SPIN Selling: Situation Problem Implication Need-payoff

“We’ve spent 10 years analyzing 35,000 sales transactions. We’ve studied 116 factors that might play some part in sales performance, and we’ve researched effective selling in 27 countries.”

Rackham states that the difference between this book and others is that SPIN Selling is based on research. This research, funded by several Fortune 500 companies, was the largest venture investigating sales behaviors and sales success at the time. Though Rackham will go into greater detail about this research and his methods later in the book, it is critical that his audience understands the scope of this research to prove his argument.

“Research has an inconvenient way of coming up with evidence that the researchers sometimes wish they’d never found. That’s what happened to me. I was perfectly content with traditional theories of how to sell. When we started our investigations, our aim was to show that classic sales training really worked.”

Rackham insists throughout the work that his goal was never to cast doubt on the effectiveness of traditional sales methods. Traditional sales methods have over 60 years of research to back their success rate, and Rackham agrees that these methods are successful, but only in smaller sales. This is the beginning of Rackham’s argument that different types of sales require different tactics.

“I’m writing this book for the people whose business is the major sale—and who, like me, have become dissatisfied with the effectiveness of traditional sales models, and are looking for something more sophisticated. Many of the major-account salespeople I work with complain that traditional sales training treats them as if they were selling used cars. What’s worse, it treats their customers as simpletons waiting to be exploited by verbal trickery and manipulation.”

Rackham reiterates that this book is intended for major sales. He also points out the discontent some salespeople have with traditional sales methods. Again, this idea will be repeated throughout the work, but this is the first time the audience is introduced to this idea and has the most charged language. Larger sales are called “more sophisticated,” whereas traditional sales methods are referred to as “verbal trickery and manipulation.” Later, Rackham will approach this idea more gently, assuring his audiences that there is nothing wrong with traditional methods but that they are ineffective in larger sales. However, this is his first big push to prove that even salespeople are unhappy with traditional methods.

“As the size of the sale increases, successful salespeople must build up the perceived value of their products and services. The building of perceived value is probably the most important skill in larger sales.”

Rackham actually notes two key skills for successful salespeople: investigation skills and building perceived value. However, Rackham is clear to draw the distinction that building perceived value is not necessarily dependent on product knowledge. Bombarding the client with information about all the features a product offers is detrimental to a sale. Instead, the seller is advised to use their investigation skills to uncover client needs and dissatisfactions and build on those to increase perceived value.

“Investigating is the most important of all selling skills, and it’s particularly crucial in larger sales.”

For 60 years prior to the publication of SPIN Selling, the belief was that closing was the most important of all selling skills. Here lies the core of Rackham’s argument: It is not closing that truly drives sales, but investigation. He subtly indicates that this is true for both small and major sales. This is how Rackham earns his moniker as “the assassin of closing.” While Rackham might disagree, the bulk of his work indicates that closing—even in small sales—is not the deciding factor.

“These four types of questions—Situation, Problem, Implication, and Need-Payoff—form a powerful questioning sequence that successful people use during the all-important Investigating stage of the call.”

Rackham’s argument is built on two points: that traditional sales methods are ineffective in larger sales and that using SPIN questions improves sellers’ success in larger sales. Rackham gives a brief introduction to the SPIN question sequence in this section. The importance of this sequence is one of the main tenants of SPIN Selling.

“Closing techniques may increase the chances of a sale with low-priced products. With expensive products, they reduce the chance of making a sale.”

This quote comes after Rackham reviews the results of multiple studies on the effectiveness of closing. Rackham had to work hard against his audience’s preconceived notions, as previous sales knowledge emphasized the importance of closing and closing techniques. Rackham is asking his audience to forget this type of sales training in order to become more successful at larger sales.

“The most natural, and most effective way to bring a call to a successful conclusion is to suggest an appropriate next step to the customer.”

Rackham encourages his audience to reevaluate their use of closing strategies, but he is clear that the sellers must still close the sale. Moreover, he adds that closing a transaction does not necessarily mean that an order is placed. Instead, the seller can recommend steps that advance the sale forward. Instead of closing techniques, Rackham recommends that sellers be honest with their client about what next step is most appropriate to take.

“‘I’ve never been a believer in closing,’ he told me, ‘Because my objective is not to close the sale but to open the relationship.’”

This is another foundation of Rackham’s sales techniques. Closing, in larger sales, is ineffective because larger sales generally require a longer relationship with a customer. Rackham heralds the idea that building a relationship with the client is just as important as receiving the order.

“I suggested in Chapter 2 that success in the Obtaining Commitment stage of the call depends on how well the earlier stages have been handled. Our studies at Huthwaite revealed that the stage with the strongest influence on overall call success is Investigating.”

While traditional sales methods place the most emphasis on the obtaining commitment stage of the sales call, Rackham indicates that this stage is impossible to reach without success in the previous three phases. Particularly, the investigating stage is incredibly important to making the sale. The investigating phase is used to turn clients’ problems (implied needs) into a desire to act (explicit needs). Turning implied needs to explicit needs is a key indicator for success.

“But my perception of a problem, even if the problem is severe, doesn’t mean I’m ready to purchase. The final step in the development of a need is for the problem to be translate into a want, desire, or an intention to act.”

Rackham, again, highlights the differences between large and small sales. In small sales, the number of needs (both explicit and implied) is an indicator of success. In larger sales, only explicit needs generally lead to a sale. This evolution of an implied to an explicit need can take months or years in larger sales.

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

This is the ultimate purpose of the SPIN method detailed in this book. Though the SPIN method also serves for data collection, the main goal is to move problems and dissatisfactions into calls for action. If the client is not willing to act, there will be no sale.

