SPIN SELLING

SPIN SELLINGby: Neil Rackham

http://studentofsales.wordpress.com/2007/07/04/my-take-on-spin-selling-part-1/

Sales Behavior and Sales Success

Successful Salespeople are…

Not better closers Not better at handling objections Not better at using open ended questions

Many beleive the 3 key components to a sales pitch are:

1. Uncover needs with open and closed questions.2. Overcome objections.3. Close for the business.

Huthwaite (Rackham’s research company) found through 10 yrs of research that the methods listed above are:

Good for low-value sales

According to Rackham,

Top salespeople are using a POWERFUL PROBING INVESTIGATION STRATEGY to achieve their success.

Success in the Larger Sale

Traditional (not necessarily effective) steps of a sales call are:

1. Opening the call~Relate to the buyer (not necessarily effective in the large sale.2. Investigating needs3. Giving benefits4. Objection handling5. Closing techniques

Again, these may be o.k. for a small sale. A small sale for these purposes are one that is relatively low-value and can be closed in one call.

The Major Sale

You know a major sale from a minor one.

Now, consider the psychology…

The customer perception changes. Customer behavior changes. Selling cycle is longer:

o Most of the “talk” about your presentation is done internal.o Or…not by you.o Consider these questions:

1. How much of what I’ve said will the customer remember tomorrow after I’ve gone

2. Could the customer repeat my smoothly polished presentation to her boss?

Size of customer commitment is bigger: o The building of value is probably the single most important selling skill in

larger sales. The on-going relationship

o It is harder to seperate product from seller in larger sales. The customer has to decide whether or not they want to enter a relationship with the salesperson.

The risk of mistakes o Larger decisions are much more public and a bad decision is much more

visible.

The 4 Stages of a Sales Call

Every sales call goes through these 4 stages.

1. Preliminarieso Introduce yourselfo How you begin conversationo These are less important in large sales.

2. Investigating

o Very importanto Crucial in large saleso In fact, the most important selling skill.

3. Demonstrating Capability

o You must show customers that

You have a solution That it makes sense to do business with you

4. Obtaining Commitment

o The key here is called ADVANCES in larger sales.

The balance of these four stages will depend on:

The type of call The calls purpose Where the call comes in the sales cycle

So, which stage is most important?

The answer depends on the size of the sale.

Questions and Success

In studies of

NEGOTIATION MANAGEMENT INTERACTION PERFORMANCE INTERVIEWS GROUP DISCUSSIONS

More Questions = More Interaction

Focus: Open vs. Closed

Closed: Answered in single word, Sometimes called directive probe Open: Require longer answer, non-directive probe

Points about Open and Closed Questions generally made by writers over the last 60 years:

Open Questions are more powerful and often reveal unexpected information. Closed Questions are less powerful and can be used with “talkative” customers. Closed Questions can be used when little time is available. Open Questions are particualarly important in larger sales, Closed Questions can

be successful in small sales. General goal of sales training should be to help people ask more Open Questions.

Huthwaite found that these points are not necessarily true. There has been no scientific research on their truth. Even still corporations around the world are spending billions of dollars training salespeople with these assumptions held as truth.

A New Direction

Huthwaite found that questions in the successul call tend to fall into a sequence they call SPIN.

1. Situation Questions. ~ Data-gathering questions about facts and background not to be over used.

2. Problem Questions. ~ Explore problems difficulties, and dissatisfactions in areas where the seller’s product can help. Inexperienced sellers generally don’t ask enough.

3. Implication Questions. ~ Take a problem question and explore it’s effects or consequences. Very important.

4. Need-payoff Questions. ~ Get the customer to tell you the benefits that your solution could offer.

The SPIN Model

This is not a rigid sequence. However it is generally true that Situation Questions are asked early in the call and all other types of questions follow.

Obtaining Commitment: Closing the Sale

Huthwaite research shows that success in the major sale depends more on how the Investigating stage of the call is handled.

So why is everyone so enthralled with Closing?

In this chapter Rackham asks the following questions:

1. How many of these closing techniques actually work?2. In larger sales, how do such factors as price and buyer sophistication influence the

success of closing?

What is Closing?

Huthwaite’s definition of Closing:

A behavior used by the seller which implies or invites a commitment, so that the buyer’s next statement accepts or denies commitment.

The Consensus on Closing

The consensus among writers on selling seems to be this:

Closing techniques are strongly related to success. You should use many types of closes. You should close frequently during the call.

Starting the Research

Rackham started his research into closing in the late 1960s.

Talking with Salespeople

Rackham found that salespeople

Talked about closing on their own time. Could name four different closing techniques. Could give no more than one technique on opening the sale or handling

objections. Less than half of the field in another study could specify a single technique for

investigating customer needs beyond just asking questions.

Closing for Real

When Rackham first quit his University teaching job to found Huthwaite he enrolled in a sales training program and paid particular attention to the area of closing techniques. He had to sell his services to eat.

When he tried his first close, an Alternative Close, it worked. For a while he was a hard-close believer.

What changed his mind? Read on…

Initial Research

Huthwaite began their research fully believing they would find a strong positive link between the number of times a seller tried to close and the success of the sale. He believe the magic number of 5 closes would be found to hold true.

Unexpected Results

For the first small study, Huthwaite went out on 190 calls. They took for study the 30 calls in which the sellers had closed most often and compared them with the 30 calls in which the seller had closed the least.

