High Tech Companies Summary - SPINselling1

Nice Ventures | Wallisellerstr. 114 | CH-8152 Zurich | Switzerland | Tel. +41 (0) 43 211 9681 | Fax +41 (0) 43 211 9682 | [email protected] | www.nice-ventures.com

SPIN Selling for large high-tech sales Part I: Why the things you learned in your sales course don’t work (and may even be counterproductive) for large sales (Summary of the book SPIN Selling by Neil Rackham)

Introduction SPIN selling is based on scientific research results. It delivers some very - at first sight - surprising news and shows that many of the sales strategies used by most sales gurus turn out to be simply wrong for large sales processes. A large sales or key account sales process is one where the amount paid by the customer justifies a longer evaluation and selection process by customers. As Business Executive comments: “The revolutionary findings, published here for the first time, will overturn a whole collection of hitherto accepted assumptions. The book also provides a set of simple and practical techniques (known as SPIN) which have been tried in many leading companies, resulting in a dramatic increase in sales.” All of the following assumptions on how to do selling prove to be completely wrong and ineffective for large sales. I am sure most of them are familiar to every reader, and used regularly by many, though counterproductively, it seems, in the case of large sales: • The saying goes that the best way to open a sales call is by relating to the buyer’s personal interest and

by making initial benefit statements. As it turns out, those opening methods have a doubtful success record in larger sales.

• Open questioning has been taught as the way to investigate the needs of your prospects. It now appears

that those questions don’t help in bigger sales. • Simply giving benefits, despite what everyone has been told, is not enough. It won’t work well for large

sales: A new type of benefit is needed for success. • Objection handling has been taught extensively in sales courses. The research shows that this is

completely useless for large sales. The important thing here is objection prevention – avoiding objections by all possible means.

• Closing techniques, and in particular closing as the number one skill a good sales person should possess,

turn out to be among the biggest errors taught in traditional sales courses. In large sales they simply don’t work.


All of the above methods only work in very simple low-cost small sales but fail in larger sales. What has been shown is that it is beneficial to organize the sales process in a strict sequence of four stages, even though in every sales situation they might be handled differently. One of these stages in particular has emerged as the most important for successful large sales. That is the Investigation Stage – not the Obtaining Commitment stage as you have so often been told. The four stages of a sales call 1. Preliminaries

This introduction phase has been highly overstated. Statements like: “the impression made in the first 2 minutes influences the outcome of the call” have been proven wrong.

2. Investigating This is the most important part in large sales selling as it turns out. Nevertheless, this is not so much a simple Q&A session as a smart way of leading customers to the point where they give the answers themselves.

3. Demonstrating capability In every sales call you must convince your customer that you have something to offer, whether this is done by a formal presentation or showing your product in action.

4. Obtaining commitment In large sales, as opposed to small sales, commitment can mean steps on the way to a purchase order. These can be, for example: attend a product demo; test the product; or get access to a higher-level decision maker. These intermediate steps are all advances. Each moves the customer towards the final decision. Here especially, classic closing techniques don’t work and can even hurt you.

Fig. 1: The four stages of a sales call. What is the most important stage? The immediate answer from the “well-trained” sales manager will be: Obtaining commitment, or closing stage, since this will make all the difference in the success of a salesperson. Well, the real answer is, no, it is not the closing but the Investigating phase that determines whether your calls are successful or not. Again, this is true for large sales. For small simple sales, clever closing techniques will determine whether you sell that little toy to the mother with the demanding kid or not. But typically in high-tech markets we are after the large sales. One extremely interesting outcome of the research conducted by the author’s group was the fact that open versus closed questions had no impact on the outcome of successful sales calls in large sales. This is also quite astonishing because literally everybody attending a sales training hears about the importance of using open-ended questions rather than closed questions to get the prospective customer more engaged, and at the same time to obtain more information.


As an outcome of the above mentioned research results the authors found a new method of questioning. As they found out in successful calls the questioning falls into sequence that they call SPIN. The SPIN sequence of questions is: • S ituation Questions • P roblem Questions • I mplication Questions • N eed-payoff Questions Those SPIN questions are used during the all-important Investigation stage of a successful large sales call. We will talk about them in all detail in Part II in the next Nice Ventures newsletter. Closing Success in Large sales Closing success also means different things in simple and large sales. In large sales one needs many advances over a longer period of time before finally moving on to the order placement. This requires many intermediate steps towards the final goal and many positive small commitments along the way, which are advances towards the final goal of a purchase order. The figure below shows the call outcomes and what they mean in terms of success or failure for the overall sales process in large compared with small (simple) sales situations.

