SPIN Selling Neil Rackham
Chapter 3: Customer Needs
In sales, a need is defined as a want or problem stated by the customer that the seller can address. Salespeople discover, develop, and address customer needs in the investigating stage of a call
This requires both questioning skills and an understanding of how customer needs develop.
Customer needs develop differently in small and large sales, and they require different sales approaches to gain commitment.
in a small sale, asking one or two problem questions that highlight a need may be enough to motivate the customer to buy a relatively inexpensive item immediately.
for a bigger-ticket purchase takes much longer to develop. A sales rep uncovers and “develops” the need by exploring a problem the product will address, and creating an urgency to address it.
Sales reps in major sales need special skills to help customers develop needs; the key is using SPIN questions.
Needs in Different-Size Sales
as sales get larger: Needs develop slowly. The buying decision involves multiple people. Needs are rational (although they can still have an emotional component, such as when a CEO wants the most impressive office). A bad decision can have serious consequences.
How Needs Develop
When you’re 100% satisfied with something—for instance, your laptop computer—you don’t feel a need for change. But when your satisfaction begins to erode, even to 99.9%, you have the beginning of a need.
So the stages of need development are:
The item you have is no longer 100% perfect. You feel a hint of dissatisfaction. You start noticing flaws. You realize you have problems with it. You want to change it—now.
In small sales, your mind can run through these stages quickly, or even instantaneously. In major sales, the process of developing a need that becomes a want can take months or years.
Implied and Explicit Needs
Implied needs are problems and frustrations expressed by the customer—for instance, “I’m not happy with the quality our press is producing,” or “Our system creates too much waste.”
Explicit needs are strong wants or desires expressed by the customer—for example, “We need a more efficient system,” or “We have to cut our procurement costs.”
the more implied needs a rep can uncover, the greater the chances of making a sale.
In these sales, implied needs are “buying signals,” or behavioral cues that the customer wants to buy; however, in large sales, this isn’t the case.
In a large sale, implied needs are a starting point requiring further development into explicit needs. The quantity of needs you uncover isn’t important; it’s how you develop them.
customers make buying decisions based on a value equation, in which they weigh the seriousness of their problem against the cost of the solution.
When the solution doesn’t cost much, weaker needs can tip the scale toward buying. But when the solution is expensive, the buyer must feel a much stronger need in order to be motivated to buy. She asks herself: is the problem big enough to warrant paying this much?
If the cost is high, but the need/problem is perceived to be small, there won’t be a sale. If the cost of the solution is low for the size of the problem, you’ll make a sale.
Thus in small sales where the price is lower (as with the first pocket calculator), implied needs are often enough to nudge the customer to buy—and the more implied needs you can uncover, the better your chances of selling.
in a major sale, you have to build the implied need into something bigger and more urgent—an explicit need—so that the size of the problem, as well as the risk the customer is taking, justifies the cost of your solution.
In small sales, both implicit and explicit needs predict sales success. A questioning approach that uncovers problems (implied needs) and provides an answer makes the sale.
However, in large sales, only explicit needs predict success. Reps need to use a more advanced questioning strategy to both uncover implied needs and convert them to explicit needs.
Buying SIgnals in the Major Sale
in small sales, implied needs are reliable buying signals (indications the customer wants to buy or advance the sale). The more often a customer agrees that he has a need/problem, the greater the probability of a sale.
in large sales, explicit needs are the buying signals. In assessing whether a call has been successful, experienced sales reps want to see explicit needs, while less experienced reps may count implied needs as indicating success. Needs development—making the customer’s problem so big that he has to act on it—is the critical selling skill in major sales.
Developing a Need
What did you become dissatisfied with? What first caused you to be dissatisfied? Once you realized a need/problem, how did it grow bigger in your mind? What were the factors that made it seem bigger than the way it started out? Were you happy with the result (either acting or not acting)? Why? What aspects of your personal experience in developing a need could apply to your next sales call?
Chapter 4: The SPIN Strategy
The four question areas of the SPIN strategy—Situation, Problem, Implication, Need-payoff—are the key to converting a customer’s implied needs into explicit needs in a large sale.
How long have you been in your position?” “Do you make buying decisions?” “What’s your company’s annual sales volume?” “What equipment do you use? How old is it?”
