Last month, I had a unique opportunity - I was able to sit down with two guys who had done high end sales in the past, and have now since moved on to running their own companies.
I met them separately about two weeks apart. One used to sell high end audio equipment, the other raised money from accredited investors for some kind of fund.
Sales is one of those things that's crucial to everyone's lives, but rather hard to nail down. There's lots of literature available on it, but much of it is outdated - or was never even correct in the first place.
I asked both guys their favorite books on sales. Both of them replied, right away, with "SPIN Selling by Neil Rackham" - they each had separate other recommendations, but when the first book recommended on a topic by two people who have succeeded at a really high level in unrelated parts of the same field... well, you're probably on to something.
I got a copy, read it, and I'm blown away. I'm also kicking myself - Judd Weiss gave me a copy a few years ago and recommended it to me then, but my reading list was too long and I didn't get to it. Man, reading this earlier would have saved me a lot of trouble.
Rackham's good because he's not a salesman - he's a researcher, and a pretty thorough one. His sales research/training organization, Huthwaite, would be brought in to identify the what top salespeople in companies were doing and generalize it so the company's performance would increase.
Throughout the book, he mentions when his statistical controls are adequate or poor, and he's very aware of causation/correlation and very skeptical of his own results. It's very different from anything else I've read on selling which tend to be more "war stories" oriented about landing a huge account by doing something crazy. Which is good, but the statistical/research rigorousness of SPIN Selling makes it a very different kind of book.
A few of my biggest takeaways -
1. Most of the research and literature on sales was done on relatively small dollar sales. That means the person you're selling to probably has buying authority immediately (as opposed to needing to consult and get approval from other people at their company), and the cost of getting an item that's not great for you is relatively small. This means that most of the sales literature that's useful for small dollar sales can be irrelevant or even counterproductive for larger sales.
2. He demystifies closing right away - and amazingly, found that repeatedly and persistently trying to close on high dollar sales leads to lower performance. A fantastic insight - if you've gone through any sales literature, you've probably heard, "Close! Close! Close!" You've probably gotten a variety of tactical closing advice. A lot of that has always seemed off to me - if you're writing a proposal for a $100,000 contract over 12 months, "Should we start on Wednesday or should we start on Thursday?" seems like a rather ineffective way of trying to get the sale. Indeed, that's what Rackham and Huthwaite found in their research - frequently closing leads to higher sales on low dollar items, but lower sales with sophisticated buyers on high dollar sales.
3. Rackham is clear to differentiate between his research and speculation as to why. He speculates that aggressive closing is an activity that puts pressure/stress on the potential buyer. If you're selling a $15 item that the person is 50/50 about wanting, just buying it is an easy relatively low risk way of dissipating the pressure. On higher dollar sales, it makes whoever you're talking to not want to talk to you any more.
4. The most effective closing technique that Rackham found for high dollar sales? He found most "closing tactics" counterproductive, including, surprisingly, even asking for the order. The most effective one was suggesting what was to happen next.
5. In higher dollar sales, the person you're selling to then has to sell their organization. Therefore, it's more important to help them get a concrete repeatable understanding of what benefits their organization is getting. If you say it and it's impressive, but they can't remember the details later, then you're in trouble when their boss asks why they're in favor of your product.
6. On the topic of benefits, what most people think of as benefits aren't very effective. After a lot of research and investigation, Rackham divided benefits into two rough categories - the first category is explaining what the product helps the person do. "The printer system runs at high speeds, so you spend less time waiting for your copies and brochures." Many people think of that as a benefit. Rackham found that those are slightly better than just features ("this printer runs at 200 pages per minute" without explaining why that helps), but not all that effective. The most effective way for benefits is to emphasize how it helps meet a explicitly stated revealed need. So the person has explicitly stated, "Our last printer would break down and screw up our operations," and you emphasize "Our printers come with a reliability guarantee, and service within 6 hours of any emergency call - so your printer is never broken down and screwing up your operations."
7. Rackham says that it's one of those things that might seem obvious or like splitting hairs, but the majority of salespeople don't do it. You shouldn't push benefits heavily until finding out what they are, and importantly, having the person who is going to buy explicitly state it - Rackham advises against making logical inferences that a person would benefit from something until they explicitly state what their need is.
