Pete and Dom discuss the principles in Neil Rackham’s SPIN Selling technique for making high-value sales, then they apply the the techniques to the 7 Levers of Business to show how you can benefit from them, whatever your product or service.
Pete has a couple of consulting/strategy session spots available – email support [at] preneurgroup [dot] com for more details.
In honour of the 2013 Awards, we are giving away 3 copies of SPIN Selling by Neil Rackham (one of Dom’s Awards Choices). To enter this competition, just visit: http://preneurmarketing.com/preneurcast/preneurcast124-2013-awards/ and leave a comment on the post for the awards show. Tell us your vote for any of the categories we listed this year, and feel free to tell us about a something we missed!
SPIN Selling Fieldbook – Neil Rackham
Amazon – http://preneurmarketing.com/spinsellingfbook
Flee 9-5: Get 6-7 Figures and Do What You Love – Ben Angel
Amazon – http://preneurmarketing.com/flee95book
You can try out a lot of the books we recommend in audio format with Audible: http://audibletrial.com/preneurcast – Free trial with a free audiobook download for PreneurCast listeners
Previous PreneurCast Episodes:
Episode 126 – Clarity vs. Distraction – http://preneurmarketing.com/preneurcast/preneurcast126-clarity-and-distraction/
Episode 124 – 2013 Awards – http://preneurmarketing.com/preneurcast/preneurcast124-2013-awards/
Episode 116 – Who Are Your Customers? – http://preneurmarketing.com/preneurcast/preneurcast116-who-are-your-customers/
Episode 95 – LinkedIn with Wayne Breitbarth – http://preneurmarketing.com/preneurcast/preneurcast095-conversation-with-wayne-breitbarth/
Episode 52 – 7 Levers Redux – http://preneurmarketing.com/preneurcast/preneurcast052-7-levers-of-business-redux/
Episode 37 – Preneur Hierarchy – http://preneurmarketing.com/preneurcast/preneurcast037-the-self-indulgent-preneur-hierarchy/
Transcript: Read it now.Hide it.
Episode 128: SPIN Selling & the 7 Levers of Business
Dom Goucher: Hello, everyone, and welcome to this week’s edition of PreneurCast with him, Pete Williams, and me, Dom Goucher.
Pete Williams: Hey, buddy. How’s things?
Dom: Pretty good, sir. As usual, I’d have to say. But you just have to check these things, now, don’t you?
Pete: Of course. Absolutely.
Dom: Of course. This week, folks, we are going to be looking at a very interesting thing. We are going to be looking at a book that we’ve talked about a lot recently, which is SPIN Selling by Neil Rackham. But we’re going to look at it in the context of the 7 Levers, one of our frameworks that we use and talk about a lot on PreneurCast. So that’s what’s coming up in the show this week. First, Pete, what have you been up to?
Pete: Oh, mate, getting older and wiser this week for me. That’s been my week. I had a birthday yesterday, which was, well, I guess ‘exciting’ is the term, so that’s been a bit of fun, and I just took a more of a relaxed week. At least in my world, so it’s been nice.
Dom: Well, it’s been a learning week for me. I’ve been focusing on learning all about LinkedIn.
Dom: Yes, I’ve been talking about this on and off for a couple of weeks, but LinkedIn have implemented some new, cool stuff with their company pages, which not a lot of people know about, and not a lot of people use. I’ve spent some time dedicated this week to learning all about those new features and how we can leverage them. So, keep an eye out, folks, because what I’m going to be doing is updating my own stuff, but also, well, I’ll tell you about it when I get there. But you’ll be able to see what we’ve done, and maybe we’ll talk about it on another show, about how LinkedIn can help.
We did have a chap on a while ago, Wayne Breitbarth was on the show. I’ll put a link to the show notes. If you’re not on LinkedIn, you really should look at it. It’s a powerful business tool, and it’s growing in its support and its influence out there, so check out that in the show notes.
Pete: Just let me give you some context there, as well, because my take is that I agree. LinkedIn is growing immensely, and I think everyone should be on there if you’re in that entrepreneurial business space. Before I spoke to Wayne on the show last year, my vision was LinkedIn was just like this online resume where, if you’re an employee, you have this online resume that you might get headhunted. And my cousin got headhunted recently via Adidas, and moved from Australia to Germany to head up their HR team, based on his LinkedIn profile.
My thing was that’s what LinkedIn’s about. But the more I get into it, the more I realize that it’s a great platform for entrepreneurs to network and promote themselves. So, even if you’ve got a little e-commerce business online, I still think there’s a place for LinkedIn in your marketing strategy. Don’t turn off like I originally did, “LinkedIn’s not for me. I’m an entrepreneur, I’m not an employee.” It actually is becoming more and more powerful for us marketers and entrepreneurs.
