Saturday, November 5, 2011

Book of the Week: SPIN Selling by Neil Rackham

It's hard to believe that Neil Rackham's SPIN selling was written in 1988 and some of its most profound discoveries (especially #4 and #9 below) are still not being taught by sales trainers. I use the word "discoveries," because Rackham's book is unlike any other sales book ever written. Rackham is not a salesperson turned sales trainer. His background is in behavior psychology. While most sales books are written by retired sales people, giving their anecdotal perspectives on what does and doesn't work in selling, Rackham's book is the culmination of a huge research project. Rackham and his company actually follow reps on hundreds of sales calls to isolate trends in successful salespeople versus unsuccessful salespeople. SPIN Selling is a well-written, provocative telling of their findings.

Here are the top 10 takeaways that I believe every salesperson should know from this exhaustive research project:
  1. The traditional sales process only works in low-value sales. Rackham oultines the traditional sales process as: "opening the call, investigating needs, giving benefits, objection handling, and closing techniques." When the sales is simple and required a low investment, this simple process works--for example, in selling furniture, printers, electronics, perhaps even cars. In more complex sales--for example, major account business-to-business sales--this simple formula isn't sufficient.
  2. In major sales, you aren't just selling a product; you are selling a relationship. Rackham tells the story of a selfish, pushy overhead projector salesman that he did not like but bought from anyway because he knew that he would never have to see the salesman again. He then met another salesman the same day selling a new accounting software system--a more complex and more expensive product. While the salesperson was more refined than the previous one, he still seemed over-eager to get the sale. In this case, Rackham told him that he would have to think about it. The more involved the salesperson will be after the sale, the more important the relationship is to getting the sale.
  3. To improve selling, you have to improve the questions you are asking. Though you wouldn't know it from the title, SPIN Selling is a book about asking questions. Rackham's research primarily explores the type of questions successful and unsuccessful people ask throughout the sales call. His theory is that, by changing the type sequence of questions asked, you can alter the success of a sales call. Sure enough, he and his research team discovered a distinct pattern in questioning that was common in the calls of successful reps.
  4. Closing techniques are dangerous in complex sales. Rackham spends a great deal of time talking about the danger of using "closing techniques" such as the assumptive close ("you see that our product is right for you, so if you'll just sign right here..."), the standing-room-only close ("if you wait until next week, there may be a several month delay..."), and the alternative close ("would you prefer a month's trial installation or would it be better for your budget to buy outright..."). The prevailing theory of Rackahm's day (as well as today I believe) is that your success as a sales professional is directly proportionate to your ability to use as many of these techniques as possible. What Rackham and his team find, though, is that in complex sales, successful salespeople actually use fewer of these techniques than unsuccessful salespeople. Closing techniques in complex sales give prospects the impression that you are trying to trick them into buying and cause immediate distrust. One prospect, when a sales rep uses the "closes" I have listed above, ends the sales call with a closing technique of his own when he tells the rep, "I'm going to throw you out of my office. Tell me, would you and your friend in the corner prefer to go of your own accord, or would you like me to call security?"
  5. Great questions mirror the buying cycle of the customer. The problem with the questioning of the unsuccessful sales rep is that it reflects the sales process rather than the purchasing process. S.P.I.N. stands for "Situation questions," "Problem questions," "Implication questions," and "Need-payoff questions." These questions reflect the process a customer goes through when making a purchasing decision. First, they take account of their present situation. Then, they realize that there is a problem is some area. Next, they think about the negative effects the problem could have on their business. Finally, they evaluate the benefits of solutions. Traditional questioning jumps straight to benefits, without even bothering to discover if those "benefits" are relevant to the customer. SPIN selling walks the customer through the purchasing process in a manner with which they are more comfortable.
  6. Don't skip too quickly to selling the benefits of your product. When you go straight to selling the benefits of your product in a complex sale, the customer's trust dissipates. It becomes clear to them that you are only trying to get their money and do not truly care about their success. If you ask questions that follow the process identified above, though, trust is built as the customer comes to see that you are interested in their business and the problems they are having.
  7. The only effective benefits are those that meet explicit needs. Here, Rackham makes a profound point that I have not heard in any other piece of sales literature but that makes an incredible amount of sense intuitively. There is a distinction, he says, between advantages and benefits. Too often, sales people are selling advantages when they think they are selling benefits. Advantages are ways that a product or service generally helps all customers. Benefits, according to Rackham, are ways in which the product or service can help the specific customer being addressed. When selling benefits, most salespeople fail to connect them to the specific problems that customers are having; they tell instead how the product or service is intended to help most cusotmers. The problem is that customers only care about the benefits that are relevant to them. Great salespeople talk only about the benefits that relate to the explicitly stated needs of the customer being addressed.
  8. Salespeople are less likely to ask questions when selling new products. In discussing the selling problems with product launches, Rackham isolates an interesting trend. Salespeople have the tendency to oversell the features and advantages of new products or services. They get too excited and try to sell the customer on the novelty of the offering rather tha its usefulness to the customer. The problem is that the customers don't care whether or not it's new--they only whether or not it will solve their problems.
  9. Objections should be prevented rather than overcome. Flying in the face of conventional sales wisdom, Rackham's research proposes that receiving an objection is NOT a good thing. Traditional sales training says that an objection indicates interest. Therefore, the more times a customer objects, the greater interest they have in doing business with you. In his research, though, Rackham discovers that the most successful salespeople are met with the fewest objections. Why is this so? Because the successful salespeople frame the questions in such a sequence that it prevents the objection from occurring. Focusing on "objection-handling" creates an adversarial tone in the sales conversation and is more ineffective than is traditionally thougth to be the case. Focus should instead be on "objection-prevention."
  10. Opening the sales call is simply about getting permission to move forward. In Rackham's research, the sales calls with the highest levels of success were those that spent the least amount of time opening the call. Unsuccessful salespeople spent far too much time establishing rapport and engaging in small talk. The successful salespeople highlighted the purpose of the call, gained agreement from the prospect, and simply moved forward.

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