Development Units.3doc

DEVELOPMENT UNITS Need-payoff Questions

Huthwaite RESEARCHED EFFECTIVENESS

OVERVIEW The number of Need-payoff Questions you ask during a call is important to your sales success. Successful calls contain significantly more Need-payoff Questions than unsuccessful calls. This unit is designed to help you practice and refine your Need-payoff Question techniques. It will take you approximately forty-five minutes to complete.

NEED-PAYOFF QUESTIONS This unit covers the: • Why?

Why you should ask Need-payoff Q—6ons. Why they help you sell. ^ What?

What makes Need-payoff < questions.

tt from other

^

When?

tions and when'

When you should ask Need-i should avoid them. How? How you should ask Need-j Need-payoff Questions to (

^

s? Ways of]

Who?

Who you will be questioning. Piffi milN—ill |i ijiiff Quest for different customers.

This document is copyright of Huthwaite Research Group Limited. Neither this document, nor any part thereof, may be re-used or reproduced in any form or format without permission at the publisher. SPIN"" and The Buying Cycle are registered trademarks of Huthwaite Research Croup Limited.

WHY? Why you should ask Need-payoff Questions Why they will help you sell Your customers buy because they have Needs. The more clear and explicit you can make these needs, the more likely customers are to buy from you. As a seller your job is to identify, develop and satisfy the needs of your customers. Needs usually start in the form of problems or dissatisfactions which your customer feels. These customer problems, called Implied Needs, are exposed by asking Problem Questions. They provide the raw material which you must develop into a need for your product. In order to develop problems into needs, you must first ask Implication Questions to extend the problem and increase its importance in the customer's mind. When the problem is sufficiently important, clear and significant, you must shift the customer's attention away from the problem towards the solution which you offer.

The best way to do this is to develop the customer's appetite for a solution by asking Need-payoff Questions. Need-payoff Questions investigate and develop the customer's needs, wants or desires for a solution to the problems you have exposed.

Exercise One Wliy should you use Need-payoff Questions? The purpose of Need-payoff Questions is: To develop and extend a customer's problem. To increase a customer's desire for a solution 3

To expose problems which your product can

()

( ) to a problem. ( ) solve. (answers over the page)

Answer The purpose of Need-payoff Questions is to increase a customer's desire for a solution to a problem How do Need-payoff Questions help you to develop an Explicit Need for your product? An Explicit Need consists of two components: • A clear problem • A desire for a solution The function of Need-payoff Questions is to make needs more explicit by developing the customer's desire for a solution. The overall chain of questions which leads to Explicit Needs looks like: to establish a context leading to...

to reveal ...

which is developed by...

And

which increases the attractiveness of a solution leading to.

A Clear A Desire problem -^- For A Solution

AN EXPLICIT NEED

/

The capacity of Need-payoff Question to increase a customer's desire for a solution explains why Huthwaite Research Group studies of successful calls show significantly more Need-payoff Questions being asked than in unsuccessful calls.

How does this apply to your selling? As you can see from your SPIN^ calls, you do ask Situation and Problem Questions to uncover Implied Needs. You also develop these needs by the use of Implication Questions. But, as you can see, your use of Need-payoff Question is low. This means that you may not be giving sufficient attention to increasing the customer's desire for the solution you offer. This can lead you to jump in with your solutions before the customer has reached the point of maximum need. When this happens, you reduce the probability of making a sale. So you should use this unit to help you increase the number of Needpayoff Questions you ask.

WHAT? What makes Need-payoff Questions different from other questions Definition Need-payoff Questions probe for Explicit Needs, either directly or by exploring the payoff or importance to the buyer of solving a problem.

Examples "How much would it be worth to you if you could eliminate this problem? " "Would it help you if we could offer the additional flexibility you lack at the moment? " "How important is it to solve this quality issue?" "Are there any other ways in which this solution would help you? "

Key points Before you ask Need-payoff Questions you should have asked: •

Situation Questions - to establish a context

•

Problem Questions - to expose a problem or dissatisfaction

•

Implication Questions - to develop the problem.

Need-payoff Questions shift customer attention to the solution of a problem. They explore and expand the payoff to a customer from satisfying a need.

Exercise Two Check that you are clear about what a Need-payoff Question is.

Which of these are Need-payoff Questions? Need-payoff Question? 4

How many working days could you save each could reduce your wast-ge by 10% ?