Dom: Absolutely, and it was that interview with Wayne on the show that really turned me on to exactly that because I was of the same mind, as well. I just didn’t see the value to me at the time. But, now, I’m past what Wayne was talking about, and that’s to say I went to the company pages and all the advanced stuff, and it is just huge and powerful. So, definitely go back and listen to that. Hopefully, it’ll inspire you to get started on LinkedIn. But also, watch this space. There might be an article popping up on Preneur Marketing about what we’re planning.
Pete: Ooh. Awesome.
Dom: Very cool. So have you actually fit in any reading in this week, Pete, or listening?
Pete: No, listening this week, funnily enough. I do want to apologize to our sponsors, Audible, who do an amazing job with our audiobooks — you can always get one at AudibleTrial.com/PreneurCast. You can sign up there and get a free trial, and download an audiobook.
But what I’ve been consuming this week is a book from an upcoming guest, which I’m excited about. Another Australian. His name’s Ben Angel, and he’s got a book called Flee 9-5: Get 6-7 Figures and Do What You Love. It’s a really cool book about breaking free from the work shackles, and becoming an entrepreneur and starting a business. He walks you through that process, and it’s a good book. We’ll have Ben on the show in a couple of weeks’ time, so keep an eye and an ear out, because it’s going to be a good conversation.
Dom: And hopefully, by the time he’s on the show, maybe he’ll have an Audible version out there.
Dom: We’ll link to the physical book in the show notes as we always do. So that’s pretty cool.
Okay, folks, time for the main topic of the show. In the introduction of the show, if you’re a follower of the show, you’re probably aware of what the two things that we’re bringing together are all about, which is the book, and the technique known as SPIN Selling by a chap called Neil Rackham, and the 7 Levers framework that we talk about a lot on the show.
But, if you’re not — Pete, do you want to just do a quick rundown of the 7 Levers, and what it means, and what it’s all about? And then, I’ll come back and do a bit of an update on SPIN Selling before we move into the main topic.
Pete: Yeah, sure. The 7 Levers is a framework that I think we covered in, like, the third episode of our show. So, 120 episodes ago was when we first spoke about this framework, and it really resonated with so many people and has become the underlying theme, as you said, for everything we talk about here and on the blog at PreneurMarketing.com. What the 7 Levers is, is it’s a framework that gives you clarity and direction when working on your business. The direction that it takes you is into the doubling of the profits that your business is producing.
A lot of people spend all their time worrying about, “I need to get more leads. I need more leads. Give me the good leads.” They spend all their time worrying about that part of their business because they think that is the sole driver that generates profit. And really, when you break it down, there are seven key elements that drive the profit of any business, which I’ll touch on in a moment. But the beautiful, the magical thing is that, if you increase each one of these seven areas, these 7 Levers by just 10% (so a very small, easily achievable goal for a lot of people), you actually end up doubling the profitability of your business.
The 7 Levers are:  Traffic;  Opt-ins — how many people opt in to your e-mail report, or try on a dress in your retail store. That qualifies as an opt-in in this context;  Conversions — how many people transact with you. So the procedure, people who have opted in, tried on that dress, registered for your e-mail newsletter, how many of those people convert into buys;  Average item price — what’s the average price people pay for the items you sell.  Average items per sale — how many items do people purchase when they make a transaction with you;  Transactions per period — if you’re looking at this over a calendar year, how many times do these people come back and buy from you again; and there’s also  Margins — what are the margins of the products you’re selling.
These seven areas all tie in to the bottom-line profit of your business. If you could increase your opt-ins, let’s say you’re currently getting a 5% opt-in rate, so 5% of the people who view your website are opting in to your newsletter. Five percent of people who walk into your footwear store try on a pair of shoes. If you could increase that from 5% to just 5.5%, so it’s a 10% increase on itself (very easily achievable for a lot of people), if you could increase your buys where they come back 10% more — so you might have, let’s say 10% of your clients come back and buy from you again. If you could increase that to 11%, just a 10% increase on itself, that is an achievement and you’ve hit that goal.
So what that does, as I said, is it doubles the profit of your business. And what this framework provides entrepreneurs like us is some clear direction. I think a lot of us spend our time just running around like we’re chickens with our heads cut off. You are overwhelmed with what to do when there’s no clear direction of what you should be working on, there’s no filter of decisions. That is what the whole framework’s all about, and I won’t spend too much time delving into that here.
We’ve got a couple of previous episodes solely on the 7 Levers of Business, and we’ll link that up in the show notes, but I do encourage people to check out those past episodes. There’s also a free report at 7LeversReport.com. It’s a 39-page free report there. It delves deep into each of these levers, gives you some clarity of what they are, and also some suggestions of the low-hanging fruit for a lot of businesses in terms of, if you are going to go and increase the business, and start measuring the business, these are the seven areas to start working on.
