Customer Development, Shmustomer Shememelopment.
Let’s talk about books. SPIN Selling is the single best book to learn about selling that I have ever read.
Why, you ask?
Here is what I like when I read a self-help business book: Data. Tell me what you think, but don’t just back it with funny anecdotes, although I love a good anecdote. Back it with research. SPIN Selling is the most data driven book on sales techniques I have ever seen. As the subtitle says, “The best validated sales method available today. Developed from research studies of 35,000 sales calls.”
I was re-reading it the other day – “Sharpening the Saw” in self-help speak, when I read a chapter and thought, “Oh, this is the data that shows that customer development is the most effective technique for new product development”. “Oh, this is the part where they tell you that you have to use customer development techniques to sell things to people”. FYI, SPIN Selling was written in 1988.
Want data? Hell yeah, you know that Cogblog is committed to data driven posts.
First, let me tell you a little about SPIN Selling, in case you are not familiar with it. If you are unfamiliar with it, here is what you should do: GO READ THE BOOK. If you are the kind of person that likes my blog, then you should read the book. End of story.
Anyway, here is a key summary:
SPIN = Situation, Problem, Implication, Need-Payoff
There are two kinds of sales: simple and complex. If a sale is a simple sale, then you should master closing techniques and close the hell out of people. It works. If a sale is complex and you try a closing technique on people, it actually makes a sale less likely (42% of sales situations by people without training in closing resulted in a sale (2.7 close attempts per sales situation) vs. 33% for people with closing training (4.5 close attempts per sales situation)).
In a simple sale, successful sales have more implied needs expressed than unsuccessful sales. An implied need is something like, “the system we use today sucks”. Salespeople eat that up! But here is a fact: In a larger sale, implied needs do not predict success. So if you are selling something complex, and you hear about a guys problem, it doesn’t improve your odds of victory. Explicit needs are the difference. ”Analysis of 1406 larger sales shows more explicit needs in successful calls” An explicit need is when a customer goes from saying, “My current thing is bad” to “I need a new thing”. ”I don’t like how our web app loads pages so slow” needs to become “We need our web pages to load faster”. There is a huge difference between those two statements when closing a complex sale and helping a customer navigate from an implicit need to an explicit need is what SPIN is about.
Asking a customer about their problems makes no difference in a large sale. (Huge difference in a small sale.) You can ask a lot of “problem” questions or a little. Doesn’t matter. Developing the implications of those problems and the value proposition of that information is what separates the winners from the losers.
They specifically relate this back to new product launches by talking about how most new product launches fail because people are stoked to talk about their great product and its awesome features. Unless you lead with developing a customers explicit needs (i.e. CUSTOMER DISCOVERY), you are never going to close any business. I think a big part of the customer development process and how it works effectively is getting out there when you have nothing for sale forces you to spend your time developing implicit needs into explicit needs. In fact, Blank tells you that the most important part of the initial exercise is getting to Need-Payoff – How much does the implication of this problem impact you monetarily? How much is it worth to solve it?
Features and benefits and how and when to discuss them is something Customer Development talks about a fair bit. SPIN Selling gives you the data. In fact, they break it down even more granularly. A feature is something the product does. An “Advantage” is a manner in which the feature helps the customer solve a problem. A “Benefit” is how a feature of the product solves a problem that the customer has said that they have (An advantage they have actually said they need!). And what does the data show? If the customer hasn’t told you that they have the problem, then telling them a “classical benefit” (An advantage in SPIN terms), doesn’t do anything to increase the likelihood of a sale. You have to have developed the customer and a deep understanding of their problems, the implication of the problems and the value that a solution can have in impacting those problems to close business. If you give them a true benefit: They say they have a problem, they need a solution, and then you say, “My product does that”, the deal is as good as closed. Now, that sounds, “Duh”, and I know this, but the point is that if they don’t say, “I need a solution”, you are nowhere. You have to get them to say that. Customer Development tells you that, SPIN Selling gives you the data demonstrating that this is the case.
Incidentally, and I love that they studied this, the data shows that asking a personal question (small talk – “How are the kids/weather/knicks/red sox/vacation?”) has no impact on the likelihood of closing the sale. You can just jump right in to talking about the sales call. A more comfortable situation due to personal relationship, commonalities, whatever doesn’t bear on the outcome. If you are awkward and do a nice job developing explicit needs, you get the business. Good news for an awkward guy like me.
Go forth and help your customer understand how their problems require solutions!