5

How many days are you losing each year wastage7

6

What would it be worth to your Department ( ) if you had some way to produce your own slides without the problem of sending them to Central Administration?

7

If you could save ten minutes each cycle, what mean to you in terms of output?

8

Doesn't the unreliability of your present system whole production unit at risk?

9

If I could show you a way to overcome this problem, would you be interested?

10

Couldn't a new method also help you to keep control?

11

What is the value of your present machine?

( ) year if you

( ) because of this

( ) would that

( ) put the

( ) contamination

( ) better stock

() (answers over the page)

Answers The question is about a solution and its worth or importance to the buyer.

This is an Implication Question. It develops the problem, not the solution.

The question is about a solution (a way to produce your own slides) and the worth or importance of the solution to the customer.

The solution being explored involves saving ten minutes per cyde. The worth of importance of the solution is developed in terms of output.

This question develops the problem, not the solution. It is I an Implication Question.

This is clearly a question about the importance or worth of a; Note: As we shall see later, many sellers make the mistake of l "If I could show you a way..." questions too early in the call.

The solution (a new method) is being developed into other payoS areas (better stock control).

The question just asks for background data - not for the importance of a solution.

Remember, Need-payoff Questions are about solutions and their value or importance to the customer.

WHEN? When you should ask Need-payoff Questions - and when you should avoid them Few sellers ask Need-payoff Questions at the optimum point in the sale. If you ask them too soon, right at the start of the call for example, then the customer's lack of clarity about problems prevents you from effectively developing a real desire for solutions. At the other end of the scale, many sellers begin asking Need-payoff Questions too late. They wait until after they have described their solutions - and only then do they try to generate an appetite for what they have offered. The ideal time to start asking Need-payoff Questions is just before describing your product/solution, but after you have developed the customer's problems by the use of Implication Questions. Although the use of Need-payoff Questions is strongly related to sales success, the average seller just doesn't use them enough. Huthwaite Research Group studies show that in the average call, less than two of these questions are asked. Yet, when used at the right point. Need-payoff Questions increase the chances of maldng a eal
Exercise Three So, when should you ask Need-payoff Questions? Early in the call, before you have exposed a 13 After you have demonstrated the capabilities product/solution. 14 After you have developed a customer's problems introduce your product/solution.

( ) customer's problems. ( ) of your

( ) but before you

(answers over the page)

Answer Ask Need-payoff Questions after you have developed a customer's problems but before you introduce your product/solution Generally, Need-payoff Questions help to sell and should be asked freely.

Low risk areas Areas where they are low risk and especially valuable for increasing a customer's desire for your solution are: • When the solution has payoff in other areas If, as a result of your product, there are potential spin-off benefits for the customer, then Need-payoff Questions are particularly powerful in helping you sell. Questions Bee "What can you do with the extra time our system will save you?"w, Ti there any other way in which you would benefit?" can oftoi Hart the customer thinking of additional payoffs. Many custa—r situations are complex and freeing the customer from 01 problem often has unexpected extra payoff. Youroaecf Needpayoff Questions can uncover and develop tk—— additional possibilities. • When the customer must justify the solution Often, even if your customer has power to make a ponlH decision, this action must still be justified to the cuslo—— management. The more you can use Need-payoff QaofioBS to clarify and develop the customer's understanding of Ac potential payoffs from your product, the easier it wiB b«far the customer to communicate the payoffs from your prodadto others in the organisation. By answering your Needpayoff Questions, the customer practices an explanation ofhmyyour product can help.

High risk areas In some areas, however, Need-payoff Questions are high risk and must be asked with care. Be cautious about using Need-payoff Questions in these areas: • Too early in the call Many sellers like to open with dramatic statements like 'Mr Customer, if J could show you a way to reduce your costs, would you be interested? " Although this is a Need-payoff Question of sorts, its value as a means of developing a desire for your solution is very limited. Your Need-payoff Questions will not have real effect until the customer has recognized and clarified a problem. Asked before this point, they are premature and may

even antagonize customers into denying the existence of genuine problems and needs. • When the customer's need is subjective Sometimes a customer just likes your product, or is prepared to make a purchasing decision, when few of the objective facts about customer problems and their implications would suggest a justification. If you ask Need-payoff Questions under circumstances where the customer is making very positive but subjective judgements about your product you may cause the customer to have second thoughts. Check how dear you are about When to use Need-payoff Questions by trying these examples.

Exercise Four Check how clear you are about when to use Need-payoff Questions.