It’s surprising, the amount of people who have applied this as a filter and doubled the profit of their business, even just by taking the first step and measuring. Realizing that there was a big hole in their bucket. And without any additional education, just awareness, people start measuring stuff, and they get the increases very quickly, which is super exciting.
Dom: Yeah, we get great results all the time. People talk to us about the 7 Levers. One of the big things for me is, as you said at the beginning, people tend to focus on the big and most obvious things. Maybe they focus of getting more traffic, or maybe they focus on the margins on their business. All those other steps in the middle all add up. And instead of trying to increase your traffic by 100% or trying to get duffing people up for better margins, really big percentage jumps, 10% across those seven things is a lot easier to achieve. And a lot less hassle for you, a lot less work for you, just generally a lot easier to achieve. The end goal is just basic math. That, and the cumulative 10% increase does — it’s not hype, it does mathematically double your profits.
Now, with the word ‘hype,’ let’s move on to the other topic of our show, which is SPIN Selling. I remember when somebody handed me my copy of first SPIN Selling, and I thought, “Hmm. No. I don’t like that word. I don’t like the word ‘spin.’ I’m not that bothered about that book. The two words SPIN and Selling together don’t attract me at all as a title.” And it wasn’t until I read the book and realized it’s not hype. It is an acronym.
SPIN is an acronym for the framework that is put forward in this book. Now, again, I’m not going to go into too much detail about this because there is an entire book on the topic, and we’ll link to it in the show notes, or you can win a copy if you’re quick, and more about that at the end of the show. But SPIN, S-P-I-N, is a framework that really is, when the book first came out, it was a revolution in sales technique, completely changing how people approach high-ticket sales. And it’s all based upon scientific investigation, again, all in the book.
But the core idea here is that, instead of striding in the dark and telling people that I have this thing to sell, what you do is you go in, in a more consultative manner, and you ask questions. You find out things about the client, about the problem and situation they’re facing and so on. And the S, P, I, and N refer to these questions, or the framework of questions that you ask.
The S is for Situation questions, the P is for Problem questions, the I is for Implication questions, and the N is for Need-payoff questions. The idea is that the more of these questions that you ask, and as long as you ask them in the right way, and in the right order, the more you know about what it is that is the ideal thing that the client would like to buy from you. And this is just a much bigger version of the idea that people might sit in their shed for years, and years, and years creating the perfect mouse trap. But if nobody wants that mouse trap, then you’re not going to sell it.
So, what we’re going to do today, this great idea that Pete and I came up with, was to see if we can map this questioning approach, and this knowledge that you develop with these questions, into the 7 Levers. Let’s see if there’s a way of using this technique and the idea of knowledge about your client base and your market to improve the 7 Levers. What we’re going to do is we’re going to go through one lever at a time and look at these four questions. I’m going to explain the questions in a little bit more detail in a second, just so you get an overview of that. But we’re going to go through 7 Levers, one at a time, and Pete and I are going to talk about ideas and ways that these map into the 7 Levers. Are you ready for that, Pete?
Pete: Right, sounds great. And also, I want to touch off at the end about how this can definitely apply to a lot of online business owners, because I know there’s a big part of our community who have online-based businesses, and don’t have that direct face-to-face interaction with their clients. In our telco business, we have that in our sales team. But in our e-commerce projects and divisions, we don’t have that.
And I think that is something that should definitely be addressed for people, because a lot of people are going to be saying, “I don’t speak to my clients face-to-face in the sales process or during the discovering process or in the prospecting process.” They might be thinking this isn’t going to apply to them, but it absolutely does. And we’ll be touching on how that applies as well during today’s episode, so make sure you stick around because it’s going to be pretty powerful for people there, as well.
Dom: You make a really good point, actually, Pete. Because, yes, the SPIN Selling model was based upon the idea — I mean, this book almost predates the internet in its original format, so it’s all based upon the idea that you have contact with the customers. You call them up or go visit them, and you have the opportunity to ask them this succession of questions.
And, as you say, quite rightly, you don’t have that if you own an online business, or you have it much less. So you being able to put forward some suggestions about how people might overcome that problem would be great. Let’s look at these four questions, or four types of questions, that you ask, and then maybe you can talk about a solution how people can find this information out from their clients before we go ahead and map it into the 7 Levers, Pete.
Pete: Sure. Sounds like a good plan, mate.
Dom: Cool. So the four question types: the situation questions, problem questions, implication questions, and need-payoff questions.
Situation questions are very basic questions, and it’s back to this idea of who are your clients. I’ve talked about this in the past in one of my Foundation episodes, about the importance of understanding who it is that you’re talking to, what the marketplace looks like. You know the age of these people, all the basic knowledge about them, what sector their business is in, things like that. The advice in the book, by the way, is to not ask too many of these questions directly as part of the sales process, because you really should know this about your clients anyway.