“Why do we find that inexperienced salespeople ask more Situation Questions than those with greater experience ask? Presumably it’s because Situation Questions are easy to ask and they feel safe.”

Situation questions are a double-edged sword in the SPIN method. They are necessary to move forward with the sale; however, too many situation questions will irritate the buyer. The key is ensuring that the seller only asks necessary situation questions. Situation questions that indicate a lack of research on the part of the buyer are no way to start a relationship. Additionally, although these questions feel safer than the other questions in the SPIN method, they are the most likely to lose a sale when overused.

“This is the central purpose of implication questions in larger sales. They take a problem that the buyer perceives as small and build it up into a problem huge enough to justify action.”

For larger companies, inertia is a real problem. Implementing new solutions is generally a challenging and painful process, not to mention a costly one. Therefore, salespeople in larger sales are already dealing at a disadvantage. Implication questions serve to level the field. They help the salesperson point out that a client’s current solution, which may seem “good enough,” is costing the client enough resources to be worth replacing.

“In summary, Need-Payoff Questions are important because they focus attention on solutions, not problems. And they make customers tell you the benefits. Need-Payoff Questions are particularly powerful selling tools in the larger sale because they also increase the acceptability of your solution. Equally important, success in large sales depends on internal selling by customers on your behalf, and Need-Payoff Questions are one of the best ways to rehearse the customer in presenting your solutions convincingly to others.”

Need-payoff questions are critical in the larger sale because they have the most positive spin. These questions help build a salesperson’s relationship with the client because they shift the seller’s role from “salesperson” to “problem solver.” Instead of forcing the client to solve problems alone, it creates a team atmosphere for the sale.

“Benefits, in the way you’ve probably been taught to use them, are ineffective in larger sales and are more likely to create a negative response from the customer. And even something as simple as defining a Benefit is much harder than it seems.”

A key component of the sales call is demonstrating capability. The easiest way to do this is by offering benefits to the client. Unfortunately, benefits are not easily defined in traditional sales training. Likewise, benefits, as defined by traditional sales training, can be detrimental to larger sales. Rackham will later separate advantages (the types of benefits mentioned in traditional sales) from benefits (which address explicit needs).

“Remember that, in larger sales, the powerful statements are those which show that you can meet Explicit Needs. Don’t fool yourself into thinking you’re giving a lot of Benefits if you are not uncovering and meeting those Explicit Needs.”

Uncovering and developing explicit needs is the main purpose of the SPIN strategy. According to Rackham, most parts of a sale will fall into place once the seller has developed implied needs into explicit needs. Therefore, in order to demonstrate capability, the seller must show how their product or service can meet the buyer’s explicit needs. Showing how a product or service can meet implied needs has little effect on a sale.

“Objection handling is a much less important skill than most training makes it out to be. Objections, contrary to popular belief, are more often created by the seller than the buyer. In the average sales team, there’s usually one salesperson who receives 10 times as many objections per selling hour as another person in the same team. Skilled people receive fewer objections because they have learned objection prevention, not objection handling.”

This summarizes the research discussed throughout Chapter 6. Objection handling, one of the main focuses of conventional sales training, is only mildly useful in larger sales. Instead, salespeople need to build implied needs into explicit needs, thus building the value of the seller’s product or service. Building value prevents buyer objections. Throwing solutions at implied needs causes objections, rather than promoting a sale. Finally, salespeople who focus on the features and advantages of a product will incur far more objections than other salespeople.

“Advantages cause objections—and this is one reason why they are poorly linked to success in the large sale.”

Advantages, or solutions aimed at implied (rather than explicit) needs, are often successful in smaller sales. In larger ones, the client raises objections because the cost and value of the solution does not seem larger than the problem. Salespeople who focus on offering advantages are moving too quickly in a sales transaction and are likely to lose the sale because of it.

“Obviously, there are many ways to open the call, but the common factor of most good openings is that they lead the customer to agree that you should ask the questions.”

Rackham spends most of Chapter 7 explaining that preliminaries are the least important part of any sales transaction. Salespeople should focus, instead, on moving to the investigation stage. However, in order to move to the investigation stage, the salesperson needs to ensure that the client is comfortable with being interrogated by the seller. How the seller establishes this is a matter of personal preference, but establishing the seller’s right to question is critical to the call.

“Start by picking just one behavior to practice. Don’t move on the next until you’re confident you’ve got the first behavior right.”

It takes a great deal of practice to move theoretical ideas into practical ones. However, it is impossible to adequately focus on improvement if a person is juggling too many new skills at once. Additionally, the seller cannot gauge which behavior changes are the most effective if they change multiple at once. Though it is more time-consuming, it is better for the seller to focus on changing one behavior at a time.

“When you’re practicing, concentrate on quantity: use a lot of the new behavior. Don’t worry about quality issues, such as whether you’re using it smoothly or whether there might be a better way to phrase it. Those things get in the way of effective skills learning. Use the new behavior often enough and the quality will look after itself.”

Sometimes, sellers focus overmuch on perfecting the sale. In reality, there is no perfect sale, and the effectiveness of techniques vary from client to client. Focusing on quantity rather than quality allows the salesperson to learn from experience, rather than focusing on theory.

“Increasingly, our research has shown that success is constructed from those important little building blocks called behaviors. More than anything else, it’s the hundreds of minute behavioral details in a call that will decide whether it succeeds.”

Rackham almost seems to contradict the entire book with this last statement. However, the SPIN method is part of the behaviors that help salespeople succeed. With this statement, Rackham places a lot of pressure on the seller to deeply analyze their work. Even small behaviors can alienate a buyer, particularly in large sales.