#1 Book Summary: SPIN Selling, by Neil Rackham

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SPIN Selling by professor and consultant Neil Rackham is a practical how-to guide for making big sales. First published over 30 years ago, the book has become a sales classic. Based on pioneering research, Rackham’s sales method of questioning customers about their needs challenged 60 years of traditional sales training in hard-sell techniques. SPIN selling—asking a series of questions about the Situation, Problem, Implication, and Need-Payoff—has proven to be a durable, effective process any sales rep can learn in order to boost sales success.

1-Page Summary of SPIN Selling

The first widely used sales model was developed in the 1920s, and it established the basic ideas of traditional selling, such as using open and closed questions, presenting product features and benefits, handling objections, and using standard closing techniques (such as creating artificial time urgency).

However, in the 1990s,** the traditional sales model started becoming less effective as sales grew in price and complexity**. SPIN Selling by Neil Rackham created a new model for larger sales, based on research into what top salespeople were doing differently to make major sales.

Rackham, founder of Huthwaite International, a sales research and consulting firm, found that winning major sales requires asking customers different types of questions, rather than just open and closed questions. Further, the techniques and strategies effective in small sales can be a hindrance in large sales.

Rackham developed and extensively tested a new model for major sales, SPIN Selling, which uses a questioning method capsulized by the acronym SPIN: S-Situation, P-Problem, I-Implications, and N-Need-Payoff. SPIN Selling is about how to apply this method.

Sales models have continued to evolve in the 32 years since the book was published in 1988; a variety of models are now debated, taught, and practiced. But SPIN selling principles are still core sales practices, and the book has become a classic and a template for successful selling.

Small Versus Large Sales

Rackham’s research found that large sales require a more sophisticated conversation with the customer because they’re different from small sales in key ways:

  • Length of the selling cycle: Small sales often can be handled with one call, in which the customer buys on the spot. In contrast, a major sale often requires making many sales calls to a customer over months.
  • Size of the commitment: In a small sale, since the customer isn’t spending a lot of money, the rep doesn’t need to strongly emphasize the value of the product to the customer to get him to buy. However, in a large sale where the customer is making a big financial commitment, the rep must increase the perceived value of the product or service to make it seem worth the price.
  • The ongoing relationship: In a small sale, there’s usually no long-term relationship. But in large** **sales, the rep has a long-term relationship with the customer because multiple calls are required to close the sale.
  • The risk of mistakes: When the purchase is small, the customer doesn’t worry much about losing money if it doesn’t work out. In contrast, customers are extremely cautious about making large buys because mistakes are costly.

Four Stages of a Sales Call

Despite the differences between small and large sales, all sales calls have basic similarities. There are four typical stages:

1) Warming up/Opening: The opening is how you introduce yourself, establish connection, and start the conversation. Sales training often teaches that the customer’s impression in the first few minutes of the call is critical to the sale. The opening may have a bearing in a brief one-call interaction, but in large, protracted sales, your opening is less important than what you do in the next stage: the investigating stage.

**2) Investigating: **In this stage, you ask questions to get information. You’re trying to better understand the customer and discover her needs. Sales reps in large sales ask a greater number and type of probing questions than reps do in small sales, because the stakes are higher.

3) Demonstrating value: Once you understand the customer’s needs, the next step is to show how your product or service can help. In larger sales, where you’re often selling a broader solution, you need to show how your solution solves the customer’s specific problems in a way that makes it worth the cost.

4) Getting commitment: To be a success, a sales call must end with a customer commitment.

In small sales, the customer usually commits to buying the product, while in large sales, she may agree to another meeting or to provide access to a decision-maker. Such intermediate steps are called advances because they advance the sale by moving the customer toward a decision.

Traditional sales training emphasizes the commitment stage—the closing—as the most important, and it advocates a variety of high-pressure closing techniques. But in a major sale, investigating is the most important stage.

The SPIN Selling Approach

Huthwaite researchers found that successful reps in large sales spend the most time on the investigating stage and handle it differently from the traditional approach.

