The Sales Process; SPIN or SPIV

Posted on January 13, 2013

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Redrackam

Last year I posted and tweeted a fair amount on the subject of sales process. Many, it seemed to me, were all too focused on the success of the seller with scant regard to the buyer. I argued that even more enlightened and consultative approaches have a problem of perspective. Buyers don’t believe they are ever in a selling cycle, they are in a buying cycle. Here, I am inclined to agree with thinkers like Brian Solis, Gary Vay-ner-chuk (sic) and Doc Searls, author of the Intention Economy: When Customers Take Charge, a work that describes a future that turns Customer Relationship Management upside down into Vendor Relationship Management.

With some ‘spare’ research time over the festive period I took a deeper look at the grandfather of consultative selling, SPIN.

SPIN, the grandfather of consultative selling, is based on extensive research by Huthwaite International and was first published in 1987 by Neil Rackham, Huthwaite’s founder, sales process veteran, NY Times best seller and regular speaker on sales and marketing. Anchored in objective studies, it has stood the test of time. It remains relevant well after it’s late 80’s origins when it probably challenged sales professionals with assertions that included high pressure selling results in less, not more, success.

ABC

The clarion call of traditional selling approaches is ‘ABC: Always be Closing’. Photocopier and vacuum cleaner sellers in the 80’s were brow-beaten (some just beaten) by their managers with repeated questioning that boiled down to ‘did you ask for the order?’. The assumption was that those bold enough to push for the order, will get it more often than those that wait for the right moment. Close harder and faster as a seller, the theory goes, and you will sell more. Huthwaite, however, saw no such correlation when they conducted studies in closing techniques like the assumptive close (‘when would you like to take delivery Sir?’) In fact on larger and more complex products and services, they saw a negative correlation between successful sales and the use of closing techniques. What’s surprising is that it needed any evidence to prove what most of us know instinctively; that few go back for more strong-arm selling.

Instead, Rackham proposes obtaining commitment or advances that progress the sale by degrees through stages that include investigation (the customer) whilst demonstrating capability (of the seller). Instead of applying pressure or leaving with unclear objectives (at the other extreme) he suggests a balanced approach. He proposes obtaining the highest realistic commitment the customer is able to give. Successful sellers, Rackham cautions, never push a customer beyond these achievable limits.

In fact Rackham turns the focus around. Instead of ‘asking for the order’ as quickly and as forcefully as possible he argues that closing is entirely dependant on the earlier stages of the customer engagement, notably putting an onus on the seller to rigorously investigate the customer and their needs in an extended prospecting and business value development phase.

NEEDS ARE A MUST

Needs evolve through distinct stages. They start as a fall from being fully satisfied but perhaps only marginally. We are discontent – but only moderately so. We will not act at this stage unless our dissatisfactions or desires more are more clearly understood.

This is the journey from implied needs (the process is not quick enough or takes too long) to more explicit ones (we need something more reliable because 50pc of our sales are on-line and increasing) Implied needs might be buying signals in smaller sales but certainly not in larger ones. Rather, they are a starting point. They need to be uncovered and developed. In fact, in the absence of explicit needs both buyer and seller have not done the math. They don’t understand what Rackham calls the Value Equation. This, stated simply, is that the seriousness of the problem must be greater than the cost of the solution. If it isn’t there will be no change to the status quo, no decision, no action, no purchase, no sale.

ANYWAY THAT’S ENOUGH ABOUT YOU

At some point, all sellers will want to talk about themselves, their company and their product. Actually, many can do this a little too early and a little too often. SPIN is about reducing this to a minimum, about demonstrating competence in solving the customers problems and addressing their needs. More specifically, rather than talking about product features (what SPIN calls advantages) which only meet implicit needs the seller spends the time identifying benefits that will address explicit needs.

Rackham’s research demonstrates that those talking about features and benefits are less successful. He illustrates this with a familiar scenario, the new product launch. Just before it is released the sales team receive extensive training in all the new features, flashing lights, bells and whistles. Unsurprisingly, this is what the sales team excitedly take out to their customers. What happens next is that sales invariably don’t meet expectations. Sometimes they tank. Everyone is surprised that their wunderkind hasn’t worked out. Then, as they shake their collective heads in confusion and disappointment there is often an unexpected upsurge. Customers have started buying again because the shine has worn off the product and focus has retuned to customer needs.

QUESTIONS QUESTIONS QUESTIONS

Rackham proposes a framework for asking the right questions to uncover implied needs and to develop them into explicit ones;

Firstly situational questions like ‘what are your revenues?’ and ‘how large is your sales team?’. These are all good background for the seller but of least interest to the buyer. Indeed they will quickly fatigue of this type of question.