But the real power comes from when you start asking the next question, which is the problem question. Because by asking people what their biggest problem is, then you can uncover what I call implied needs. Now, this idea is really important because what a lot of people do when they’re trying to sell something is they scour around for what’s your biggest problem. And the person will say, my biggest problem is this thing, my biggest problem is that my photocopier is too slow. Or my biggest problem is that I don’t have enough traffic. But it really is not a specific problem or a specific need. It’s implied that they’ve got some actual problem in their business. Not having enough traffic may not really be their problem. There may be other ones.
So you ask the next level of question based upon these problem question, which is implication questions. What is the implication of your photocopier running too slow, or you not having enough traffic? What is it doing to the business? What is it doing to you or your business? How does this affect you? What is the implication of that?
Pete: Almost what’s the cost of that? Not necessarily the cost in dollar terms, but what’s the cost in terms of pain? What does that mean to someone? For a lot of people, I think that it’s, “Oh, I need more traffic.” But realistically, what you want is more profit. That’s the problem in the business. The business isn’t to the profit level of what you want. That’s really what they’re trying to achieve. They want more clients so they can make more sales and effectively make more money.
That’s the implication of not having enough traffic. It’s not enough to make the profit that their business needs to have, so that’s an example. Realistically, to a certain degree, if you’re selling to business owners, if you’re selling in that B2B business owner space, effectively on some level, the implication is always going to be more profit. That’s the whole reason you’re in business. There’s going to be variations of how someone articulates that, and what that means to people. But effectively, it’s going to be about more profit.
But you need to get them to articulate how they see the implication being. Because some things might be about more profit, but it might be about, “My staff aren’t productive enough and we need this extra piece of tooling to be more productive for my team,” which is the real underlying implications. It’s not that my photocopier’s not working, it’s that I need a better machine to make my staff more productive.
Dom: Yeah. Really, really good examples. And a good example of the range of things that might pop up depending on the business that you’re in and what it is that you have to sell. Whether it’s a physical product or a service. These implication questions, what they do, from a sales and marketing point of view, is it also makes the client feel the pain a bit more acutely because they’re speaking about it out loud.
Pete: A really good example, in terms of this, I just want to give it to relate to online startup entrepreneurs and I do see this a lot, is a lot of people, they will articulate their problem being, “I need to hire an outsourcer. I need to go and hire a virtual assistant, and the problem is I don’t have enough time.” So the implication is, “I don’t have enough time to do everything I haven’t done in my business.”
They have this back and forth conversation in their head, but the issue they’ve got, the implication is not enough time, and the problem is they don’t have a staff member so they’re going to go and hire a virtual assistant. Where realistically, if you spoke to that person and got to the bottom of their issue, for a lot of people, it’s not that they need a virtual assistant, it’s that they need a framework to remove distractions so they only focus on the core elements of their business. Having a virtual assistant may be more problems for that person.
And once you delve into that conversation, it’s like, “You don’t need to go and hire an outsourcer yet. You need to get all the crap off your desk and not have so many spinning plates, and only have one core product and one core business model and business unit to deal with over the next two months. When you pull away all that other noise, you are going to have enough time on your plate to do the main things you need to do to grow your core business unit.” And that ties back into a previous episode we had recently, so that’s the whole problem-implication discussion that you’re trying to get out with your client.
What they might see as the problem might not be the case. So you’re going to go, what’s the implication of that problem? And you discover it’s that they want to get more stuff done, and this is where you can work out. What is the best solution? It might not be what they originally think. And this is the reason you want to delve into this. Because you could sell them some outsourcers or virtual assistant solutions, but that’s not really going to help the clients. That’s the reason you’re doing this problem implication investigation.
Dom: Absolutely, yeah. That’s a really good example of when somebody says one thing, but they really need another. And this is the thing. The goal here, with SPIN Selling, the goal is that you can sell something to somebody or deliver something, deliver a solution to somebody that is the absolute best solution to their problem. And this is for a number of reasons: one, because then they will be eternally grateful to you; and two, if it’s a high-ticket item that you’re selling, making sure that they have indicated to you in every way possible that they need that item means that they’re far more likely to complete the sale. In fact, the sale is almost a byproduct if you go through this properly. People say to you that’s what they want, and you’re able put it in front of them.
The last step of that process is the need-payoff question. If you’ve found out a problem, you’ve discovered and investigated the implied needs by looking at the implication questions, then the final step of asking the need-payoff question. And that’s: what do you need to solve this actual stated problem? You’ve gone from this indirect problem, not the real problem to the real problem. You now have an explicit need, and whatever that need is, what is the ideal solution in your mind and what is the payoff? What would you get?
