Podcast: EmbedSubscribe to TrustMatters, The Podcast Android | RSS
Neil Rackham is a name many of you will recognize: the Professor of Professional Selling. He didn’t just write the book, he wrote three books that made NYTimes Best Sellers. Most famously the author of SPIN Selling — a book that still ranks at 2800 on Amazon twenty-two years after publication—Neil continues to travel the world and consult with Huthwaite, the organization that has the rights to SPIN Selling.
SPIN was a revolution in the approach to sales, and still rings fresh today. Massively researched, it introduced the key notions of consultative selling, and of inquisitive interactions. He’s McGraw-Hill’s all time biggest business book seller; his material is used in about half the Fortune 500 companies today.
What does Neil have to say about trust, you may ask? Let’s ask him.
CHG: Welcome to the Trust Quotes series, Neil. Let’s start with that question: to paraphrase Tina Turner, when it comes to selling—-what’s trust got to do with it?
NR: Trust has always been central to effective selling but, in recent years, two things have made trust even more important. First, an increasing percentage of routine transactional sales have migrated away from face-to-face selling to cheaper channels like the Internet and telesales. That means the average face-to-face sale today is significantly larger and more complex than it was five years ago. And the bigger and the more complex a decision, the more important trust becomes.
The second factor that makes trust a more important issue today is the increasing tendency to build service, implementation and advisory components into the sale. So instead of just buying a tangible stand-alone product, you are also buying advice and support. If I’m selling you a product you can think that Neil Rackham is sleazy and untrustworthy, but you look at the product and if it does what you need at a good price, you might well buy it.
But once there’s an advisory component to the sale you can no longer separate the product from the person selling it. If you don’t trust me, you don’t trust my advice. So trust in selling is more important than ever before.
CHG: You’re in that rare position of being able to look at your own work from a 30,000-foot stand-alone level. What do you think the world made of SPIN? And do you think the world got it right? What do you think was its biggest impact?
NR: The SPIN research was notable because it was the first time that anyone had tried to scientifically measure selling and buying behavior. It was also by far the largest sales study ever carried out: 35,000 sales calls in 23 countries over 12 years. In today’s dollars that would cost upwards of $30 million. It’s not likely anyone will try to do another study on a similar scale to take the ideas further.
That’s a shame because bringing a rigorous research approach had a huge impact. Over half the Fortune 500, for example, use models in their training derived from that original research. So it’s had an enormous impact. But I feel we only scratched the surface. There’s so much more.
For me, the biggest impact of the SPIN research has been that it created a model for large B2B sales where none existed before. And it showed that selling is much more about understanding and creating customer value than about persuasion and pressure.
CHG: I recently heard a lovely quote from a blogger: Nobody buys a value proposition. True?
NR: Value propositions are incredibly useful in selling but are generally misunderstood. They are not elevator messages that the sales force is supposed to give to customers. In fact, in most circumstances, the customer should never explicitly be told the value proposition. A good value proposition shows you whether your offering will be worthwhile and – as a result – shows you what your chances are of winning the business.
If you’ll allow me a quick swipe at bad marketing departments, too often value propositions are not about value. They are statements that fancifully massage minute competitive differences. As the inventor of value propositions, Michael Lanning, puts it, “You can’t judge value unless you know its price – and that’s too often a missing element.”
CHG: In the field of complex sales, including intangible sales—what do you find is the most pervasive problem, and what do you find is the hardest-to-correct-for problem?
The most pervasive and hardest sales problem? Premature solutions… The mistaken belief that that sooner they can begin solving the problem, the more effective they will be.
NR: Perhaps the most pervasive one is also the hardest to correct. I’d call it “premature solutions”. Most salespeople understand that their role in complex sales is to use products and services to solve customer problems. Many of them mistakenly believe that the sooner they can begin solving the problem, the more effective they will be.
Our earliest research showed that top salespeople didn’t focus on solutions until very late in the sale. Less successful salespeople couldn’t wait to begin showing how their products and services could solve a customer problem.
So most salespeople don’t spend enough time listening and questioning. The moment they think they have the answer, they jump straight to talking about their solution. As a result they don’t do a good enough job of understanding issues from the customer point of view. And if customers don’t feel that they are listened to and understood, there’s an inevitable loss of trust.
CHG: What has been the impact of some of the nominally depersonalizing aspects of sales: blinded online auctions, the professionalization of purchasing agents, increasingly detailed buying process designs?
NR: On the whole, I think the impact of these changes has been very positive. The professionalization of purchasing, in particular, has introduced a new generation of smart and thoughtful customers into the buying process. Salespeople often feel that the new purchasing has made life harder. And so it has – at least for the good-old-boy traditionalists who used the golf course and business lunches as their main sales tools.
But, for salespeople who genuinely create customer value, it’s a good thing to see customers who would rather make better decisions than be bought a better lunch. When I hear salespeople complain about the new buying professionals, I wonder whether they are really complaining that they are being forced to be more professional themselves and that it’s hard work.
But there is a downside to the new purchasing. Buying processes, purchasing segmentation, the internet, reverse auctions and the like have been designed to benefit buyers, not sellers. So they make it harder for salespeople to get away with excessive margins or offerings that do a poor job of meeting needs.
And, in the hands of inept or rigid purchasing agents, the new purchasing can become a rigid and unresponsive liability that isn’t in anyone’s interests. But, on the whole, the quality of selling can only benefit in the long run from the new purchasing.