There's more to it than that - he has a system of questions of getting people to explicitly draw out their needs and identify how they'll benefit from a solution - that way, they're more likely to be excited individually but also more likely to remember the details so they can sell people inside their organization later.
I'd highly recommend Spin Selling. I'm going to re-read it again in a week or so to get more of a grasp on the nuances of it.
Darn, I was just there and one of the seminars I lead is a condensed, focused version of the Columbia Business School's Entrepreneurial Sales course. The course is amazing -- what you'd expect from a top business school course taught by a practitioner, not an academic.
From the catalog: "This course teaches participants state-of-the-art selling skills that can be used with prospective clients, venture capitalists, potential partners, investors and candidates for employment. The course is highly interactive and skill based and uses videotaped role-playing exercises to enhance skill acquisition. Subjects include relationship building, analyzing the client’s situation, making effective sales presentations, resolving objections, gaining commitment and precall planning. Skills developed are applicable worldwide, and both cultural similarities and differences with respect to the sales process are discussed throughout the course. Whether you need start-up capital, senior management to back your ideas, or customers to hire your firm or buy its products, selling skills are crucial. You will develop them in Entrepreneurial Selling. This course is particularly relevant for students interested becoming entrepreneurs and for those seeking careers in consulting and financial services."
Let me know if you want to cover it next time.
SPIN is great, a bit of a tough read. I am sure there would be some great notes/courses based around it.
One of my friends who is a killer sales person says "Sell people their dreams and they will buy every time".
A technique to find out, ask them what they want to achieve, ask them why that's important, ask again why that answer is important and then ultimately to achieve what? (digging deeper to what they really desire, often more time with family or they want a boat to take their friends out on etc).
Then you keep bringing them back to how buying from you will get them that (if it truly will). e.g. if your selling websites. They aren't buying a website from you, they are buying a lead generation system that will make them enough money to buy the boat they want.
As far as I've just finished reading "How I raised myself from failure to success in selling" by Frank Bettger and it's phenomenal. You should definitely check out the reviews and judge for yourself! You seldom see so many good reviews for a book. I know its name sounds cheesy but it really is the deal.
I'm gonna get myself a copy of spin as well :)
SPIN is great as a questioning technique and sales meeting process. If you are doing large ticket selling or B2B, Strategic Selling by Miller & Heiman is fantastic as well.
Thanks for the article; I've gotten a copy of the book and I'm reading it now.
I'm curious about what the other books on their respective lists were. Would you mind sharing them with us?
Question from a reader --
"Hello, you don't know me of course, but I've been reading your posts for a while and it kinda makes me do greater things than I usually do (well mostly it makes me "wanna" do greater things but there has been noticeable improvement). But let me cut to the chase. I'm a relatively decent economics student from Croatia, but my problem is the college isn't really teaching me anything practical so when I leave the said institution in two years I'll be left with no definitive skill with real application in the current economic state, or any economic state I'm afraid. With this as my base http://sebastianmarshall.com/my-best-guess-as-to-what-an-aspiring-artist-should-do (as I'm also a photographer), and my usual voracious reading appetite, is there anything more you can recommend to someone who would like to one day start his own business, like books ,specific areas and skill sets to develop? The stuff I'm already working on is programming, social skills and developing a hard-working mindset (or maybe its smart-working) that my current social group/peers/family lack. Thanks, M"
Seems like you're on the right track with the learning. Here's two recommendations --
1. Accounting2. Sales
First, accounting is the most useful course to take at university if you want to run your own company.
Below is a great post by Dharmesh Shah on building a startup sales team. You can read the full post here.
"Your sales force if your company's lifeblood. No matter how good your product is, it won't sell itself, no matter how much you believe otherwise. Establishing a competent, effective team to draw customers is often challenging for entrepreneurs, though, who would rather focus on research and development or chase VCs.
First off, a few disclaimers: I've never been a sales person. I've never even played a sales person on TV. All the points below have been pulled from startup sales teams that I think work pretty well (including the team at my marketing software startup).