11 of the high-close calls resulted in a sale.

21 of the low-close calls resulted in a sale.

They could not call this a resounding victory in the “close early, close hard, and close often” school of learning.

Uneasy Feelings

Rackham noticed in this first study an antagonism from the buyer anytime a closing technique other than asking for the order was used.

Attitude Problems

Rackham conducted research on attitude as it affects closing.

The results (though possibly skewed) showed that

more favorable attitude towards closing = less sales less favorable attitude towards closing = more sales

This raised more doubt as to the effectiveness of closing. More research was needed.

The Effect of Training

More research was conducted on how training in closing affected sales success.

After training, on 86 calls, sellers used 2.4 more closing behaviors per call than before.

However, the overall effect of the training was a decrease in sales.

Before training the success rate was over 60%. After training it was around 50%.

A possible flaw in this research was that the training caused the seller to feel ackward in his presentation, therefore causing a negative effect on the sales call success.

A Glimmer of Light

Rackham then came across a major training firm claiming that they could increase sales by 30%. After further investigation he came to theorize that

closing techniques worked when the sale was small closing techniques failed when the size of the sale increased

Consider the pyschology:

Closing is, in effect, putting pressure on the customer to make a decision. As this decision increases in size, the pressure tends to have a negative affect.

Rackham highlights this by the classic example of a young man courting a young woman. The alternative close of “shall we sit here or shall we sit there?” works because the decision is small. However, the same young man may have a considerably lesser success rate with the alternative close of “my place or yours”. The decision this close implicates is a much larger one.

The Photo-Store Study

Huthwaite was to study whether a new training for the photo store would be effective.

This study would allow Huthwaite to observe sellers in rotating positions. One day they would be selling low priced items, the next they would be selling high priced items.

Closing and Decision Size

Before the training took place Huthwaite measured three things:

1. Transaction time. How long did each sale or attempted sale take?2. Number of closes. How often did the seller use a closing behavior during the

transaction?3. Percentage sale. What percentage of the transactions resulted in a purchase?

Low-value items:

The effects of closing training:

decreased the transaction time the number of closing behaviors increased the success rate increased

High-value items:

The effects of closing training:

decreased the transaction time the number of closing behaviors increased the success rate decreased

Two Conclusions

By forcing the customer into a decision, closing techniques speed the sales transaction.

In small sales it’s generally desirable to keep transaction time short; in larger sales a shorter transaction time has fewer advantages and many penalties.

Closing techniques may increase the chances of making a sale with low-priced products. With expensive products or services, they reduce the chances of making a sale.

Closing techniques, like all forms of pressure, become less effective as decision size increases.

Closing and Client Sophistication

The few existing research studies all suggest that the more sophisticated buyers react negatively to the use of closing.

Closing and Post-Sale Satisfaction

Huthwaite performed a study on the satisfaction rate of customers. The idea was to find out if customer satisfaction was affected by the use of closing techniques.

The results showed that sellers who had been trained in closing had lower satisfaction rates.

Rackham’s states that the most likely interpretation of these results is that, in using closing techniques, the sellers put pressure on customers to make a decision. Most people are less satisfied with decisions that they feel they’ve been pressured to make than with those they feel they’ve made entirely on their own.

This is key when remembering one of the pyschologically important factors of a large sale:

The large sale is an ongoing relationship.

Why is the Rest of the Army out of Step?

Rackham was reluctant to present his findings. In the few instance when he did share, he was poorly received. He did not so much dislike the rejection as he was concerned that his research was wrong.

Why did so many people, successful industry people, believe and spend so much money on techniques that not only don’t work, but are counterproductive?

What Makes a Compulsive Closer?

Rackham, around this time, conducted a seminar with a California management consultant named Roger Harrison. Harrison suggested that there are only two reasons that

people continue to behave in an unsuccessful way. Either they are crazy or there’s something in their environment that’s rewarding and encouraging the use of the ineffective behavior.

Closing behaviors are the only behaviors that are directly rewarded or reinforced by orders.

This insight helped Rackham realize that his work, thus far, was of value and that the rest of the world just might be out of step.

But You Must Close

An inexperienced salesperson is afraid to bring the call to a conclusion and, as a result, the customer gets impatient.

Some research shows that:

a ‘no-close’ call is ineffective (22%) a ‘one-close’ call is most effective (61%) a call with more than two closing behaviors is least effective (<20%)

Where Do We Go from Here?

The seller must obtain some kind of commitment from the customer for a call to be a success. But how can you get a commitment from your customer without risking the penalties that come from using closing techniques?

Traditional closing techniques are ineffective or have a negative effect when:

The sale is large, involving high-value goods. The customer is sophisticated: for example, a professional buyer. There is a continuing post-sale relationship with the customer.

What should you do?

Obtaining the Right Commitment

The first step in successful closing is to set the right objectives. Know what level of commitment makes the call a success.

Just getting an agreement to another meeting isn’t an adequate measure of whether you’ve closed successfully.

Defining Closing Success in Larger Sales

Four possible outcomes of a sales call:

Orders – Where the customer makes a firm commitment to buy. Advances – Where an event takes place, either in the call or after it, that makes the sales

move forward toward a decision. Typical Advances might include:

o A customer’s agreement to attend an off-site demonstrationo A clearance that will get you in front of higher level of decision makero An agreement to run a trial or test of your producto Access to parts of the account that were previously inaccessible to you

Continuations – Where the sale will continue but where no specific action has been agreed upon by the customer to move it forward.

o “Thank you for coming. Why don’t you visit us again the next time you’re in the area?”

o “Fantastic presentation, we’re very impressed. Let’s meet again some time.”

o “We liked what we saw and we’ll be in touch if we need to take things further.”