Situation questions are necessary in most sales, especially early on, because you need to understand the customer’s business.
Situation questions don’t contribute to success. In successful calls, reps ask fewer of these questions; in unsuccessful calls, they ask more.
Inexperienced reps use these questions more than experienced reps do.
Customers get annoyed when reps ask too many situation questions.
Situation questions can irritate because they benefit the seller, but do nothing for the customer, who gets tired of answering them and may see them as a waste of time
Some of the questions are necessary, but you can minimize the number by doing research ahead of time, so you don’t ask questions you could have answered yourself.
Problem questions are intended to reveal implied needs. They ask customers what their problems and frustrations are.
How is your current equipment working for you?
What are the shortcomings of your system?
Does your aging equipment create problems for you with quality or speed?
In all sales, problem questions impact success more than situation questions do.
In smaller sales, problem questions are a predictor of success. The more problem questions a rep asks, the more likely she’ll make a sale. When reps get training to ask problem questions in small sales, their sales jump.
In successful small sales, reps ask twice as many problem questions as reps do in unsuccessful small sales.
In larger sales, problem questions don’t have a major effect on sales success (discussed below).
when you uncover problems you can address, you have something relevant to offer the customer.
problem questions engage customers because you’re talking about something they’re interested in, as opposed to taking up their time with routine and possibly repetitive situation questions.
Problem Questions in Major Sales
in larger sales, once you uncover implied needs, you need to build them up into explicit needs, because the customer must perceive the need to be greater when the cost of solving it is greater.
Implication questions are a tool for building implied needs into explicit needs big enough to require action.
consequences of a seemingly small problem, making i
Could the limitations of your equipment be costing you new business? What effect does that have on quality? Do your equipment problems increase turnover, or make it more difficult to hire operators? Is this leading to increased costs?
Implication questions contribute strongly to success in larger sales. They increase the customer’s perception of value: when a problem seems big, your solution seems more valuable or worth the price. They’re more difficult for reps to ask than situation or problem questions because they challenge customers.
In small sales, after they’ve uncovered problems or implied needs, reps typically move on to offering a solution—which may be sufficient to make a sale.
However, problem questions aren’t enough in large sales where your solution is expensive.
For example, if you’re trying to sell a new machine costing $120,000, you could ask implication questions that emphasize the workaround costs of continuing to use the old system over time. It may be that because the old system is difficult to use, the customer has more turnover in operators. This leads to overtime, outsourcing, recruiting, and training costs, plus a loss of quality. When the customer factors in these costs, the problems of the older equipment appear much bigger—and a $120,000 solution starts to seem reasonable.
While implication questions emphasize the magnitude of the problem, need-payoff questions emphasize the value of your solution.
benefits of solving a problem using your solution. For example:
How would this help you? What would be the benefits of solving this problem? What makes this solution appealing to you?
Research shows that: In larger sales, need-payoff questions contribute strongly to success. By encouraging the customer to identify the benefits of your solution, these questions make your solution more appealing. Influencers who make your case to the decision-maker respond well to need-payoff questions. Customers rate sales calls with a lot of need-payoff questions as helpful and positive. Need-payoff questions contribute strongly to success in large sales where a good ongoing relationship is important.
Need-payoff questions have two psychological effects: They shift the customer’s attention to problem-solving or taking action. They engage the customer in identifying the benefits, or payoff, of what you’re offering. For example, if you asked, “How do you think a machine that’s twice as fast would help you?”, the customer might respond, “It would cut our overtime costs.”
In small sales, it’s usually easy for the customer to see how a product will solve her problem. For example, if her concern is protecting important company documents, a secure, fireproof cabinet is an obvious solution.
But in larger sales, the problems—for instance, poor productivity— are more complex. There may be multiple aspects, and your solution may address only one key aspect. You’ll have trouble making a sale if the customer focuses on the aspects your solution doesn’t address, and dismisses it altogether.
In large sales, where multiple people are involved in a buying decision, you have to depend on influencers to sell your solution to top management in your absence. Asking the influencer need-payoff questions will help him remember and advocate for the benefits of your solution. When the influencer identifies the benefits to his company in a conversation with you, he’s rehearsing for presenting them to his bosses. By participating in identifying the benefits, he’ll feel more confident and enthusiastic about your solution.
