A Guide to Sales for New Startup Founders
Bringing SPIN selling to startups
If you’re a technical founder like myself, the word “sales” alone is daunting. If only building a good product is enough to become a billion-dollar company right? Rarely do products sell themselves, and even if they do, they require some degree of sales before the flywheel effect kicks in.
The book “SPIN Selling” by Neil Rackham is an all-time classic in the sales world, revolutionizing the standard literature on how one should acquire customers. Despite being published in 1988, it has withstood the test of time, resting in the bookshelves of today’s most accomplished salespeople.
Presenting in front of potential customers might be an uncomfortable notion for you. I hope this modern overview of the classic SPIN selling will help you improve your skills, and propel you towards your revenue target in 2022.
Overview
Before delving into the details, it is worthwhile to ask —
What is the objective of your sales call?
It is easy to shift the goalpost and rationalize away failures. For example, if a buyer says “Sounds interesting, let’s talk about this again in a few months”. Is this a success or failure? In large sales, which typically involve multiple calls/emails, objectives are less black and white.
Here’s how to think about it — a call is successful if it leads to a sale or advance. An advance is an action by the buyer which leads you closer to a sale. For example, the buyer agrees to connect you with a higher-up in the organization. A call is unsuccessful if it leads to a direct “no” or continuation, which can be seen in the previous paragraph.
Before even starting the call, identify your objective. And make sure it is either a sale or an advance.
Based on Rackham’s research, where his researchers listened to thousands of sales calls, his team derived a 4-stage process to a successful sales call.
Stage 1: Preliminaries
Stage 2: Investigating
Stage 3: Demonstrating Capability
Stage 4: Obtaining Commitment
Stage 1: Preliminaries
This refers to the very early stages of a sales call, lasting anywhere from a few seconds to a few minutes. And here’s the most important lesson for beginners: It doesn’t matter as much as you think.
When the sales process lasts several months, with many interactions along the way, the first 2 minutes with the buyer play a rather insignificant role. I often fall into the trap of spending hours deliberating on how to make a good first impression: What is the best wording of my cold email? How should I start the sales call? The reality is — these minute details make little difference.
So keep the preliminaries simple: Establish who you are and why you’re here. Get down to business quickly — don’t let executives get impatient with you.
Stage 2: Investigating
The Investigating stage primarily consists of asking the buyer questions, which serves to understand their needs and guide them towards your product. What separates high and low-performing salespeople is how long and well they perform this stage. It’s not about the first impression you make, or how good you are at “closing”, it’s about how you ask questions.
The SPIN model breaks down this stage into 4 types of questions, generally asked sequentially.
Situation Questions
These are questions to collect facts, information, and background data about the customer. For example, what’s your position? How long have you been here?
This is a necessary step in the sales call, but don’t spend too much time here. Asking too many Situation questions will annoy customers, for they want to see how your product can benefit them, rather than merely to provide information on themselves.
Situation questions are safe to ask, which is why so many initially (myself included), will dwell on these to keep the sales call going. But this is a bad habit — they do little to increase your chances of a successful sales call.
Problem Questions
These questions help you probe for problems, difficulties, and dissatisfaction. For example, are you satisfied with your current technologies? What are its disadvantages?
The goal is to uncover implied needs — which essentially communicate problems. Some typical statements are “the present system is too slow” or “the setup wastes a lot of time”.
But implied needs aren’t enough. Businesses have hundreds or thousands of problems to solve at any point. To purchase a solution, it mustn’t just solve a problem, it must have value. Decision-makers must feel like the problem is big enough to be worth the cost and effort to implement.
This brings us to the next question type.
Implication Questions
These questions help identify the consequences of the problems identified earlier. They take a problem that the buyer perceives to be small and build it up into one that’s large enough to justify action and a price. They typically go along the lines of “What effect does this have on output?”, “Will it slow production?” or “Could this increase costs?”.
Once the far-reaching costs and lost opportunities of a problem are laid out to the buyer, they are much more motivated to consider a solution.
However, the downside is the negative and depressive nature of implication questions. This is unsurprising, considering they are meant to amplify and showcase the problem.
Need-Payoff Questions
They serve to look at problems from another angle. Rather than focus on the direness of issues, these questions ask about the value or usefulness of a solution. Some examples are “So you’d like to a reduction in preparation costs?”, “Is this the area you’d like to speed up?” and “Is there any other way this might help you?”.
When need-payoff questions are asked, buyers generally respond with benefits they’d like to see. This helps warm buyers up to your solution and lightens the mood by diverting attention from problems.
The primary goal of need-payoff questions is to create explicit needs. These refer to specific statements of wants and desires, such as “We need a faster system”, “We need a more reliable workflow”, etc. Explicit needs are powerful because they go one step further than implicit needs. Rather than just saying “there’s a problem”, they’re saying —
“I want to solve this problem”.
There is one last benefit, particularly significant in B2B sales. Usually, for large sales in companies to be executed, multiple parties within the organization will be involved. Often, the person you’ve pitched to will have to pitch to someone else in the company on your behalf. Need-payoff questions serve as rehearsals to help buyers identify the benefits of your solution. Rather than reciting a list of features, which buyers will inevitably forget, focus on benefits to make internal selling easier.
Stage 3: Demonstrating Capability
Finally, this is the part where you discuss how your solution helps the buyer. But don’t rush to this stage — develop a strong need during the Investigating stage, before moving on. Here’s why:
There are 3 ways to demonstrate capability:
- Features: Facts about your product
- Advantages: Show how features can be used to help the buyer
- Benefits: Show how features meet an explicit need expressed by the buyer
Features are often ineffective — they dwell on what the product is, rather than what customers want. Studies have also shown that they tend to encourage price objections. Unless your product’s price is a selling point, pointing out too many features may even be counterproductive.
Advantages are better than features, insofar as they are more customer-centric. For example, “This product has Feature X, which makes it cheaper to operate”. However, such statements tend to invite objections. After all, the seller is attempting to convince the buyer that something will help them, so naturally, the latter will poke holes at it.
Benefits are the most effective at demonstrating capability. When the customer has explicitly pointed out something they want, showcasing the corresponding feature will prevent objections from arising in the first place. Therefore, only start Stage 3 once you’ve established strong explicit needs with the buyer.
Step 4: Obtaining Commitment
Once you’ve convinced the buyer of your product in the last 2 stages, recall the objective you set before the call started. Here’s a short checklist of things to say:
- Check that key concerns are covered. Eliminating doubt and ambiguity up front will make it easier for buyers to say yes.
- Summarize benefits
- Propose a commitment. This can either be a Sale or an Advance, depending on your situation.
Conclusion
Like all skills, effective sales is one which takes time and practice. It will inevitably feel awkward to ask Implication and Need-payoff questions at the start, but give it a few tries before evaluating its effectiveness. Don’t forget, this framework is the result of observing the best salespeople at work.
How might SPIN selling fit into your startup’s existing sales process?