Huthwaite classified those calls that closed with Continuations as unsuccessful.

No-sales – Where the customer actively refuses a commitment.

It is important to know these 4 possible outcomes in order to close calls more effectively by turning Continuations into Advances.

Know the difference between Continuations and Advances, then become dissatisfied with setting call objectives that result only in a Continuation.

Setting Call Objectives

The secret of strong closing in major-account call is to question your objectives ruthlessly.

In your call planning, always include objectives that result in specific actions from the customer.

Obtaining Commitment: Four Successful Actions

Huthwaite found that there are four clear actions that successful people tend to use to help them obtain commitment from their customers:

1. Giving attention to Investigating and Demonstrating Capability. o Successful salespeople give their primary attention to this action.o Successful salespeople do an outstanding job of building needs during the

Investigating stage.o If you can convince customers that they need what you are offering, then

they will often close the sale for you.

2. Checking that key concerns are covered. o Sellers who were most effective in obtaining commitment from their

customers would invariably take the initiave and ask the buyer whether there were any further points or concerns that needed to be addressed.

3. Summarizing the Benefits. o In a larger sale, summary will almost always be a helpful way to bring key

points into focus just before the decision.4. Proposing a commitment.

o Asking for the commitment is not what successful sellers do.o In all ther other stages of the sale, asking behaviors are much more

successful than giving behaviors.o At the point of commitment, successful sellers don’t ask–they tell.o Most natural and effective: Suggest an appropriate next step to the

customer.

How do you know which commitment to propose? There are two characteristics of the commitments proposed by successful salespeople:

1. The commitment advances the sale. As a result of the commitment the sales will move forward in some way.

2. The commitment proposed is the highest realistic commitment that the customer is able to give. Successful sellers never push the customer beyond achievable limits.

Rackham’s old friend and colleague, Hans Stennek, is quoted as saying: “I’ve never been a believer in closing, because my objective is not to close the sale but to open a relationship.”

Customer Needs in the Major Sale

The studies at Huthwaite revealed that the stage with the strongest influence on overall call success is Investigating.

Remember, the Investigating stage: Asking questions and collecting data about customers, their business, and their needs.

It’ sin the nature of major sales that needs aren’t instant.

Different Needs in Small Sales and Large

Contrasts between smaller sales and larger sales:

Need development is faster in smaller sales than it is is larger sales. Larger sales require consulting with others, smaller sales do not. The strong emotional component of a smaller sale is not acceptable in larger sales. A bad purchasing decision in a smaller sale is, well…smaller.

Broadly speaking, Huthwaite says that as the sale becomes larger:

Needs take longer to develop. Needs are likely to involve elements, inlfuences, and inputs from several people,

not just the wishes of a single individual. Needs are more likey to be expressed on a rational basis, and even if the

customer’s underying motivation is emotional or irrational, the need will usually require a rational justification.

A purchasing decision that doesn’t adequately meet needs is likely to have more serious consequences for the decision maker.

Huthwaite’s research suggests that these differences are substantial. Enough so that they require a different set of questioning skills.

For research purposes, Huthwaite defines a NEED as:

Any statement made by the buyer which expresses a want or concern that can be satisfied by the seller.

For these purposes there is no distinction between the needs and wants of a buyer.

How Needs Develop

The first sign of a need is a slight discontent or dissatisfaction.

Needs normally:

Start with minor imperfections. Evolve into clear problems, difficulties, or dissatisfactions. Finally become wants, desires, or intentions to act.

In small sales these stages can be almost imstantaneous. In larger sales the process may take months or even years.

Implied and Explicit Needs

Huthwaite looked for a simple way to express this series of stages. They decided to divide needs up into two types:

Implied Needs. Statements by the customer of problems.

Explicit Needs. Specific customer statements of wants or desires.

In larger sales, one of the principle differences between very successful and less successful salespeople is this:

Less successful people don’t differentiate between Implied and Explicit Needsm, so they threat them exactly the same way.

Very successful people, often without realizing they’re doing so, treat Implied Needs in a very different way than Explicit Needs.

Huthwaite’s research showed that, in simple sales, the more Implied Needs you can uncover, the better your chance of getting the business.

What matters in the larger sale isn’t the number of Implied Needs you uncover, but what you do with them after you’ve uncovered them.

Why Implied Needs Don’t Predict Success in Larger Sales

Anyone making a decision to purchase must balance two opposing factors:

The seriousness of the problems that the purchase would solve. The cost of the solution.

In many small sales, because the cost is so low, it is easy for relatively superficial needs to tip the balance in favor of purchase.

The Value Equation

The Value Equation is the relationship between the size of needs and the cost of a solution.

If a customer perceives…

the problem to be larger than the cost of solving it = sale the problem to be small and the cost to be high = no sale

This explains why, in smaller sales, you can sell just by uncovering problems. In major sales, you must develop the need further so that it beocmes larger, more serious, and more acute in order to justify the additional cost of your solution. Remember the pyschological aspects of a major sale? These usually add to the cost side of the equation. (example: entering a relationship due to length of sale, risk of bad decision costing job)

Explicit Needs and Success

Huthwaite did research to show that, in larger sales, Implied Needs were not significantly higher in successful calls, but Explicit Needs were twice as high.