When would asking Need-payoff Questions be High Risk and when would they be Low Risk? High risk

Low risk

15 The customer must present and defend your ( ) ( ) proposal to the Purchasing Committee before giving you the order. The customer clearly wants your product, although you can't see how it will really solve customer problems.

()

()

Lots of projects have lapsed lately because the ( ) ( ) customer has a severe staff shortage. Your product will greatly reduce staff workload in one key area. It's right at the start of the call and you want to ( ) ( ) show how the customer can get the maximum payoff from your product (answers over the page)

Answers 15 LOW RISK The more clearly and explicitly you can develop the customer's understanding of payoff from your product, the better it will be

presented to the Purchasing Committee. Need-payoff Questions will develop and clarify the customer's perception of payoff. 16 HIGH RISK The customer may want your product for purely subjective reasons and Needpayoff Questions will only demonstrate that there is little objective payoff. (Of course, it may not be to your advantage to allow the customer to buy under these circumstances, especially if your product's reputation - or your long-term customer relationship - is important to you). 17 LOW RISK This is the ideal circumstance for asking Need-payoff Questions. Your obvious payoff to the customer is in the area where your product reduces workload. But what does this mean in other areas? What can the customer now do that was not possible before? And what's the effect on the staff themselves - motivation, reduction of load, etc? You can often open up payoff areas much greater than the one you started from. 18 HIGH RISK If you want to show the customer maximum payoff then you don't do it right at the start of the call. If you try Need-payoff Questions here, you risk antagonism and denial of real needs. To demonstrate maximum payoff you must use the SPIN® sequence to build up problems and their implications before moving into the Need-payoff area.

HOW? How you should ask Need-payoff Questions The purpose of Need-payoff Questions is to clarify and develop customers' perception of payoff from your product/solution. Whether you believe your product has value to the customer is irrelevant - unless the customer believes it, there's no sale. Because you know your product and what it can do, it's generally much easier for you to see payoff than it is for the customer. Many sales are lost because the seller assumes that the customer has a clear understanding of payoff. This is a dangerous assumption. The customer's desire for a solution must be developed using Need-payoff Questions to establish the range of payoff areas and their importance. Some types of Need-payoff Questions are particularly powerful in achieving this development. This section explores how to use them.

Exercise Five The customer usually recognizes potential payoffs from a product: 19

20

More easily than the seller.

Less easily than the seller.

21 About the same as the seller.

^^

^ ^ ^^ (answers ova- the page)

Answer f The customer usually recognizes potential payoffs from a product less easily than the seller Some forms of Need-payoff Questions are more powerful than others in developing customers perceptions of payoffs. For example, which of these two questions do you think is more likely to get the customer to actively think about payoff? "Mr Customer, if I could help you save time on this operation, would that be useful to you?" "Mr Customer, if 1 could help you save time on this operation, what would that enable you to do which you can't do at the moment?" Most people would agree that the second question would make the customer think more actively about payoffs than the first question. Why? The first question allows the customer to passively accept payoffs without really thinking about it. In contrast, the second question causes the customer to actively specify payoffs. The customer cannot just passively agree, but has to think in detail about the solution and how it can help. This thinking process can often lead the customer into new payoff areas. But it has an even more important function. People are always more committed to solutions which they have discovered for themselves. If you can help the customer discover payoff, rather than you having to demonstrate it, the customer will be more committed to your solution. Therefore, ifs more powerful for you to phrase your Need-payoff Questions in a form which causes the customer to actively specify payoffs.

Exercise Six Check that you are clear about which kinds of question lead the customer to actively specify payoff by working through the examples below. Wliich questions would cause the customer to Actively specify payoff and which would cause the customer to Passively specify payoff? Actively Passively

22

How could this help you with your turnover problems?

23

IfI could show you a way to save £10,000 would you

()

( ) be interested?

24

What other areas of the business will benefit as a change?

()

( ) result of this

25

What would this mean to you in terms of improved

26

()

()

()

( ) cash flow?

/s it important to you to have increased efficiency here?

()

()

27

How can you use the extra production capacity which machine will release for you?

()

( ) our

28

How can the flexibility of such a system help you cope fluctuating demand?

()

( ) with

29

Are you interested in cost improvement?

