Spin Selling by Neil Rackham

Neil Rackham is the founder of the Huthwaite Research group, a global research and consulting firm. Neil has studied the art of selling his entire career and, by measuring and recording thousands of sales-related data points, has turned selling into a science. The book is great for those that would like to learn scientifically-proven methods to improve their sales skills.

**Disclaimer: All material on this page is taken directly from Neil Rackham’s book, SPIN Selling. All rights belong to Neil Rackham, Huthwaite Inc, and the McGraw-Hill Book Company.**

I have summarized what I believe to be the key points in the book and I have bolded the sections that had the most impact on me. Share the quotes that resonated most with you in the comments section so that others can see!

Four Stages of a Sales Call

Preliminaries: The warming-up events at the start of the call.
Investigating: Finding out facts, information and needs.
Demonstrating Capability: Showing that you have got something worthwhile to offer.
Obtaining Commitment: Gaining an agreement to proceed to a further stage of the sale.

SPIN Method

Situation Questions
1. At the start of the call, successful people ask data-gathering questions about facts and background. Although situation questions have an important fact-finding role, successful people don’t overuse them because too many can bore or irritate the buyer.
2. Successful salespeople ask fewer situational questions. Each one they ask has a focus or purpose.
3. Examples:
  1. “How long have you had your present equipment?”
  2. “Is it purchased or leased?”
  3. “Could you tell me about your company’s growth plans?”
Problem Questions
1. Explore problems, difficulties, and dissatisfaction in areas where the seller’s product can help.
  1. Examples:
    1. “Is this operation difficult to perform?”
    2. “Are you worried about the quality you get from you old machine?”
Implication Questions
1. Implication questions take a customer problem and explore its effects or consequences. Implication questions help successful seller’s understand a problem’s seriousness or urgency.
2. The central purpose of implication questions is to take a problem that the buyer perceives as small and build it up into a problem large enough to justify action.
3. However, by definition, these questions make customer more uncomfortable with their problems. Sellers who ask lots of implication questions may make their buyers feel negative or depressed.
  1. “How will this problem affect your future profitability?”
  2. “What effect does this reject rate have on customer satisfaction?”
4. Need-Payoff Questions
  1. They get the customer to tell you the benefits that your solution could offer.
  2. They focus the customer’s attention on the solution rather than on the problem. This helps create a positive problem-solving atmosphere where attention is given to solutions and actions, not just problems and difficulties.
  3. If you can get the customer to tell you the ways in which your solution will help, then you don’t invite objections.
  4. As the size of the decision grows, the more people become involved. Need-Payoff Questions are particularly effective with influences who will present your case to the decision maker.
  5. Need-Payoff Questions concentrate on the area that buyers understand best: their own business-and how it would be helped by the action you are proposing.
  6. Implication questions are problem-centered while need-payoff questions are solution-centered.
    1. “Would it be useful to speed this operation by 10 percent?”
    2. “If we could improve the quality of this operation, how would that help you?”

SPIN Method in Action

Initially, ask Situational Questions to establish background facts. But don’t ask too many because they can bore or irritate the buyer.
Next, quickly move to Problem Questions to explore problems, difficulties, and dissatisfactions. By asking Problem Questions, they uncover the customer’s Implied Needs.
You should now move forward by asking Implication Questions to make the Implied Needs larger and more urgent.
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.

Recognize that your role in a sales call is that of a problem solver. The more clear you can be about the problems you can solve, the easier it is to ask effective questions during the discussion.

How to Prepare for your Call

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

Then ask yourself what related difficulties this problem might lead to. Think of these difficulties as the implications of the problems and be especially alert for those implications which reveal the problem to be more severe than it may originally have seemed.

Standard Closes

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.

Assumptive closes
1. Assuming that he sale has already been made.
  1. Asking “Where would you like it delivered?” before the customer has agreed to buy
2. Alternative Closes
  1. Asking “Would you prefer delivery on Tuesday or Wednesday?” before the customer has made a purchasing decision
3. Standing-room-only closes
  1. “If you can’t make a decision right now, I will have to offer it to another customer who is pressing to buy it.”
4. Last-chance sales
  1. “The price goes up next week, so unless you buy now…”

Rackham’s research suggests that closing techniques are both ineffective and dangerous in a large sale.

Closing is a method of putting pressure on the customer and the larger the sale, the more negatively people generally react to pressure. By forcing the customer into a decision, closing techniques speed the sales transaction.

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.

It was clear from Rackham’s studies that closing is less effective as the size of the decision increases.

Defining Sales Success

It is important to define success in larger sales prior to interacting with your customer.

Success in a simple sale has two outcomes:

Order (success)
No-Sale (failure)

Success in larger sales has four possible outcomes:

Order (success)
Advance (success)
1. Where an event takes place, either in the call or after it, that moves the sale forward toward a decision.
  1. A customer’s agreement to attend an off-site demonstration
  2. A clearance that will get you in front of a higher level decision maker
  3. An agreement to run a trial or test of your product
  4. Access to parts of the account that were previously inaccessible to you.

Continuation (failure)
1. Where the sale will continue but where no specific action has been agreed upon by the cutomer to move it forward. These calls don’t result in an agreed action, yet neither do they involve a “no” from the customer.
  1. “Thank you for coming. Why don’t you visit us again the next time you are in the area.”
  2. “Fantastic presentation, we are very impressed. Let’s meet again some time.”
  3. “We liked what we saw and we will be in touch if we need tot take things further.”

No-Sale (failure)

In your call planning, always include objectives that result in specific action from the customer – objectives like “To get her to come to a demonstration” or “to get an introduction to the planning department.” This is a great way to train yourself to look for an advancement opportunity during your discussion with the customer.