So, in larger sales, Implied Needs don’t predict success, but Explicit Needs do. In smaller sales, both may predict success. A probing strategy for the larger sale must uncover Implied Needs then convert by questions into Explicit Needs.

Buying Signals in the Major Sale

Implied Needs are accurate buying signals for small sales. Explicit Needs are the buying signals that predict success in larger sales. Less experienced people put too much weight on Implied Needs.

The purpose of questions in the larger sale is to uncover Implied Needs and to develop them into Explicit Needs.

In the next chapter, Rackham shows how this can be done using the SPIN questions.

The SPIN Strategy

Now we look at how the four SPIN questions–Situation, Problem, Implication, and Need-payoff–can each be used to help in the needs development process.

Situation Questions

Situation Questions collect facts, information, and background data about the customers existing situation.

Huthwaite’s research uncovered the following about Situation Questions:

Situation Questions are not positively reelated to success. In calls that succeed, sellers asked fewer Situation Questions than in calls that failed.

Inexperienced salespeople ask more Situation Questions than do those who have longer sales experience.

Situation Questions are an essential part of questioning, but they must be used carefully. Successful salespeople ask fewer Situation Questions. Each one they ask has a focus, or purpose.

Buyers quickly become bored or impatient if asked too many Situation Questions.

Explanation of the above: Situation Questions benefit the seller.

Do your homework before the call to avoid asking too many Situation Questions.

Problem Questions

Problem Questions probe for problems, difficulties, or dissatisfactions. Each invites the customer to state Implied Needs.

Huthwaite’s research found that:

Problem Questions are more strongly linked to sales success than Situation Questions are.

In smaller sales the link is very strong: the more Problem Questions the seller asks, the greater the chances that the call will be successful.

In larger sales, however, Problem Questions are not strongly linked to sales success. There’s no evidence that by increasing your Problem Questions you can increase your sales effectiveness.

The ratio of Situation to Problem Questions asked by salespeople is a function of their experience. Experienced people ask a higher proportion of Problem Questions.

If you can’t solve a problem for your customer, then there’s no basis for a sale. But if you uncover problems you can solve, then you’re potentially providing the buyer with something useful.

Problem Questions and Experience

To the inexperienced salesperson, even the “safe” Situation Questions seem to make the buyers impatient. Why would we want to risk upsetting them further with potentially offensive questions about problems? However, in most salespeople’s career, they come to a time when they find themselves spending the majority of their time with a customer asking Problem Questions.

Problem Questions in the Larger Sale

In larger sales, it’s Problem Questions that provide the raw material on which the rest of the sale will be built.

A Harder Question

Why should Problem Questions be so much more powerful in smaller sales than in large? Research showed that of 646 small sales calls, the level of Problem Questions were found to be twice as high.

However, the purpose of Problem Questions is to uncover Implied Needs. Implied Needs, as we saw in Chapter 3, don’t predict success in larger sales. Therefore, if Implied Needs don’t predict success in larger sales, neither should Problem Questions.

An Interesting Exception

Rackham highlights experiments carried out by Masaaki Imai, president of the Cambridge Corporation. These experiements studied the link to Problem Questions and success of larger sales in Japan. It is often unacceptable to ask about problems of business people in Japan.

Imai found that there is a powerful link between Problem Questions and success in the larger sale in the Japanese culture.

Implication Questions

In small sales you can be very successful if you uncover problems and then demonstrate that you can solve them.

In larger sales, however, it’s clearly not sufficient to uncover problems and offer solutions.

In terms of the value equation the problem won’t be big enough to balance the high cost of solving it.

It’s here that Implication Questions become so important to success.

The central purpose of Implication Questions in larger sales is to take a problem that the buyer perceives to be small and build it up into a problem large enough to justify action.

Implication Questions are a good indicator of success.

It is possible to be successful in small sales without Implication Questions.

Professionals Often Sell Better than They Realize

Many professional people, particularly those who have to ask a lot of diagnostic questions as part of their work, can quickly and easily learn to use Implication Questions to help them sell.

Where Implication Questions Work Best

Implications are the language of decision makers, and if you can talk their language, you’ll influence them better.

A Potential Negative

By definition, Implication Questions make customers more uncomfortable with problems. Sellers who ask lots of Implication Questionsmay make their buyers feel negative or depressed.

Is there some way to get the benefit of making a problem more acute without risking the penalties of depressing your customer?

Need-Payoff Questions

To develop Implied Needs into Explicit needs, Huthwaite found that seller’s use two types of questions. First, Implication Questions to build the problem up. Then, Need-payoff Questions to build up the value or usefullness of the solution.

Typical examples of Need-payoff Questions:

Is it important to you to solve this problem? Why would you find this solution so useful? Is there any other way this could help you?

What’s the pyschology of Need-payoff Questions? Two things:

They focus the customer’s attention on the solution rather than on the problem. They get the customer telling you the benefits.

Need-payoff Questions create a postive effect. This is one reason Huthwaite found that they are particularly linked to success in dealing with existing customers.

Need-Payoff Questions Reduce Objections

When you present your solution, you run the risk that the customer will focus on the areas you don’t solve rather than on those you do.