The SPIN Model in Action
In a nutshell, research indicates that successful salespeople: Ask situation questions, but not too many, to understand the customer situation. Ask problem questions to uncover implied needs. In smaller sales, reps may offer solutions next. But in larger sales, reps ask implication questions emphasizing the magnitude of the problem and the urgency of solving it. Reps ask need-payoff questions to get the buyer to identify benefits of the seller’s solution.
Practicing SPIN Questions
In planning a call, ask yourself, “What problems can I solve for this customer?” Write down at least three possible customer problems that your solution could address. Write down several problem questions you could ask to reveal each of the above problems.
Tips for Asking Need-Payoff Questions
Don’t ask need-payoff questions before you’ve developed the customer’s problems.
You have to develop and magnify needs before asking need-payoff questions.
Don’t ask need-payoff questions for which you don’t have the solution—that is, questions about a need your product or service doesn’t address.
The time to ask a need-payoff question is when the customer reveals a need you can meet
Practicing Need-Payoff questions
Why is this important or why does it matter? How would that help the situation? Would it be useful if …? How else could this help you? How much would it save if….?
Exercise: Weighing Value
they weigh the magnitude of their need or problem against the cost of the solution. Put another way, they ask themselves, “Is my problem or need big enough to warrant paying this much?”
Describe the problem that the purchase would have solved.
List the ways the purchase/solution could have benefited you.
Chapter 5: Presenting Benefits
This stage, also referred to as demonstrating capability, is where you present your solution. I
features are facts or characteristics about a product
Benefits are the ways features help the customer
research has shown facts may help slightly in small sales, but their impact is neutral in larger sales
Describes how a feature helps the customer. Saves the customer money Is a unique aspect of your solution that no one else offers Creates a motive to buy
A type-A benefit, which shows how a product/service can help generally (this is the most commonly taught benefit definition).
A type-B benefit, which demonstrates how a product/service meets an explicit need of the customer.
In smaller sales, using the type-A benefit contributed strongly to success; in large sales, it contributed only a little to success.
Using the type B-benefit—focusing on how the solution addresses explicit needs— contributed strongly to success in both small and large sales.
Benefits showhow a solution meets an explicit need of the customer. Examples are: “We have this in stock, so we can meet your need for immediate delivery,” “This machine will give you the greater speed you’re looking for,” “This feature saves energy, which gives you the cost savings you need.”
Effects of Advantages and Benefits
Advantages have a greater positive impact on small sales than large ones because they address implied needs rather than explicit needs, which you have to develop in a large sale to justify the high price. Offering solutions to implied needs isn't enough in larger sales.
Demonstrating Value Effectively
1) Don’t try to demonstrate the value of your solution before you’ve developed the customer’s explicit needs by asking implication and need-payoff questions. 2) Don’t confuse advantages with benefits. Sales models for smaller sales urge you to focus on general advantages (the word may be used interchangeably with benefits)—but remember, to succeed in large sales, you must develop a customer’s explicit needs and answer them with benefits specific to those needs. 3) Don’t get caught up in the hype surrounding new products. When presented with a new product to sell, ask yourself what problems it solves, then formulate SPIN questions to develop explicit needs the product can meet.
Chapter 6: Limiting Objections
Objections are prompted by the seller’s actions more often than they’re raised independently by the customer.
Inexperienced sales reps get more objections than experienced reps.
Experienced reps prevent objections rather than handling them.
1) Customer Response to Features
When the salesperson presents a lot of product features, customers often respond with concerns or objections to the price. In other words, emphasizing features increases price sensitivity.
This works if you’re selling a cheap product with a lot of features like a $10 watch. In fact, features have long been used to sell inexpensive merchandise because of their link to price sensitivity. The way it works is that when you list a lot of “amazing” features, the customer expects a high price and is pleasantly surprised and more inclined to buy when the price turns out to be low.
with high-end products, the price sensitivity created by listing features makes people less likely to buy; seeing the features makes them question whether it’s worth the price. That’s why an ad for a cheap watch lists dozens of features, while an ad for an expensive one omits features and instead creates an impression of style. When you’re presenting a lot of product features but the product isn’t selling, you don’t need training in handling objections—you need to stop emphasizing so many features.
2) Customer Response to Advantages
citing advantages—or showing how product features can help the customer—has a positive effect on small sales, but the effect diminishes as sales grow larger.