An example of how you could phrase the question is, if I gave you this, what would it do for you? Not, “Here, buy this,” or, “I’ve got the answer to all of your problems. Buy this, it’s a hundred dollars.” But, “If I gave you this, what would be the result?” So you’re getting someone to visualize in their mind, picture in their mind.
Pete: They’re articulating it. You’re future pacing it, which I’ve spoken about before. And you’re always getting them to articulate the issue. It’s like you’re asking the question, if I gave you this solution, would that help? How would that look like? And then the other person will say, “That would solve my problem.” As soon as you can get someone to articulate: “That is a solution I need, that is what I want,” and they’re the one saying, “This is what I want,” rather than you saying, “This is what you want,” very small shift in the dynamics of the conversation that makes huge differences to someone writing a check, and purchasing the products and services off of you.
Dom: Absolutely. If you look at it from a copywriting point of view alone (we talked a while ago to the Copy Hackers people about differentiation), and one of the ways that you differentiate yourself is by indicating the problems that you solve, and the benefits of your solution. By going through this process: one, the client tells you the problem, the real problem; two, they also tell you the implications of the problem, so that’s the pain point; and three, through the need-payoff questions, they tell you the benefits as well. They tell you the benefit of solving the problem.
So if you could have this conversation with a client, even if they didn’t buy your product, they’ve basically written your sales copy for you. Which brings us around to that situation that you spoke about right at the beginning, Pete, which is what if people can’t have a direct conversation with their clients — before we go into mapping this to the 7 Levers? Because there are people now going, well, that’s all well and good, but I don’t talk to people. I have an online, I have a website, I have an e-commerce business. So how do I solve this problem?
Pete: Yeah, it’s a very good question. For a lot of online entrepreneurs, that is a real sticking point for them. I think there’s a couple of ways you can get around this. One way is simply doing a questionnaire, asking your community some questions in a similar fashion to the SPIN framework. You can use things like Wufoo or SurveyMonkey. And Google Docs, which is completely free, has a survey functionality in it.
You’ve probably seen and been sent to surveys before. This is what we’ve done. If you’ve gone to PreneurMarketing.com and joined our community, there’s a very high chance you would’ve gotten an e-mail from me asking what you had for breakfast, and then leading into a questionnaire where we get into our community and working out who they are, what their problems are, where they’re headed, what type of business they’ve got, so we can really understand where they’re at.
And from there, we can delve into, and then create content. Whether it’s blog posts or episodes like this that really help and resonate with the community that we’re building here at PreneurMarketing.com. That’s one way of getting the information from your prospects.
Another way is more of a guided one-to-many way that’s interactive, is running a webinar. Run a discovery-type webinar for your community. You don’t have to do it every single day, but you can guide this in a webinar situation where you go on, you run a webinar, you talk to the people in your community about their problems and about their situations, and you get feedback in the comments box of a one-to-many type webinar. You may have 50 or 500 of your audience there, and you can guide this conversation back and forth, and get their responses throughout the process of the webinar.
There’s a couple of different ways that will hopefully spark more, a bit of seeds for thought there, that will push you into the direction of getting these types of information from your community. You can then take and mold this into sales copy, as Dom said before.
E-mail sequences. You can do it at each point, in a sequence of e-mails, and that’s another way you can get conversation and feedback from your audiences. Put in a e-mail sequence that walks through almost the four steps of the SPIN Selling approach in different e-mails, and each one is designed to pull a little bit more information out of your audience. Then, the next e-mail that goes out builds on that saying, “Hey, thanks for the responses, everybody. It was amazing what people said. The two or three big problems that people articulated to us were A, B, and C. There’s a fair chance that you and your business, or you and your issue, fall into this category. So I’d love to hear from you again. “What does it mean to you, if you have this problem of getting Achilles pain when you’re running? What’s the implication of that for your training and your racing?” if you’re selling to triathletes and athletes like Matt Frazier, the No Meat Athlete, who we had on a podcast a while ago.
It’s a great e-mail you can send back to your list in the implication stage. Then the sales pitch again is, “Everyone had these implications. What if I can solve all that with this eBook?” And then you push them towards an eBook.
It’s a very high-level structure, and another way you can use this SPIN Selling situation in a non-face-to-face-manner. Because as you said, Dom, it’s very obvious that if you are a business with a sales force to be on the phone or face-to-face, you can have this dialogue and spin the conversation in the way you want it to go. Not in an unethical spin, but in the framework of the SPIN Selling direction.
Dom: There are some really good ideas there, mate. The other obvious, but not stated one, is just social media. People have these conversations on Facebook and Twitter, and even with publishing YouTube videos and looking for feedback on Google+. Starting these conversations with your customer base is a great way. But it’s all about asking targeted questions, and asking in the right way, in the right order, and using that information to lead into the next one. That’s really what we’re trying to get across here.