So how can you gain the customer’s acceptance that your solution is worthwhile, even though it may not solve every part of the problem? Use Need-payoff Questions. If you can get the customer to tell you the ways in which your solution will help, then you don’t invite objections.

Need-Payoff Questions Rehearse the Customer for Internal Selling

In larger sales a major part of the selling–perhaps most of it–will be done by your internal supporters while you’re not there. What’s the best way to rehearse customers so that they sell effectively for you?

Need-Payoff Questions

In summary, Need-payoff Questions are important because they focus attention on solutions, not problems. And they make customers tell you the benefits. Need-payoff Questions are particularly powerful selling tools in the larger sale because they also increase the acceptability of your solution. Equally important, success in large sales depends on internal selling by customer of your behalf, and Need-payoff Questions are one of the best ways to rehearse the customer in presenting your solutions convincingly to others.

The Difference between Implication and Need-Payoff Questions

Both Implication and Need-payoff Questions develop Implied Needs into Explicit Needs, and because they have a similar purpose, it’s easy to confuse them.

Quincy’s Rule – (named after the 8 year old son of a Huthwaite team member who discovered it).

Implication Questions are problem-centered–they make the problem more serious–and that’s why they are “sad”.

Need-payoff Questions are solution-centered–they ask about the usefullness or value of solving a problem–and that’s why they are “happy”.

Back to Open and Closed Questions

In experienced seller need to understand that the power of a question lies in whether it’s asking about an area psychologically important to the customer–not whether it’s open or closed.

The SPIN Model

Asking questions that are important to the customer is what makes the SPIN model so powerful. Its questioning sequence taps directly into the psychology of the buying process.

Treat the SPIN model as a guideline not a formula.

In summary, Huthwaite’s research shows that successful salespeople use the following questioning sequence:

1. Initially, they ask Situation Questions to establish background facts. But they don’t ask too many, because Situation Questions can bore or irritate the buyer.

2. Next, they quickly move to Problem Questions to explore problems, difficulties, and dissatisfactions. By asking Problem Questions, they uncover the customer’s Implied Needs.

3. In smaller sales it could be appropriate to offer solutions at this point, but in successful larger sales the seller holds back and asks Implication Questions to make the Implied Needs larger and more urgent.

4. Then, once the buyer agrees that the problem is serious enough to justify action, successful salespeople ask Need-payoff Questions to encourage the buyer to focus on solutions and to describe the benefits that the solution would bring.

SPIN isn’t new and unexpected. Its strength comes from putting a simple and precise description to a complex process. Consequently, it helps you see what you’re doing well and pinpoint areas where you need more practice.

How to Use SPIN Questions

To begin, recognize that your role is that of a problem solver.

Here is a simple technique to help you plan your call strategy and questions:

Before the call, write down at least three potential problems which the buyer may have and which your products or services can solve.

Then write down some examples of actual Problem Questions that you could ask to uncover each of the potential problems you’ve indentified.

Here’s a simple way to help you plan Implication Questions.

How to Plan Implication Questions

1. Write down a potential problem the customer is likely to have.2. Then ask yourself what related difficulties this problem might lead to, and write

these down. Think of these difficulties as the implications of the problem–and be especially alert for those implications which reveal the problem to more severe than it may originally have seemed.

3. For each difficulty, write down the questions it suggests.

Good questions won’t just spring into your mind while you’re talking with a customer. Unless you plan your questions in advance, you won’t think of them during the call.

Using Need-Payoff Questions Effectively

Let’s look at when not to ask Need-payoff Questions and then at how to increase our skills in asking them at the right point in the call.

Avoid Need-Payoff Questions Early in the Call.

Don’t ask Need-payoff Questions before you’ve identified the customer’s problems.

Avoid Need-Payoff Questions Where You Don’t Have Answers

The worst point to ask a Need-payoff Question is when the customer raises a need you can’t meet. Conversely, the best point is when you can meet the need. However, this is when most people are unlikely to ask them.

Practicing Effective Need-Payoff Questions

Here’s an example of a simple excercise that helps you practice Need-payoff Questions:

1. Get a friend or colleague to help you. The person you choose needn’t know anything at all about selling.

2. Choose a topic about a need that you believe the other person has.3. Ask Need-payoff Questions to get the other person talking about the benefits of

the topic under discussion.

When you try this excercise, notice two things about it:

1. As in real life, it builds up noticeable enthusiasm in your “customer”. The power of Need-payoff Questions is often visible in these simple practice demonstrations. Watch for it.

2. Unlike Implcation Questions, which tend to be specific to a particular customer problem, Need-payoff Questions have wide generality.

o Why is that important?o How would that help?o Would it be useful if…?o Is there any other way this could be helpful to you?

Giving Benefits in Major Sales

In this chapter, Rackham shows what Huthwaite’s research found about the Demonstrating Capability stage.

Features and Benefits: The Classic Ways to Demonstrate Capability

Basics of Features and Benefits

Features

Facts, data, or information about your product or services. They are unpersuasive.

Huthwaite’s research found that:

The level of Features is slightly higher in unsuccessful calls. Thier difference is small enough to conclude–Features are nuetral.

In small sales there’s a slight positive relationship between the use of Features and call success.

In larger sales, Features have a negative effect when used early in the call and a neutral effect when used later.

