wider geographic group of top talent to choose from. And concerning relocation, 54% of job seekers are willing to move for a great job, which also opens up the talent pool.

Conclusion

Overall, the Bravado State of Sales Compensation Guide is mostly good news for the sales industry, especially concerning trends for the upcoming year. In other words, the future seems promising. So we don’t really need to peek over our neighbor’s fence, as our own backyard is also looking pretty good.

The post The State of Sales Compensation: Good News? appeared first on Challenger Inc.

]]>
More B2B Decision Makers Are Weighing In https://challengerinc.com/blog/more-b2b-decision-makers-want-in/ Wed, 21 Nov 2018 00:00:00 +0000 https://live-challengerv2.pantheonsite.io/2018/11/21/more-b2b-decision-makers-want-in/ 84 percent of customers report a buying journey taking longer than expected. And that’s if the journey ends with an […]

The post More B2B Decision Makers Are Weighing In appeared first on Challenger Inc.

]]>
84 percent of customers report a buying journey taking longer than expected.

And that’s if the journey ends with an actual decision! 

In today’s complex world of B2B selling, it’s not uncommon for a group of customer stakeholders to reach gridlock instead of consensus and simply give up on a decision. The process is so painful that the status quo (as suboptimal as that may be) is seen as a better option.

No decision is very costly, both for your customer and for you: meetings, time, travel, effort, missed opportunities, missed forecasts.

How frequently does this happen? That depends on the size of the buying group. But the trend doesn’t seem to favor sellers. Back in 2014, as part of CEB, we started measuring the average size of a customer buying group in a typical B2B purchase. When we first looked at it, the number was 5.4. This makes sense; if you’re purchasing an enterprise software solution, you’ll have finance, HR, marketing, operations, and of course IT and procurement involved in the decision.

But more surprising than the size of the initial number was what happened each subsequent time we measured it. In 2016, the number jumped to 6.8—a 25 percent jump in just two years. Fast forward two more years, to 2018, and that number could be as much as 10.2. That’s an additional four stakeholders involved in decisions who weren’t involved just a few years ago.

Salespeople today encounter a very different customer buying group than they have in the recent past, and it’s not an easier group to work with. You see this displayed in the graph below, which looks at how growth in the number of buying team members correlates to purchase likelihood. When a single person makes a purchase decision, the odds of purchase are in the seller’s favor (81 percent). Add a second person to that buying team and the likelihood drops significantly (to 55 percent). A third person is helpful in breaking a tie (likelihood rises to 60 percent), but once you reach five or more people in the buying team, the likelihood of reaching a decision falls dramatically. In summary, without a significant change in strategy and behavior, your salespeople face significant odds in getting a customer decision to happen.

Source: CEB Analysis 

In the face of these statistics, the answer for most organizations is more sales activity.  More engagement with prospects, more responses to proposals and RFPs, more visits and conversations. But what we fail to realize, when running a machine more and more to get less and less, is that we can control this situation because we created it.

Why do we think more and more customer stakeholders are involved in these decisions? It’s not for fun, or because they have nothing else to do. It’s because the complex solutions we have built require this type of consensus. When a solution must be integrated across the business, it’s reasonable to expect that a good number of people will have an opinion on it.

Before we go and blow up our well-designed, value-added solutions, let’s consider a third path. A path that teaches customers to see the wisdom and value in our solutions, but also recognizes and addresses the reality of today’s decision-making journey. Visit us to learn specific ways to strengthen your sales experience so that you move this expanding buying group to consensus and close more opportunities faster.

The post More B2B Decision Makers Are Weighing In appeared first on Challenger Inc.

]]>