()

() (answers over the page)

Answers 22

ACTIVELY SPECIFY

23

PASSIVELY ACCEPT

24

ACTIVELY SPECIFY

25

ACTIVELY SPECIFY

26

PASSIVELY ACCEPT

27 ACTIVELY SPECIFY 28

ACTIVELY SPECIFY

29

PASSIVELY ACCEPT

A word of warning .... Need-payoff Questions can have a negative effect if, instead of leading a customer to discover payoff areas, they are used too early in the sale in a way which makes the customer feel confused or manipulated. So avoid situations like: Seller:

Good morning, Mr Customer. I'm from Systems Corporation. We sell machines which can prepare invoices in eight seconds. How will that help you?

Customer: (uncertainly) I'm really not sure. Seller: Well, for example, it will release manpower -wouldn't that be useful? Customer: I don't know. Seller: It will reduce your costs - surely you want to do that, don't you? Customer: Look - I'm not sure what you are trying to sell, but I don't think I'M very interested.

There are two ways to avoid this ineffective use of Need-payoff Questions. Before using Need-payoff Questions use Situation, Problem and Implication Questions to clarify and develop problems to a point where the customer feels sufficiently strongly to want to think about situations. Link Need-payoff Questions smoothly to customer responses by •

Selectively asking Need-payoff Questions which develop or extend solutions to identified customer problems.

•

Expressing Need-payoff Questions in a variety of ways so that they don't sound mechanical and repetitious.

An effective technique for ensuring that you have developed a range of customer problems before introducing Need-payoff Questions is to: • Write down a potential customer payoff from your product. • List the problems you should first develop before the customer will be fully receptive to this payoff. For example, suppose you are selling Fireproof Filing Cabinets. Product Fireproof Filing Cabinets

Potential area of customer Payoff: •

In the event of fire, company records will be undamaged.

Problems your product could resolve which you must develop before customer fully recognizes this payoff: •

Legal problems resulting from destroyed records

•

Possible implications of loss for financial and other control systems

•

Inability to trace orders and debtors

•

Manpower and other costs of tracing and replacing lost records

•

Insurance problems.

By making a list like this as part of your call planning you can prepare so that your Need-payoff Questions will have maximum impact.

Exercise Seven Now try this method with your product. Product:.............................

1

2

Potential area of customer payoff:

Problems your product could resolve which you must develop before the customer fully recognizes this payoff:

There's no correct answer, but you probably found: • You need to develop several problems before a customer will fully realize the potential payoffs from your product. •

Not all of these problems would apply to every sale.

•

If you have developed the relevant problems in your list, Need-payoff Questions can be asked smoothly and naturally.

Using linking phrases Another way to ensure that your Need-payoff Questions sound natural is to link them to customer responses. Avoid just saying: "How would it help you if you could reduce wastage?" Use linking phrases such as: "You mentioned a problem with wastage, how would it help you if you could reduce it?" or, "'You're obviously very concerned with this wastage issue, what would it save you if you could reduce it by 20% " or,

"What would it be worth to eliminate the wastage problem that you have just described7"

Using variety If you always use a standard phrase to ask Need-payoff Questions you can irritate the customer and sound mechanical and repetitious.

Avoid repetitions of the same phrase. For example: "Haw could this help you to reduce costs?" "How would this help you to save time?" "How would this help you to speed production?" Use a variety of Need-payoff Questions. For example: "What would be the main benefits from cost reduction in this area?" "How could you use this time you'll save?" "What effect could this have on production speeds?"

Exercise Eight Use a potential payoff which a customer could get from your product and demonstrate five different ways in which you could express it as a Needpayoff Question. Potential area of customer payoff:

Five different ways of phrasing this as a Need-payoff Question: •

Check each of your phrases to ensure that at least one of them requires the customer to actively specify payoff (see page 13). If not, then rephrase one of your questions here so that the customer must specify payoff. Need-payoff Question requiring the customer to actively specify payoffs:

Summary check So far in this unit we have considered:

Why Need-payoff Questions are important and why they will help you to sell. What Need-payoff Questions are. What makes them different from other questions and how you can recognize them. When

You should ask Need-payoff Questions and when it is High Risk to ask them. How To ask Need-payoff Questions, particularly those requiring the customer to actively specify payoffs.

The next section of this unit considers Who you will be questioning -and some of the differences between Need-payoff Questions for users and for decision-makers.