More interesting questions might be ‘How is that working out for you?’, ‘Are you finding it easy to get the information you need? or ‘Does your budgeting process complete on time or frequently overrun?’. Obviously, these are questions that reveal business problems and uncover implied need. So far, so good but it would appear that many professional sellers stop here at a point.

Here, Rackham encourages sellers to drill into the need with implication questions to make the implied needs more significant and more urgent. At this point the seller should have the value equation at the forefront of their questions piling up implied needs until they far outweigh the cost of their solution. Implication questions uncover what other sales approaches call consequential pains. An example might be;

Q. How long does it take to pull the management report pack together?

A. No time at all really, we ask one of our finance analysts to do it.

Q. Do you know how long they spend on it?

A. They tend to pull it together in a single week, it’s not really a problem.

Q. All week?

A. Yes, I think so. Other things tend to go to the back of the queue in the last week of the month so I know it is only a week but all week.

Q. But they do at least get it done in a working week and in time for the management meeting?

A. Well, I have heard that they can end up working some of the weekend to complete it. It’s important to our management team and they know it.

Q. Really, how much of the weekend?

A. Well, now you come to mention it, they have started referring to it as the ‘TOYS Report Pack’ for ‘takes over your Saturdays’

Q. [Laughs] Can it involve more than one Analyst?

A. Yes, I think so. And now I think about it a little more maybe the S in TOYS could stand for Saturday or Sunday or both!

Q. [Laughs again] Is there a high turnover in Analysts?

A. There can be, it is a high pressure role because we run our business on information. I guess frequent working weekends does not help either.

At this stage the discussion has opened up into one about the cost of staff retention, the importance of management information and the implications of deferring less urgent, but still important finance activity. We can sometimes be oblivious to the business problems that surround us, we grow used to them, we mentally discount them like we do the creaky door or leaking tap until someone points them out to us afresh.

The problem with this is that implication questions focus on problems and leave customers feeling negative. The seller then should move on to need payoff questions such as ‘Is it important to solve the problem?’, ‘What would you do with the extra information if you had it?’ or ‘How would a faster machine help you?’. These are focused on the solution and what the customer’s world would look like if it were fixed. As the discussions about need payoff progress the buyer is also describing the benefits. What’s more, says Rackham, the buyer is more predisposed to your solution because they have shared their own perspective on the benefits of the sellers solution. The process of exploding implied needs into explicit ones would not be out of place in a consulting project with it’s focus on process and identifying the value of moving from the ‘as is’ to the ‘to be’.

There is a shift in SPIN selling from seller to buyer which is to be applauded. For example, it takes a completely contra view to objection handling. Some sales methods perhaps based on ‘bad medicine’ principles assert that the more objections a buyer raised, the more likely they are to buy. After all, they argue, each objection is a mini-selling opportunity. SPIN is about ensuring the dog didn’t eat your homework on the customer’s explicit needs. That way there are far fewer objections and those that remain are dwarfed by the need payoff.

SPIN OR SPIV?

Apparently Rackham preferred the term ‘value’ over ‘needs payoff’ but that would have made it SPIV selling. The term spiv has negative connotations, at least in the UK, so it didn’t make it into the final text. I am not sure spin has a positive connotation in the UK either thanks to Malcolm Tucker and Alastair Campbell.

It was interesting to get a perspective from my 21 year old Son who was listening to the audiobook in the car with me at one point. As he got out he commented that the author seemed to regard people as ‘cattle’. I am sure Rackham would emphatically reject this conclusion but it provides an insight into how those outside of the community of professional sellers react to language that objectifies buyers. In one jarring statement, Rackham describes how he has no problem with the use of closing techniques on unsophisticated customers. I emphatically do have a problem with this. Assuming and acting on commitment where there is none is wholly unacceptable.

One of the values (or need payoffs?) of approaches like SPIN is the very fact that they are a process. A prospective buyer is, by definition, faced with uncertainty. A sales process brings structure to their decision making, guiding them step by step through a universe of possibilities towards certainty and, ultimately, an outcome. All good. The problem for me is that even enlightened approaches like SPIN don’t go far enough. As buyers become more social and power shifts from process to people and from corporations to individuals  then the process will inevitably become increasingly buyer and not seller centred. Terms like objection handling and closing will be confined to productions of Mamet’s Glengarry, Glen Ross.

SPIN is intended to drive out the explicit and quantifiable need of buyers and Rackham regards good sellers as problem solvers. This is commendable but it is no longer optional. As buyers become more social and power shifts from process to people and from corporations to individuals then the process will become increasingly buyer centered and, as sellers, we have no choice in the matter. Increasingly, in the networked age, processes like SPIN will not seem consultative enough. In fact, we will know we are there when the role of seller is indistinguishable from that of a consultant. It can’t come soon enough.

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