Pete: If you want to see this done really well, basically what you were saying about starting a conversation on a website: Ramit Sethi, author of the financial book I Will Teach You To Be Rich, which I reckon that’s the only book that’s got a more of a spammier title than my first one, How to Turn Your Million-Dollar Idea Into a Reality. I think Ramit and I both challenged each other for the spammiest book title.
But, yeah, if you go to IWillTeachYouToBeRich.com, which is Ramit’s blog, he does an exceptional job of this where he will tell a little bit of a story, and then ask his community for feedback and their experiences and their take on this issue. Then he builds up this conversation in the comments that really helps him resonate and understand what are the issues of his audience. Then the next blog post and the next e-mail will be built on that. I don’t know if he uses the SPIN framework, but it is a very similar kind of step and process he takes whenever he launches products and does little series on his blogs. It’s definitely a really cool thing to go and look at and model off of what Ramit does. He’s a very savvy marketer.
Dom: Cool. And it’s like everything else that we talk about on here. When you know about these frameworks, and you understand the reasoning behind it, certainly when you look at other people’s marketing materials, you start to see them. And that’s one of the things we’re trying to get you folks to, the point that we’re trying to get you to, is to be able to see these things in action.
Because one of the things Pete talks about is swipe and deploy, this idea of looking at what someone else is doing, mapping it into your world, and implementing it. The great thing is to be able to see these things in play somewhere and look at how somebody’s done it, and then go and use it for yourself.
With all that said, really, the extra bit of bonus here, other than just talking about SPIN selling as a technique, which is a great, powerful technique — this was my Book of the Year for 2013 because it changed the way that I did a lot of what I do. It enabled me to really step up a level with what I was doing in terms of my first customer-facing role.
But on top of that, what we want to do is just give a little bit of a twist to this. Because, again, it’s marketed as a selling technique. Direct, bang, sell, that’s it. But I think there’s a wider use to it. Pete and I talked about this, and just came up with this cool idea of mapping it into the 7 Levers. So what we’re going to do is just very quickly run through those 7 Levers, and look how the processes that you go through, the questioning that you go through, and the information that you pull out of it, can help you, or just the general technique can help you with each of the 7 Levers. So, you ready for this, Pete?
Pete: All right, let’s go. You lead it off, and we’ll dive into this. I’m excited.
Dom: Okay. The first of the 7 Levers is traffic. Now, one of our little frameworks that we talk about is something called the Preneur Hierarchy. The idea behind the Preneur Hierarchy is the relative difficulty in reaching an audience. To cut a long story short, it’s a lot easier to reach your existing audience than it is to reach a completely unknown one. It’s all about how much you know about the audience.
So, just by understanding the situation that your potential customers are in, or your existing customer bases are in, then you can target different places for traffic. And the more you work down this process, the more you go through from the situation (which is a very high-level, vague understanding about the marketplace and the kind of people), when you start looking at problems, you can also start looking at where people are looking for solutions to those problems. You can start advertising in specific magazines or advertising on specific platforms. Just those first two questions can start informing where you get your traffic from.
Pete: This is important. Because a lot of people, they sell a solution. This is something that resonated very highly this week. I had a speaking engagement here in Melbourne to a whole bunch of start-up entrepreneurs. I was talking about this whole idea of, if you want to start a business, all you need to do is find a group of people with a problem, find out where they go to look for the solution, and then just be there. A lot of people, when they talk about this they say, find a group of people with a problem and solve it.
But I think the key part missing in that is you need to know where people go proactively when they’re aware of their problem, and just stand in front of that group of people. So, as you’re selling stuff, you sell stuff that fixes a problem for somebody. Now, the problem they might have initially, or what they think is their initial problem might be slightly different to the solution you offer, because of this problem-implication flow that we spoke about before. The problem someone has, you need to get them to articulate the implication, because that’s the solution.
If you sell business consulting, maybe standing in front of a group of people who are looking for virtual assistants can help your business. Even though you don’t sell virtual assistants. That’s the problem-implication suggestion that I made earlier, and, hopefully, people see that bridge. If you can go and write a free report about how a virtual assistant won’t help your business, and you can promote that eBook or that free report to people looking for virtual assistants, you can then help articulate, “This is the problem you think you have, you need a virtual assistant. But really, the reason you have this problem, the implication of it is because you’re too distracted. Well, don’t go buy a virtual assistant, and hire somebody. Take my course, and get rid of those distractions first.”
It’s a way of understanding the implication of what you do, the problem that people have initially before they can be able to articulate that implication, and then you can go and get that traffic coming to your offer. Does that make sense, Dom?