Users respond more positively to Features than do decision makers. In the middle of very complex selling cycles of technical products, the customer

sometimes develops a “Feature appetite”. When this happens, the customer demands considerable product detail and may respond positively to Features. It’s at this stage of the selling cycle that technical experts, systems analysts, and other sales-support people often have a positive impact on the customer.

Generally, Huthwaite’s work found that, as writer’s have been saying for 50 years, Features are low-power statements that do little to help you sell. It’s beeter to use Benefits.

What’s a Benefit?

When Huthwaite began to investigate Benefits, no two writer’s on selling seemed to have the same definition of a Benefit.

Which Definition is Right?

Huthwaite’s research team set out to test which definition of Benefit had the most positive impact on customers. After testing several definitions, Huthwaite chose two for their research test:

Type A Benefit. This type shows how a product or service can be used or can help the customer.

Type B Benefit. This type shows how a product or service meets an Explicit Need expressed by the customer.

At first sight these two definitions of a Benefit seem very similar. However, their effect on customers is dramatically different. If you assume the customer has a need for your solution and state the Benefit, it is a Type A Benefit. If the customer states a problem and you explain the Benefit of your product or service, this is still a Type A Benefit. This is because the customer has simply given you an Implied Need, not an Explicit Need.

How Important is the Difference?

Huthwaite’s research found that the Type A Benefit is quite strongly related to success in smaller sales but is only slightly related to success in larger sales. In contrast, the Type B Benefit is very strongly related to success in all sizes of sales.

Huthwaite put more descriptive labels on the two types of Benefits in order to avoid confusion in their research. For the rest of this chapter:

Type A Benefit is referred to as an “Advantage“.

Type B Benefit is referred to as a “Benefit“.

Thus, there are three behaviors that can be used in Demonstrating Capability.

1. Features2. Advantages3. Benefits

The Relative Impacts of Features, Advantages, and Benefits

To make a Benefit, you must have an Explicit Need.

Benefits and Call Success

Huthwaite compared the level of Benefits in 5000 calls with the outcome of each call. They found that Benefits were significantly higher in calls leading to Orders and Advances. In contrast, the level of Advantages was not significantly different in successful and unsuccessful calls.

Features, Advantages, and Benefits in the Longer Selling Cycle

Huthwaite measured the effects of sales behaviors, (Features, Advantages, and Benefits), at different points in the selling cycle.

Features had a low impact on the customer throughout the selling cycle.

Early in the cycle, particularly during the first call, Advantages had a moderately good statistical relationship to call success. As the cycle progressed, Advantages had a decreasing effect on the customer until, as the end of the cycle approached, they were no more powerful than Features.

Why Do Advantages Run Out of Steam?

There are three possibly reasons:

1. At first meeting, the customer expects to hear about the product rather than discuss needs.

2. The seller is so enthusiastic that they jump right into Advantages.3. Advantages, unlike Benefits, have no link to the customers Explicit Needs.

Advantages are less powerful than Benefits all through the selling cycle.

Selling New Products

One area consistently handled badly by both the inexperienced and experienced salespeople is the new-product launch.

This can be explained in terms of Features, Advantages, and Benefits.

The Bells-and-Whistles Approach

The problem lies in how the product is introduced to the sales team. When launched, the marketing people gather all the sales managers and sales team to present this new product with all it’s Features and Advantages. With all the excitement generated, even the most experienced sales people speak in terms of Features and Advantages like they were explained to them.

The Problem-Solving Approach

Based on Huthwaite’s research, many of their multi-national clients now use a different appraoch to the new-product launch. Instead of giving Features and Advantages when they announce a new product, they concentrate on explaining the problems the product solves.

Demonstrating Capability Effectively

Rackham points out three main practical points in this chapter that will help you demonstrate your capability more effectively in larger sales:

1. Don’t demonstrate capabilities too early in the call. It’s important in larger sales to develop Explicit Needs–by using Implication and Need-payoff Questions–before you offer solutions.

2. Beware Advantages. Don’t let previous training mislead you. In larger sales, the powerful statements are those which show that you can meet Explicit Needs.

3. Be careful with new products. The first thing to ask with any new product is, “What problem does it solve?”. When you understand the problem it solves, you can plan SPIN questions to develop Explicit Needs.

Preventing Objections

Rackham pointas out the following about Objection Handling:

Objection Handling is a much less important skill than most training makes it out to be.

Objections, contrary to common belief, are more often created by the seller than the customer.

In the average sales team, there’s usually one salesperson who receives 10 times as many objections per selling hour as another person in the same team.

Skilled people receive fewer objections because they have learned objection prevention, not objection handling.

Linda Marsh carried out some correlation studies to check whether there are statistically significant links between Features, Advantages, and Benefits and the most probable responses they produce from customers. She discovered that Features, Advantages, and Benefits each produce a different behavioral response from customers.

Features and Price Concerns

Customers are most likely to raise price concerns in calls where the seller gives lots of Features.

Too Many Features: A Case Study

Rackham highlights a study in which Huthwaite was recruited to help a major U.S. based multinational corporation solve a problem. Their Japanese competition had been taking more and more of the market share especially on their low-end product line.

Rackham showed the V.P. of Sales how to treat the cause of their problem. They retrained the salespeople, recruited from the competition, in SPIN questioning techniques so that they could use a high-Benefits style. As a result, their sales increased, price objections dropped, and the price issues were soon forgotten.

Treating Symptoms or Treating Causes?