Research indicates that emphasizing advantages at the wrong time triggers customer objections.
Here’s how the sequence goes: the sales rep asks a problem question, the customer responds with an implied need, the seller cites an advantage—and the customer objects to the cost. From the customer’s perspective, his problem is minor compared to the seller's proposed solution. That's because the sales rep tried to show how her product’s features could help without first magnifying the customer’s implied need. The customer, using the value equation, didn’t feel his problem was worth the cost of the solution, and therefore he objected to the price. Had the sales rep first built up value of solving the problem, she’d have prevented the objection.
in small sales, where the cost of meeting an implied need is low, the seller doesn't need to build up the need, or value of the problem, to get a sale.
in large sales
When the size of the problem aligns with the cost of the solution, objections are less likely to come up.
Objections can never be eliminated entirely. Customers may have needs your product can’t meet or a competitor may offer a better product.
The key is to avoid triggering unnecessary objections because research indicates that the higher the percentage of objections in the customer’s response, the less likely your call will succeed.
3) Customer Response to Benefits
the more benefits sellers present—that is, the more they demonstrate how the solution addresses the customer’s explicit need—the more positively customers respond
The customer has expressed an explicit need or want. When you show how your product can give him what he wants (present a benefit), he’s naturally going to be happy.
Developing needs and value before you offer the benefits of your product forestalls objections,
What to Do If You Get a Lot of Objections
1) You get objections early in the sales call. This means that instead of asking questions as you should be, you’re probably jumping the gun by offering solutions and advantages. You need to ask enough implication and need-payoff questions to develop strong needs before you bring up solutions.
2) You get objections regarding value. If the customer is raising doubts about the value of your solution, you haven’t developed the problem or need enough to justify the solution. In this situation, the customer might say things like: “It’s too expensive,” “I don’t think a new system is worth the trouble,” or “We’re happy with the equipment we have.” You need to talk less about features, and focus on asking probing questions.
Exercise: Try the SPIN Sequence
Picture a customer you've met with or will meet with. What problem questions are most appropriate for this customer? How would you build these problems into implication questions? How would you develop the biggest problem into an explicit need? Now discuss the benefits of your solution, avoiding just features or advantages.
Today, price or other factors may be more important than personal loyalty.
deal with multiple sales reps, have little time or patience with chit chat. They prefer that salespeople get to the point.
Chapter 7: Opening the Call
Getting the buyer’s attention by starting with a benefit might be useful in small sales where calls may last only a few minutes
high-impact opening seems likely to be less useful in large sales, in which the call length could be 40 minutes or more.
using an opening benefit statement can get the rep into trouble, for instance by generating early objections.
An Opening Framework
first step is understanding your objectives in the warm-up or opening stage of a call.
you want the customer to agree to give you a hearing and answer your questions, so you can move into the investigating stage.
you need to specify: Who you are What you want (without delving into product details) Your legitimacy or right to ask questions
1) Connect with the buyer’s personal interests. This will help you establish a relationship quickly and increase your chances of success. So try to find something personal to talk about—for instance, if you see a golf trophy in the customer’s office, or a photo suggesting another hobby, comment on that.
2) Introduce a product benefit. The idea is to get the customer’s attention and interest with an emphatic benefit statement—for instance, “We understand that productivity is a big issue for managers like you—our product will dramatically increase your output.”
personal interests could work in small sales, it isn’t likely to help you in large sale
openings don’t play a critical role in large sales.
there are three important elements to an effective opening:
1) Get to the point of your visit quickly
Don’t spend too much time on a long wind-up. You don’t want to run out of time in the more important stages because you spent time making a lot of small talk at the beginning. You also don’t want to waste your customer’s time.
2) Don’t talk about solutions prematurely. As noted in the previous chapter, talking about solutions too soon can trigger objections and undermine your success. Discussing your solution early in the call also puts you in the position of answering questions about your product or services, when you need to quickly assume the role of questioner so you can develop needs.
3) Focus on asking questions. Remember that the opening isn’t the important part of the call; you want to move on to the investigating stage as soon as possible. Instead of worrying about how to open a call, spend your pre-call planning time working on questions to uncover and build needs.
Chapter 8: Implementing the SPIN Model
-- Reading books with ReadEra https://play.google.com/store/apps/details?id=org.readera&hl=en