Dom: Yeah. You literally have bridged it over into opt-ins because you talked about writing a free report. So putting your free report, and the content of the free report has more to do with the problem and the implication
Dom: When we look for an opt-in, whatever it is, an opt-in could be anything. The 7 Levers is applicable to any business, and an opt-in could be, as Pete gave an example, trying on an article of clothing in a shop, it might be signing up to an e-mail newsletter, or downloading a free report, and if you can understand not just the problem but the implication.
For example, in a sales situation, physical shop — let’s talk clothing. Something you’ve been involved with in the past, Pete, which is outdoor clothing. Now, somebody might come in, saying what they think their problem is, or they may have in their mind what they think their problem is. But if you can really understand the implication of the problem, for example, “I get cold.” They might come in with the problem, “I need a jacket.” But really, the implication is — you need a jacket, but the real problem is they get cold while they’re out walking. Now, the jacket may not be the solution. Maybe it’s a body warmer.
Pete: Yeah, and some thermal underwear.
Dom: A thermal underwear or a base layer. It’s really understanding that and communicating through from the problem to the implication, and then get them to try it on. You can say, “Hey, do you get cold? Okay, fine. Have you tried a body warmer? Try on one of our body warmers, and walk around the store in the body warmer to see the flexibility and extra movement.” And further down, the need-payoff. “What if I could give you something that kept you warm, but kept up the mobility? Because, if you’re wearing a big, thick jacket, you haven’t got mobility.” So going through and talking to people, and understanding that thing, may even get you all the way to a conversion.
Pete: Yeah, I think the biggest thing in what you’re saying there is that you need to get people in with a problem. That’s their first level of articulation. They see themselves having a problem, so you need to get them in. Whether it’s an opt-in through a free report, where the offer is talking about their problem, not about the implication. You can’t talk about the implication, it’s got to be about the problem because that’s all they can see.
And then in your free report, you can lead them and articulate, and make them see and future-pace the implication of that. That helps you sell different products and services. But same with a clothing store. If you think a lot of people, when they are cold, on your store sign, it should be, “We have the largest range of jackets,” to get them in the store as an opt-in. Then during that conversation with them, you can investigate what the implication of the problem is, and then that’s where you end up selling them the body warmer instead of the jacket, or as an additional item to the sale.
You sell them both because you understand that sometimes you get cold when you’re out doing hiking, jackets are fine for that. But if you get cold while you’re rock climbing, you can’t rock climb in a jacket. So, buy some thermal underwear. You have that conversation with them during the opt-in phase to work out all the things they need, so you can easily sell them additional items that match. That’s jumping ahead a little bit to the items-per-sale lever, but you can start to see how all these things blend together as you go through the SPIN Selling approach with your target audience.
Dom: Absolutely. Really good example there. What you’re talking about there is what we’ve previously called ‘consultative selling.’ Now, if you have this opportunity to have a face-to-face, or that your staff can have a face-to-face conversation, the SPIN Selling model is fabulous for that, because it does exactly what Pete just said. If someone came for a jacket, if you could ask a sensible question that doesn’t seem untoward that gets more of a problem description, which you can then ask the implication questions, then it does lead to all these other elements.
And it can lead to basically all the different parts of the 7 Levers as far as dealing directly with the customer is concerned. Because the next lever, other than conversion, which is basically led by you understanding what it is that they want and being able to put it in front of them, so the more tailored the solution is to them, and to their real problem and the real, actual need-payoff that they have, then the more likely they are to buy that thing. So that’s it. That’s the most important.
Pete: How many times have you had a conversation over coffee with a friend, and talked about a sales situation where you spent money, and the words that come out of your mouth are, “He really understood me”? That’s the thing that SPIN Selling does, it gets that conversion. It shows and articulates that you care, and that you understand the client. Nine times out of 10, I don’t have any science in front of me to back this up, but I would bet a lot of money on the fact that when someone says, he really understood me, the average price they paid for the items, and the amount of items purchased, would have been an increased number than if they had gone into the shop and bought whatever they thought was the solution they needed.
When you understand someone in a sales situation, they’re going to spend more money with you because they think it’s a personally tailored solution, as Dom just referred to. So there’s a huge tie-in here with what you can charge and how any things you can sell to the person.
Dom: And that is exactly where I’m going next. Not only can you convert more easily, the most basic thing, the most basic element, but the next lever is average price. What somebody is willing to pay for something is dependent on the pain that they feel, and how well the solution solves the problem and gets rid of that pain. Whatever that pain might be.
You do make a good point, Pete. The indirect benefit of this method is that people feel listened to. People feel listened to and understood. That’s incredibly valuable in the later levers as well, as I’ll come back to. But the average price thing, people are worried about pulling the price up. If you solve someone’s problem, if the pain is acute and you solved the problem, whatever the charge is, that’s what they pay. They will pay it if the pain is sufficient, and the solution is sufficiently well-matched to the problem, then people will pay.