In traditional sales, reps emphasize product features and use standard techniques to address objections and close a sale. In contrast, successful reps ignore traditional techniques and instead focus on asking four different types of questions in a certain order, the SPIN sequence. Here’s how to use this process:

1) S-Situation questions: Start by asking fact-finding and background questions, such as, “What do you see as the company’s biggest growth opportunities?” Asking too many of these questions can impose on the customer’s time and patience, so use them judiciously.

**2) P-Problem questions: **Once you understand the customer’s situation, ask questions that explore problems or issues your product or solution can solve—for instance, “Are you concerned about meeting your clients’ quality standards with your aging equipment?” Less experienced reps don’t ask enough of these questions.

3) I-Implication questions: Asking good situation and problem questions may be enough to win a small, uncomplicated sale. However, you need to go further in large sales and ask more sophisticated questions that explore the implications or ramifications of a customer’s problem—for example, “How will this affect your fourth-quarter results?” or “What will this mean for your biggest customer?” The point is to underscore a problem’s significance, and create an urgency to address it. These are more difficult questions to frame, even for experienced salespeople.

**4) N-Need-payoff questions: **These questions lead the customer to articulate the benefits of your product or solution. For example, you might ask, “How useful would it be if we could increase your output by 10%?” or “How would being able to reduce errors help you?” When the customer links the value of solving a problem with the capabilities of your product, he’s more inclined to accept your product as the best solution. Need-payoff questions contribute strongly to success in large sales.

Understanding and Developing Customer Needs

In sales, a need is defined as a want or problem identified by the customer that the seller can address. Salespeople discover, develop, and address customer needs by using SPIN questions 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. However, a customer’s perceived need for a bigger-ticket purchase takes much longer to develop. A sales rep uncovers and “develops” the need by exploring and enlarging a customer problem that her product will address, and creating an urgency to address it.

Implied and Explicit Needs

There are two types of needs: implied and explicit. In small versus large sales, they play out differently.

  • 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.”

In small sales, implied needs can result in sales success without further development into explicit needs. In fact, the more implied needs a rep can uncover, the greater the chances of making a sale.

But in large sales, the relationship between implied needs (customer problems) and making a sale is weaker. The number of implied needs you uncover has no bearing on sales call results.

In a large sale, implied needs are a starting point requiring further development into explicit needs.

The Value Equation

Implied needs don’t predict success in major sales because 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?

In a major sale, you have to build the implied need into a bigger and more urgent need—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.

The four question areas of the SPIN strategy—Situation, Problem, Implications, and Need-payoff—develop and convert a customer’s implied needs into explicit needs in a large sale.

Situation questions are intended to gather facts and background information about the customer’s situation. They’re the first questions asked during a sales call. Problem questions are intended to reveal implied needs. They ask customers what their problems and frustrations are.

The most important questions in this conversion process are the implication and need-payoff questions.

Implication Questions

Implication questions are the first step in building implied needs into explicit needs big enough to require action. These questions explore the larger implications, ripple effects, or consequences of a seemingly small problem, making it bigger. Examples are:

  • Could the limitations of your equipment be costing you new business?
  • Do your equipment problems increase turnover or make it more difficult to hire operators?
  • Is this leading to increased costs?

Research indicates that:

  • 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.

Need-Payoff Questions

While implication questions emphasize the magnitude of the problem, need-payoff questions emphasize the value of your solution. These are positive questions about the 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 useful 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 herself, these questions make your solution more appealing.

Getting Commitment

Of course, your ultimate objective in a sales call is getting the customer to take a specific action—either to buy your solution or to do something else that advances the sale, such as attending a product demonstration. Traditional closing techniques that apply pressure don’t work in large sales—they create resentment and undermine the sale. Successful sales reps use several more effective ways of getting commitment in large sales:

1) They focus on investigating and demonstrating value. As noted previously, they spend more time investigating—discovering and developing customer needs—than less successful reps do. Their questions help the customer feel a pressing need to purchase the solution.

2) They check for unanswered questions and concerns. In large sales, the problems or needs and the solution can be complicated. Customers may have questions or need clarification. The reps most successful in getting a commitment ask customers whether there’s anything else they need to address, and then answer the questions.

3) They summarize the benefits. Calls involving major sales can cover a lot of ground and take considerable time. By the end, the customer will have lost track of key points. So it makes sense to summarize the key points before a decision. It also helps to drive home the benefits and urgency.