Obtaining Commitment: Four Successful Actions

Give Attention to Investigating and Demonstrating Capability

The most successful sellers put their main effort into the investigating stage, which involves asking questions and collecting data about the customer, their business, and their needs. As a result of their questions they asked, their customer came to realize that they had an urgent need to buy. If you can convince buyers that they need what you are offering, then they will often close the sale for you.

2. Check that key concerns are covered

Less successful sellers go ahead and close, ignoring the possibility that their customers may still have unanswered questions. Rackham found that sellers who were most effective in obtaining commitment from their customers would invariably take the initiative and ask the buyer whether there were any further points or concerns that needed to be addressed.

Summarize the Benefits

Successful salespeople pull the threads together by summarizing key points of the discussion before moving to the commitment. Summarize key points-especially benefits!

Purpose a Commitment

The more natural and effective way to bring a call to a successful conclusion is to suggest an appropriate next step to the customer. The commitment proposed is the highest realistic commitment that the customer is able to give. Successful sellers never push the customer beyond achievable limits.

Example: “Then I might suggest that the most logical next step would be for you and your accountant to come and see one of these systems in operation.”

Needs

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

The crucial step in the development of a need is for the problem to be translated into a want, a desire, or an intention to act.

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

Implied Needs: Statements by the customer of problems, difficulties and dissatisfactions.

Examples:

“Our present system can’t cope with the throughput.”

“We are not satisfied with the speed of our existing process.”

Explicit Needs: Specific customer statements of wants or desires.

Examples:

“We need a faster system.”

“I would like to have a backup capability.”

Very successful people, often without realizing they are doing so, treat implied needs in a very different way than explicit needs.

In large sales, there is no relationship between the number of Implied Needs the seller uncovered and the success of the call. What matters in the larger sale isn’t the number of Implied Needs you uncover, but what you do with them after you have uncovered them.

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

Features vs. Benefits

Features:

-Have a negative effect when used early in the call and a neutral effect when used later.

-In small sales, features increase price sensitivity. By listing all the features, the customer comes to expect a higher price.

-Are low power statements that do little to help you sell. It is better to use benefits than features in large sales.

There are two types of benefits:

Type A Benefit: Shows how a product or service can be used or can help the customer.
1. Type A stands for Advantage
  1. “The automatic feed will save you time.”
  2. “It is quieter than the competition’s machine.”
2. Type B Benefit: Shows how a product or service meets and Explicit Need expressed by the customer.
  1. Type B stands for Benefit
    1. “You stated you needed immediate delivery, we can deliver it now.”
    2. “This will give you the faster speed you want.”

Advantages are very quickly forgotten after the call and their effect is temporary. Benefits continue to have an impact between calls because their link to Explicit Needs helps customers remember them.

Cost Benefit Analysis

Anyone making a decision to purchase must balance two opposing factors. One of these factors is the seriousness of the problems that they purchase would have. The other is the cost of the solution. If the seriousness of the problem outweighs the cost of solving it, there is a basis for a successful sale.

How to Sell New products effectively:

List the problems the product solves and the needs it meets
Identify a list of accounts where this problem could exist
Create Problem, implication, and need-payoff questions you can ask when you visit the accounts.

Preventing Objections

Objections early in the call
1. If you are getting a lot of objections early in the call, it probably means that instead of asking questions, you have been prematurely offering solutions and capabilities. Do not talk about solutions until you have asked enough questions to develop strong needs.
Objections about value
1. You have not succeeded in building a strong need. The solution lies in better needs development, not in objection handling. Cut down on the use of features and concentrate on asking Problem, Implication and Need-Payoff Questions.

How to Open the Call

The more senior person you are selling to, the more they feel their time is at a premium, and the more impatience you are likely to generate if you dwell on non-business areas.

If you make an opening benefits statement (“Hello Mr. Smith, my name is Larry and I can save you 10% on your water bill with my energy efficient water heater!”), you can trap yourself in two ways:

You are forced to talk about product details too early in the sale, before you have had an opportunity to build value by using SPIN questions.
You allow the buyer to ask the questions about the solution you proposed and have therefore allowed them to take control of the decision.

You want customers to agree that it is legitimate for you to ask them some questions. In order to do this, you must establish:

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

Quick Recap:

Get down to business quickly
Do not talk about solutions too soon
Concentrate on questions

The Four Golden Rules for Learning Skills

Practice only one behavior at a time
1. Start by picking just one behavior to practice. Do not move on to the next until you are confident you have got the first behavior right.
Try the new behavior at least three times
1. Never judge whether a new behavior is effective until you have tried it at least three times.
Quantity before quality
1. Do not worry about quality issues, such as whether you are using it smoothly or whether there might be a better way to phrase it. Use the new behavior often enough and the quality will look after itself.
Practice in safe situations
1. Always try out new behaviors in safe situations until they feel comfortable. Don’t use important sales to practice new skills.

Random Quotes from SPIN Selling

The building of perceived value is probably the single most important selling skill in larger sales.

Most large sales involve an ongoing relationship with the customer. Partly, this is because major purchases usually require some post-sale support – which means the buyer and seller must meet one or more times after the same.

In a small sale it is relatively easy to separate the seller from the product. But with the larger decision, seller and product become much harder to separate.

Customers get more cautious as the decision size increases. Purchase price is one factor that increases caution, but fear of making a public mistake may be even more important.

There is no about it, questions persuade more powerfully than any other form of verbal behavior.

The more you ask questions, the more successful the interaction is likely to be.

We carried out several studies and were astonished to find that there is no measurable relationship between the use of open questions and closed questions. The power of a question lies in whether it is asking about an area psychologically important to the customer – not whether it is open or closed.

“I have never been a believer in losing because my objective is not to close the sale but to open a relationship.” – Hans Stennek