NR: I’ve a lot of sympathy with the various writers who are saying that selling isn’t about pitching products any more. Research is on their side. We did a study of what customers valued in salespeople. Out of 1,100 buyers we talked to, nobody, not even one, said that salespeople created most value by talking about their products. In fact, the majority of buyers rated product pitches as actively negative in terms of value.
So I think everybody now agrees that the sales role is diminishingly about products. It’s less clear what the various new value-added roles will be. Some say OD consultant, some say intellectual challenger, some say industry advisor, some even say political consultant. I think that it’s whatever the salesperson can do that creates value for individual customers.
CHG: You were kind enough to offer a testimonial for the cover of Trust-based Selling, my own book. What did you find attractive enough to lend your name to in that book?
NR: I’ve been following your work ever since you and David Maister and Galford wrote The Trusted Advisor. Trust is what makes business happen and it’s certainly at the root of any professional relationship. However, I did have a criticism of your early work. Too much of it was focused exclusively on the professional/client relationship when there was a vastly wider seller/buyer population that needed your message.
So I was delighted to read the manuscript of Trust-based Selling.
My only complaint is that you waited too long to write it. Beyond that, I like the way you eat your own cooking. There’s none of the self-importance and exaggeration that goes along with most sales books. It’s a book people can trust.
CHG: (blush) Thanks very much for that. What’s the single biggest thing you think a salesperson can do to improve trust in the relationship?
NR: We know quite a lot about what creates mistrust. The biggest single factor is lack of concern for the customer. So if a salesperson is a poor listener, or appears to be more interested in making a sale than in helping the customer, then it sends off alarm bells. Only a third of high-level salespeople are rated adequate or better by their customers in terms of the depth of concern they show for the customer’s issues and needs.
It’s a pervasive problem because however honest you are, however much integrity you have, however deep your expertise, unless you show concern you will not be trusted. The solution is to demonstrate customer concern by patient listening, skilled questioning and a deep desire to understand rather than to persuade.
CHG: Can you kill this issue once and for all: what’s the role of price?
NR: Price is a real and difficult issue in selling. I’ve no patience with the sales gurus who pretend that price doesn’t matter. But it’s easy, particularly in tough economic times, to overestimate the role that price plays in decisions. Let me give you a couple of examples.
We did a study in Xerox where we interviewed 50 customers who had turned Xerox down and put in writing that the reason was price. It turned out that in 32 cases – that’s 64% — price was not the primary factor. Buyers didn’t trust the salesperson, didn’t feel they could handle internal opposition or were afraid of becoming too dependent on a sole supplier. Each of these reasons can be awkward to explain, so they chose the easy and unchallengeable excuse – the Xerox price was too high.
And another indicator that price may not be as important as it seems comes from one of the most spectacularly successful marketing campaigns of all time. In the 1980’s recession, computer makers were having a hard time. Most of them, like DEC and Burroughs — both long dead – decided it was a price issue and cut their prices by 30% or more.
IBM decided it was a risk issue. They actually raised prices for equipment that was generally agreed in the industry to be overpriced and under-featured. They did all possible to make the decision safe. People today still remember their marketing slogan, “Nobody ever got fired for choosing IBM.” They had record profits in those years because they understood that price is rarely the most important decision criterion. But – and here’s where your work comes in – you can’t sell safety unless you can build trust.
CHG: Why is sales so often viewed as unethical? Not just historically, but intrinsically? I think that is not necessary; what’s your view?
NR: Sales has been its own worst enemy. And I would point the finger particularly at sales management. When salespeople are under pressure to produce short-term results and are being told to get the business this month by whatever means necessary, they pressure customers and this creates suspicion and mistrust.
The most successful salespeople are almost always the most ethical. So good selling, I believe, is intrinsically ethical.
And compensation doesn’t help. Customers find it hard to treat salespeople as objective when they know they are being paid to influence the decision. However, I’m comforted by the fact that the most successful salespeople are almost always the most ethical. So good selling, I believe, is intrinsically ethical.
CHG: What’s the role of sales in the broader corporate context? What’s the role of sales in the broader business at large context? What does great selling do for the economy, and for people’s souls, if I may?
NR: Wow! How many days do I have for an answer? First, the role of sales is becoming more important to corporations than ever before. We’re in an era of organic growth, where organizations will not succeed by internal efficiencies or by acquisitions. They will succeed by outselling their competition.
Second, success today comes more from how you sell than from what you sell. For every Apple that succeeds through an innovative product strategy, there are a thousand companies succeeding through effective selling of products that are not much different from their competitors. So good selling is more important now than it has ever been.
Finally — something I find exciting and inspiring – the top end of selling is changing so much that I’m not sure whether the word “selling” even applies. The new top-level sale is about redesigning the boundary between the buying and the selling company so that new value is created that neither company could have achieved alone. I don’t know about how others feel, but seeing this new and challenging high level selling, seeing how much selling has grown in stature, is certainly good for my soul.
CHG: Neil, it has been a real pleasure to engage with you in this conversation; thank you for your time and insights.
NR: A pleasure.
This is number 5 in the Trust Quotes series.
The entire series can be found at: http://trustedadvisor.com/trustmatters.trustQuotes
Recent posts in this series include:
Trust Quotes #4: Peter Firestein on Trust, Character and Reputation
Trust Quotes #3: Dr. Eric Uslaner on the Nature of Trust
Trust Quotes #2: Robert Porter Lynch on Trust, Innovation and Performance