Fig. 2: Call outcomes and sales success While order and no-sales outcome should be self-explanatory, the two others, Advance and Continuation, need some further explaining:


Advance: Where an event takes place, either before or after it, that moves the sale forward toward a decision. It requires a concrete action. Typical advances are:

• A customer agreement to attend an off-site demonstration • A clearance that will get you in front of a higher level decision maker • An agreement to run a trial or test of your product • Access to parts of the account that were previously inaccessible to you

Successful closing in a major sale starts by knowing what advance you can realistically obtain from a call. Continuation: When the sale continues but where no specific action has been agreed upon by the customer to move it forward. Typical statements from the customer that constitute continuations would be:

• “Thanks for coming. Why don’t you visit us the next time you are in the area?” • “We liked what we saw and we’ll be in touch if we need to take things further.”

Continuation is now seen as a failure in large sales, since it does not move the sale process forward and really does not mean a yes or a no. In the hard world of high-tech competitive selling one cannot simply have a customer meeting with no concrete advances. The outcome is the same as if one had not met at all. So it makes sense to categorize continuations as a failure. Obtaining Commitment: Four Successful Actions There are four actions that help successful sales people to obtain a commitment in larger sales calls. 1. Giving attention to investigating and demonstrating capability 2. Checking that key concerns are covered 3. Summarizing the benefits 4. Proposing a commitment The last one is important to note – successful sellers are NOT asking for the order , contrary to the advice given by many traditional sales training gurus. Here the successful sales person tells the customer what the next step could be and proposes a realistic advance. Never, ever, is he pushing the customer beyond achievable limits. How to determine customer needs: Implied and Explicit Needs After reading the following lines you will understand why the perfect summary of this chapter would be the sentence: “The purpose of questions in the larger sale is to uncover Implied Needs and to develop them into Explicit Needs.” First of all, and not surprisingly, there are different needs in small and large sales. As the sale becomes larger, customer needs change in the following ways:

• Needs take longer to develop • Needs involve several people • Needs require a rational basis and justification • More serious consequences will result if the purchasing decision does not meet the customer’s

needs, so there is more risk and fear of losing big


Needs usually develop over time. With large sales this can take months or years, in contrast to smaller sales where those come up almost instantaneously. The author decided to divide needs into implied and explicit needs: Implied Needs: Statements by the customer of problems, difficulties, and dissatisfactions. An example would be: “Our present system can’t cope with the speed.” Explicit Needs: Specific customer statements of wants and desires. Example would be: “We need a faster system.” As has been found out, one principal difference between very successful and less successful salespeople is this:

• Less successful salespeople don’t differentiate between implied and explicit needs, so they treat them in exactly the same way.

• Very successful people, often without realizing they’re doing so, treat implied needs in a very different way to explicit needs.

Implied needs are buying signals in small sales, but not in large. In the large sale it is not the sheer number of implied needs that you uncover, but what you do with them after you have uncovered them.


Why is that? It’s all about value. If a product offers a solution to an implied need for a very good or even negligible price, then selling becomes easy. The answer is illustrated in fig. 3 with the value equation: If the seriousness of the problem outweighs the cost of solving it, there is the basis for successful sale. This explains why one can sell successfully in smaller sales, where the cost of the solution is generally low, just by uncovering problems or implied needs. And this explains why in larger sales the need has to be developed further to make it larger, thus justifying the additional cost. So more explicit needs, and not just implied ones, are needed for success in larger sales .

Fig.3: Value equation: If the seriousness of the problem outweighs the cost of solving it, there is the basis for successful sale. So how should your strategy now be in large sales vs. small sales situations? Small Sales Strategy: Uncover problems (Implied Needs) and then offer solutions Large Sales Strategy: A probing strategy needs to uncover Implied Needs. Then questioning needs to develop Explicit Needs. In Part II in our next newsletter we will explain how this questioning can be done. As you have read above, Neil Rakham and his people have discovered, and proven through extensive research, astonishing facts. Still more interesting is the fact that obviously no one has questioned some of the typical sales course content before, but simply believed that the sales gurus had their act together because of their (claimed) past history of sales success. But again the difference lies entirely in the type of sales. Whether it is a small (simple) or large sale determines what sales strategy to use.

Documents

High Tech Companies Summary - SPINselling1