Curing a selling problem, just like curing a disease, rests on finding and treating the cause rather than the symptoms.

If the customer’s price concern is the symptom, the cause may very well be giving too many Features.

Advantages and Objections

Perhaps the most fascinating of the links that Linda Marsh found is the strong relationship between Advantages and objections. Advantages create objections–and this is one reason why they are poorly linked to success in the larger sale.

From Huthwaite’s research, objections are a more likely response than any other buyer behavior when given an Advantage.

The recurring sequence of behaviors found in this research was:

Problem Question / Implied Need / objection

The buyer objected to the cost because the seller did not build up the problem enough to tip the cost/value scale.

Back to Symptoms and Causes

If a saleperson is receiving too many objections, you could teach objection-handling. However, the better alternative would be to teach her how to build sufficient value before offering solutions. This is the cause. Obections are the symptom.

The Cure

Through implementation of the Spin model, sellers can use Implication and Need-payoff Questions to build value before presenting a solution. This prevent objections. Objection prevention turns out to be a superior strategy to objection handling.

Objection Prevention: A Case Study

Rackham highlights a study in which Huthwaite trained a portion of a company’s sale staff in objection prevention. The study brought Rackham to two conclusions:

It confirms that the best way to handle objections is through prevention. Treat the cause, not the symptom.

Notice that our training didn’t prevent objections completely.

There will always be ligitimate objections, no objection prevention can prevent them. However, objections can be cut by more than half by using the SPIN behaviors to build value.

The Sales-Training Approach to Objections

It’s a comforting myth for trainers to tell inexperienced salespeople that professionals welcome objections as a sign of customer interest, but in reality an objection is a barrier between you and your customer. However skillfully you dismantle this barrier through objection handling, it would be smarter not to have created it in the first place.

Benefits and Support/Approval

Linda Marsh’ study found that the most positive relationship to emerge was the strong link between giving Benefits and receiving expressions of approval or support from customers. Unless the customer says, “I want it”, you can’t give a Benefit. It is no wonder that customers are most likely to express approval when you show them you can give them something they want.

Objection Handling versus Objection Prevention

The basic suggestion in this chapter is that objection-handling strategies are much less successful in the larger sale than objection-prevention strategies, where the seller first develops value using Implication and Need-payoff Questions before offering capabilities.

Preventing Objections from Your Customers

Here is two sure signs that you are getting unnecessary objections that can be prevented by better questioning:

1. Objections early in the call. Most objections are to solutions that don’t fit needs. If you are getting objections early in the call, it probably means you have been offering solutions prematurely instead of asking questions. There’s an easy cure: Don’t talk about solutions until you’ve asked enough questions to develop strong needs.

2. Objections about value. If the customer expresses that they don’t think your product or service is worth the money or effort, it’s a good sign that you haven’t built enough value. The solution lies in better needs development, not in objection handling.

Preliminaries: Opening the Call

In this chapter Rackham examines Preliminaries more closely. Huthwaite found this stage less exciting and did less research on it. However, the research still showed that

successful ways of opening the call in a small sale are different from those which work best as the size of the sale increases.

Huthwaite sought to answer the following:

Is it true that the first impression made in a sales call are crucial to it’s success? Do the openings that work in smaller sales work equally well in larger ones? Does one particular way work better than others to open a call?

Rackham notes that for these studies, Huthwaite only concentrated on opening first calls on new customers.

First Impressions

Although many older books on selling emphasize first impressions and appearance, there’s evidence to suggest that people notice far less in the early stages of an interaction than we might imagine. A reasonable standard of dress is probably sensible.

Rackham states his personal opinion on the First Impression: I no longer believe that first impressions can make or break your sales success in larger sales.

Conventional Openings

Since the 1920′s, salespeople have been taught that there are two successful ways to open a call:

Relate to the buyer’s personal interests. Make an opening benefit statement.

There is little evidence to show that these two methods help in large sales.

Relating to Personal Interests

Huthwaite’s research found that in rural areas, relating to personal interests would help your selling.

However, in larger urban stores, they found no relationship between success and reference to personal issues.

Rackham suspected this was due to a longer tenure in rural sales relationships.

He was not satisfied with this study.

Rackham talks about a colleague that works as a professional buyer. His colleague and other buyers express impatience with salepeople that waste time trying to relate to personal interests.

Rackham gives a general piece of advice:

Be careful not to overuse this method in larger sales.

The Opening Benefit Statement

Is it an effective way to open calls?

Rackham states that in short calls, there may well be value in this method. However, Huthwaite’s research found no relationship between the use of opening benefit statements and the success of the call.

Rackham states that it is important to vary the way you open a sales call. He highlights an experience when he was approached by an office product saleman. He was impressed with the salesman when he opened with a benefit statement and invited him back. On the next call, the salesman opened the call in exactly the same way. The sale was lost.

Rackham also lists two other potential dangers in opening a call with a benefit statement:

You may be forced to talk about product details too early in the sale, before you’ve had an opportunity to build value by using SPIN questions.

You may allow the buyer to ask questions and therefore allow him to take control of the discussion.

Neither are irreversible. Rackham states that this is not a good way to open the call.

A Framework for Opening the Call

Huthwaite’s research suggests that there is not one best opening technique, but there is a framework that successful people use.