4) They propose, rather than ask for, a commitment. Reps are taught to explicitly ask for an order in the final stage of a call. But instead of asking, the most successful reps tell: they propose or suggest a next step. The proposed action meets two key criteria: it advances the sale, and it’s the most advanced step that’s reasonable for the customer—for instance, a rep might say, “Since we’ve discussed how the new system fixes your speed and reliability problems, may I suggest the next logical step would be a demonstration for your department?”

The SPIN Model in Action

The SPIN sales model moves the customer through a naturally unfolding process of uncovering and developing implied needs, evolving them into explicit needs, and gaining the customer’s commitment to take action.

Here’s a summary showing the flow:

  • The seller asks situation questions to understand the buyer’s context, leading to
  • **problem questions that help **the buyer uncover implied needs,
  • which the seller develops through implication questions that emphasize the magnitude of the problem,
  • leading the buyer to state explicit needs,
  • to which the seller responds with **need-payoff questions, **
  • which allow the buyer to identify benefits, which contribute strongly to sales success.

In a nutshell, research indicates that successful salespeople do the following:

  1. Ask situation questions, but not many, to understand the customer situation.
  2. Ask problem questions to uncover implied needs.
  3. 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.
  4. Ask need-payoff questions to get the buyer to identify benefits of the seller’s solution.

Four Steps for Implementing a SPIN Strategy

Successful SPIN selling requires a commitment to diligently practice the skills. Here are four steps for translating the SPIN ideas and techniques into practice:

1) Focus Your Planning on the Investigating Stage

When reps plan sales calls, they tend to focus on what they will tell the customer about the product (the demonstrating value phase) instead of the questions they should ask. But it’s critical to first develop the customer’s needs by asking questions, so that she wants the value your product can deliver. Investigating is the most important stage, so focus on planning your probing questions (the SPIN questions).

2) Develop and Practice Questions Following the SPIN Sequence

Start with the easier situation and problem questions first. When you have a handle on them, move on to the more difficult types of questions.

  • Determine whether you’re asking enough questions to begin with. If you’re spending most of the call talking about features, scale back and start asking situation questions instead. Do this until asking questions feels as natural as telling about features.
  • Plan problem questions. Plan and ask at least a half-dozen problem questions on each call (focus on quantity, not quality).
  • Plan implication questions. Once you’ve mastered the skill of uncovering problems, start planning and asking implication questions. This may require a few months’ practice. Imagine the customer saying, “so what?” in response to a problem, and think about how to answer that by making the problem bigger. Then phrase your arguments as questions.
  • Plan need-payoff questions. Rather than presenting benefits, focus on asking questions that get the customer to tell you how your solution will benefit him—for instance, ask, “What do you see as the pluses of this?” and “How would that help?”

3) Think of Your Product as a Problem-Solver

Rather than focusing on your product or service’s features and advantages, think of the ways it solves customer problems. Write down the problems the product is intended to solve, then use the list to plan your SPIN questions.

4) Plan, Implement, and Review

Planning your sales call and acting on your plan help to embed new skills in your mind. But you learn even better by reviewing and analyzing your calls afterward to see what you can do better the next time.

Some helpful questions to ask yourself are:

  • Did I accomplish what I intended to in the call?
  • What would I do differently if I could do the call over?
  • What have I learned that I can use to improve future calls with this customer?
  • What have I learned that I can use in all of my calls?

Don’t be satisfied with just forming an overall impression of how a call went. Delve into the details—for instance, consider which questions had the greatest effect. Only understanding the details will help you improve your future performance.

The behavioral details outlined in this book are proven by research to be the building blocks of successful sales. Your attention to the details will determine your success.

Full Summary of SPIN Selling

Introduction

The first widely used sales model was developed in the 1920s by E.K. Strong, and it was practiced with few changes for the next 60 years. Strong’s sales model established the basic ideas of traditional selling, such as using open and closed questions, presenting product features and benefits, handling objections, and using closing techniques.

However, in the 1990s, the traditional model started becoming less effective as sales grew in price and complexity. SPIN Selling by Neil Rackham created a new model for larger sales, based on research into what top salespeople were doing differently to…

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#1 Book Summary: SPIN Selling, by Neil Rackham
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