1. Don't hire sales people too early. In the early days, the founders should be able to sell (and should be selling).
2. You don't need sales people, you need sales. Don't think VP of Sales - think "Revenue Engineer". (Not the greatest analogy, but just like you won't hire a development "manager" as one of the first 5 people in a startup, you shouldn't hire a sales "manager" either). Don't get caught up in fancy titles - focus on dollars in the door.
Below is a great post by Dharmesh Shah on building a startup sales team. You can read the full post here. "Your sales force if your company's lifeblood. No matter how good your product is, it won't sell itself, no matter how much you believe otherwise. Establishing a competent, effective team to draw customers is often challenging for entrepreneurs, though, who would rather focus on research and development or chase VCs. First off, a few disclaimers: I've never been a sales person. I've never even played a sales person on TV. All the points below have been pulled from startup sales teams that I think work pretty well (including the team at my marketing software startup). 1. Don't hire sales people too early. In the early days, the founders should be able to sell (and should be selling). 2. You don't need sales people, you need sales. Don't think VP of Sales - think "Revenue Engineer". (Not the greatest analogy, but just like you won't hire a development "manager" as one of the first 5 people in a startup, you shouldn't hire a sales "manager" either). Don't get caught up in fancy titles - focus on dollars in the door. 3. Don't hire several sales people at once. Your goal is to figure out the "pattern" of what kinds of people are best based on what you're selling and who you're selling it to. You need some feedback from the system so you can continue to iterate on your hires. 4. If you've never hired or been around sales people before, be prepared for a bit of a shock to the system. They're not bad people, they're just different. If you're an introverted geek like me, it's helpful to remember that your startup needs to sell stuff. 5. Resist the temptation to create complicated compensation plans. If it requires a spreadsheet to figure out the commission, it's too hard. You'll have plenty of time to confuse sales people later - start simple. 6. Agile methodologies can work in sales as well. Iterate! Refine your demo script, your slides, and any other collateral information. Capture the lessons learned by the best-performing people and spread it to the rest. 7. Sales people will generally act in mostly rational (but often surprising) ways based on incentives. The rules of the game define the behavior of the players. You were warned. 8. Always connect incentives somehow to ultimate customer happiness. If you reward just "deals getting done", you'll get deals - but at too high a price. You might get push-back that sales people don't control/influence customer happiness, but they do. They "pick" customers. They set expectations. And they control the degree of "convincing" applied. 9. Make sure you understand the economics of your business. Figure out your total COCA (Cost of Customer Acquisition). This includes sales people, marketing people and marketing campaigns. Quick example: Lets say you paid a sales person $10k, a marketing person $10k and you spent $5k on Google AdWords (for a total of $25k) last month. If you sold 10 customers last month, your COCA is about $2,500. Different businesses have different needs in terms of sales vs. marketing spend. Make sure neither is too far out of whack. 10. Your life-time-value (how much revenue you expect to generate per customer) should be higher than your COCA. (No, I did not need a degree from MIT to figure that out.) Once your LTV is a multiple of your COCA, you're ready to start turning the knob and scaling the business a bit (hiring more sales people). But, if your LTV is way lower than your COCA, proceed with caution. If there is no hope for LTV getting higher than COCA, you've got a problem. Don't try to hire additional sales people until the economics sort of make sense. If the car is pointed towards a brick wall, hitting the accelerator is not a good idea. 11. Track data maniacally (even if it's just in a spreadsheet). Information you will want includes: What was sold, who sold it, when, for how much, etc. This data will be invaluable later as you start to scale. For example, you should be able to answer the question: We had 14 customers cancel last month - who sold those customers? Is there a pattern? In the early days, you likely won't have the volume (or the time) to analyze the data - but you should at least capture it for future use. 12. Your pricing should be in line with your sales structure. For example, you can't expect to have an outside sales force (that meets with customers in person) if your average deal size is only $10,000. The math won't work. 13. Once you get beyond three or so people, running your sales in a spreadsheet will become painful. Start looking at CRM systems (like Salesforce.com). 14. Start watching the shape of your "funnel" as early as possible. How many leads are you getting a month? How many turn into opportunities? How many of those convert into paying customers? Once you understand your funnel, you can slowly start tweaking your system to fix the "leaks". That's all I've got for now. For those of you that have built early-stage sales teams, what are your ideas and insights?"