Focusing on Your Objective

Examine your purpose. At the very least it is to get the customer’s permission to continue to the Investigating stage. In order to do this, you must establish:

Who you are Why you’re there (but not by giving product details) Your right to ask questions

Objective: Get the buyer to agree that you should ask questions. Establish your role as the seeker of information and the buyer’s role as the giver.

Making Your Preliminaries Effective

Preliminaries don’t play a crucial role in the larger sale. Be concerned about these three points.

1. Get down to business quickly.2. Don’t talk about solutions too soon.3. Concentrate on questions.

Turning Theory into Practice

One of Rackham’s favorite words: Entelechy

def. the becoming actual of what was potential–turning something into practical usefulness as opposed to theoretical elegance.

It is the subject of this cahpter.

Improving your skills is hard work; there’s no instant formula for better selling.

The Four Golden Rules for Learning Skills

How can you learn any skill efficiently and with minimum pain?

Stick by four simple rules.

Rule 1: Practice Only One Behavior at a Time

Mr. Rackham met Tom Landry on a plane and asked him which one principle was most important in learning a new skill. Landy was quick to say, “Work on one thing at a time and get it right.”

Start by picking just one bahavior to practice. DOn’t move on to the next until you’re confident you’ve got the first behavior right.

Rule 2: Try the New Behavior at Least Three Times

The first time you try anything new, it’s bound to feel uncomfortable.

The new skill needs to be “broken in.”

Never judge whether a new behavior is effective until you’ve tried it at least three times.

Rule 3: Quantity Before Quality

Huthwaite’s studies have consistently shown that the fastest way to learn a new sales behavior is through using a quantity method.

When you’re practicing, concentrate on quantity: use a lot of the new behavior. Don’t worry about quality issues, such as whether you’re using it smoothly or whether there might be a better way to phrase it. Those things get in the way of effective skills learning. Use the new behavior often enough and the quality will look after itself.

Rule 4: Practice in Safe Situations

If you’ve just finished Rackham’s book (or this outline) and you’re about to visit your most important account, then forget everything he’s written.

Always try out new behaviors in safe situations until they feel comfortable. Don’t use important sales to practice new skills.

A Summary of the Call Stages

Four Stages of a Sales Call

Preliminaries Investigating Demonstrating Capability Obtaining Commitment

Preliminaries (Chapter 7)

The opening techniques suggested by traditional sales training:

1. relating to the buyer’s personal interests2. opening with a benefit statement

should be used with caution.

Investigating (Chapter 4)

The SPIN sequence instead of traditional open and closed questions develop customer needs best.

Situation Questions Problem Questions Implication Questions Need-payoff Questions

Spin isn’t a rigid formula. To be effective, it must be used flexibly.

Demonstrating Capability (Chapter 5)

A Benefit in this right shows how your product or service meets an Explicit Need expressed by the customer.

Obtaining Commitment (Chapter 2)

The simplest closing technique is the most effective:

Check that you’ve covered the buyer’s key concerns. Summarize the Benefits. Propose an appropriate level of commitment.

A Strategy for Learning the SPIN Behaviors

Huthwaite has found the following four pieces of implementation advice very helpful.

Focus on the Investigating Stage

If you know how to develop needs–to get your customers to want the capabilities you offer–then you’ll have no problem showing Benefits or Obtaining Commitment.

Develop Questions in the SPIN Sequence

1. Decide whether you are asking enough questions. If you are telling rather than asking, start by just asking more questions.

2. Next plan to ask at least 6 Problem Questions per call. Focus on quantity, not quality.

3. Once you are satisfied with your abiliity to uncover customer problems. Carefully plan your Implication Questions. Reread the example transcript in Chapter 4 and substitute your own problem in.

4. Finally, when you are comfortable with all the above, start into Need-payoff Questions. Try to not tell the customer the Benefits of your product or service. Try to get them to tell you the Benefits.

Analyze Your Product in Problem-Solving Terms

Instead of what Features and Benefits your product or service offers, think of the problem it solves.

Plan, Do, and Review

The most important lessons come from the way you review the calls you make. After each call, ask yourself such questions as these:

Did I achieve my objectives? If I were making the call again, what would I do differently? What have I learned that will influence future calls on this account? What have I learned that I can use elsewhere?

Rackham says that of the salepeople he’s observed, the most successful do two thing:

1. Make it a point to reveiw every call.2. Realize the importance of getting the details right.

Final Words

Rackham pointedly states that he has learned that sales success is not in generalities as he first thought.

Increasingly our research has shown that success is constructed from those important little building blocks called behaviors. More than anything else, it’s the hundreds of minute behavioral details in a call that will decide whether it succeeds.

Rackham quotes William Blake:

He who would do good to another must do it in Minute Particulars.

General Good is the plea of the scoundrel, hypocrite, and flatterer;

For Art and Science cannot exist but in minutely organized particulars.

Rackham urges you to use the results of Huthwaite’s research to examine, develop, and improve the minute particulars of your selling skills.

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Rackham has much more in the Appendices of this book. He includes much of the research referenced in the body of his work. He commends anyone who reads it. Rackham says that he finds the appendices the most exciting part of the book: the PROOF.

I won’t include them here due to time constraints. However, they are quite interesting. This book is well worth your time and money. Quite frankly, it is worth having in your personal library as a reference tool. I have outlined the book for those salespeople who don’t have time to read it fully at present, but wish to learn the principles set forth in it. I will advise, to fully appreciate this book…you might consider studying it as opposed to briefly reading it.