WHO? Who you will be questionning The people who use your product may not be the ones who make the decision to buy. The Need-payoff issues which are important to Decisionmakers - and your use of Need-payoff Questions must take this into account. People perceive payoff most easily, and most powerfully, when it affects their own interest. Because their main interests are different, you must use different Need-payoff Questions with users and with decision-makers. Of course, some customers may fall into both categories, being users and decision-makers. Customers who combine the two roles are concerned with the whole spectrum of payoff areas. Decision-makers tend to be more concerned with areas of payoff affecting costs or profitability, users with payoff areas affecting operations. Areas of joint payoff are those where operational problems have implications for costs.

Cost Factors

Operating Factors

Users Have a generally lower interest in payoff relating to cost and profitability (unless they are also decision-makers). The key payoff areas to them are likely to be convenience, technical sophistication or other factors, such as appearance of the product, which have a direct impact on the product's use or operation.

Decision-makers Will primarily be concerned with payoff which can be financially measured. They are less likely to be impressed by payoff resulting from ease of use, convenience or technical details of your product unless it can be expressed in cost terms. Therefore, in asking Need-payoff Questions to decision-makers, concentrate on developing areas of financially measurable payoffs.

Exercise Nine Winch pay off areas are of most concern to: Decision Users Both Makers Equally 30 Your product could result in a 6% cost

()

( ) ( ) saving.

31 Your product will be more pleasant to competitor's.

()

( ) ( ) handle than your

32 The display units you offer are very easy

() ()

33 The high reliability of your product will () 34 Your product will increase profits by £5,000 per year. 35 Your product will solve the present quality problems.

( ) to read.

( ) ( ) reduce breakdowns. () () ()() )

()

(answers over the page)

(

Answers 30 DECISION-MAKERS

The payoff is in cost terms. Unless the saving makes life easier, the user is relatively uninterested. 31 USERS Ease of operation appeals to users much more than to decision-makers (unless you can show that ease of operation reduces cost, or cuts the need for expensive training). 32 USERS Again, ease of operation is the key issue. This would only have appeal to decision-makers if, for example, difficulties in reading the display led to costly mistakes. 33 BOTH Reliability has joint appeal. It reduces costs - and therefore appeals to the decision-maker; it reduces trouble and effort - and therefore appeals also to the user. 34 DECISION-MAKERS As in the first example, the payoff is measured in financial terms and will only appeal to the user if it improves operating factors. 35

BOTH Overcoming quality problems means less waste and lower cost - so it appeals to decision-makers and it also means increased satisfaction for the users.

KNOWLEDGE CHECK The purpose of Need-payoff Question is: Need-payoff Question? a) To develop and extend a customer's problems. ( )( )( b) To increase a customer's desire for a solution to a problem. ) c) To expose problems which your product can solve. Which of these are Need-payoff Questions? a) What -would it be worth if you could double output in this area? b) Are there any other ways in which this could help you? c) What implication has this problem for production?

( )( )( )

High Risk? ( ) ( )( )

The time to ask Need-payoff Questions is: a) Early in the call before you have exposed a customer's problems. b) After you have demonstrated the capabilities of your product. c) After you have developed a customer's problems but before you introduce your product/solution. Which of these Need-payoff Questions would cause a customer to actively specify payoff?

Would you be interested in increasing your output? b) What would a 10% increase in output mean to your profitability? c) How would improved cashflow help you?

Actively Specify? ( )( ) ( ) True? ( ) ( )( )

a)

Witich of these statements are true? a) Decision makers are most concerned wi th financial payoff. b) Ease of operation is the key payoff area for decision makers. c) Decision makers and users are both concerned with payoff in areas affecting reliability or quality.

(answers over the page)

Answers 1

B)

The purpose of Need-payoff Questions is to increase a customer's desire for a solution to a problem, (see page 1-2) 2

A) AND B) The exception is C) - an Implication Question which develops a problem, not a solution, (see pages 2-6)

3

C)

The time to ask Need-payoff Questions is after you have developed a customer's problems but before you introduce your product/solution, (see pages 7 &9) 4 A) AND C) See pages 12-14 5

A) AND C) See pages 20-22

Use the remainder of this booklet to plan a future call

PLAN A CALL During the call, plan to explore the following areas of potential Needpayoff:

Are you visiting a User or a Decision Maker? Are these the payoff areas with greatest appeal? Fick out one of these areas In order to explore payoffs in this area, plan to first develop the following potential customer problems so that the cu5tomer feels the

problem acutely enough to want a solution. Need-payoff area:........................................ Potential Customer Problems (which you will try to develop)

Plan to introduce variety into the way you ask Need-payoff Questions during the call by using different phrases.

Are these question phrased in a way which will cause the customer to actively specify payoffs?