You can look at anything in anywhere, any retail outlet anywhere, look at any item, and there are a range of products and a range of prices in that product range. Whether it’s outdoor gear, whether its push bikes. I’m not going to bring up how much you paid for your last bike, Pete, but it solves a particular problem to a particular level for you. Because you are a sports person, you do triathlons, and the bike is a big part of that, right?
Pete: Yeah, absolutely. It’s funny, Fleur and I were having that conversation recently. It’s worth more than our first car was.
Dom: There you go. But it solves that problem. It’s a problem that you understand in detail. Where I live, some supermarkets sell bikes. You can go to a supermarket and buy a bike, these days, in certain places, and that’s fine. If your problem isn’t acute, and you just want a bike, any old bike will do, the vendor doesn’t need to understand the problem either. But when you get to the level that you’re at with competing in triathlons, you understand your problem. And what you want is somebody who will understand that problem, too, and make sure that you are being sold the right thing. When you have the right thing, you will pay what it costs, right?
Pete: Absolutely. And this is where, in sales copy, you want to address the problem early, but then, as they say, ‘scratch the itch’ in your sales copy and really push the pain of the implication of not fixing the problem. Say this pain’s worth a lot to you. Get that emotional driver in the prospect as well, because that changes the prospect’s perception of what’s going on, which can indicate you can charge more for this because it’s really painful and needs to be fixed.
Dom: Absolutely. So again, same set of questions, but we’re on average price, and you’ve already mentioned average items per sale. Once you understand the situation the person’s in — whether it’s the sports they’re competing in, whether it’s the business they’re in, whether it’s just the acute nature of pain that they’re in, or the range of the pain that they’re feeling relatively speaking, then you can recommend more complimentary products. The triathlon is a great example. Anyone who buys a bike to compete in a triathlon, if that’s all they walk out of your shop with, then you didn’t do very well.
Pete: Not at all.
Dom: Because there’s a huge range of things that a triathlete needs. Even somebody just competing at the most basic level, they’re going to want.
Pete: It’s almost as bad as golf, in terms of the other stuff you can buy. The thing is, the way I look at this, and I think this will help a lot of people, is people come in with a problem — to your retail store, to your website, to your e-commerce business, to your consulting company, with a want. To have what they perceive as their identified problem, and that’s what they want. And you should sell them what they want, because that’s what they want. Pretty straightforward and obvious.
But when it comes to items per sale, during this SPIN Selling investigation, and you are figuring out what the actual implications of that problem are, what that means to that person, and what the real solution should be, this is where you can sell them additional products that they need. So they come in with a want, and you sell to their want. But you should also, throughout that conversation, throughout that sales pitch, throughout that e-mail sequence, throughout whatever it is you do to communicate with your opt-ins leading up to the conversion phase, is you’re educating them on what they really need and making it a package solution.
So they still feel like you heard them and give them what they want, but they now figure out that there’s something else that they need that will compliment, support, help, fix, or increase the benefits of whatever they’re buying. It’s that want-and-need-type solution. So you have two products now. You have a want product, and a need product that you deliver to the person in a very beautifully packaged way that helps increase your items per sale and the revenue you generate for your business.
Dom: And again, it’s back to that conversation in the coffee shop that you mentioned earlier. If you can take somebody’s problem and what they want, and also provide them with what they need by listening and understanding, then that is what will get talked about. The fact that you went in thinking you knew what you were doing, and came out with the thing you actually needed. And that is a fantastic thing to be able to do.
Which, amazingly enough, leads us onto transactions per period. You said this right back at the beginning, if somebody goes into a store or deals with a company, and feels like that company understands them, or that salesperson understands them, then when they have a similar problem, or a related problem, they will reach out to you. They will revisit you for a solution, which is one way that this can work in your benefit indirectly. Just by showing understanding, showing listening, showing the ability to give a well-thought through solution to a problem can lead to repeat business. Simple as that.
Pete: I think, too, part of it is, as we’ve spoken about in previous episodes here on PreneurCast, is that what also happens before and after the pain that they’ve got that you’re solving in your initial conversation, that is where you can also go back and sell additional items. So, part of this conversation, this SPIN conversation, this investigation, this fact-finding if you will, you’re learning a lot about the person beyond just the confines of this issue right now, where you can go back and sell them other items or services. Because you understand what their problem is, what their situation is, what the implications are, and that all ties in beautifully for follow-up marketing.
Dom: Absolutely. And I’ve been through this situation recently. I’ve had a number of meetings with potential clients. I walked into a meeting recently, and the client basically said flat out: we are not interested in what you have to sell right now. That was like the opening statement. He didn’t know what it was that we could offer, but he said we’re not interested right now. We’re going through a process right now, and there’s nothing — we’re not going to make any decisions right now.
And I said, “Would you mind,” as we have the meeting booked, “if I just asked you some questions?” So I’d basically been told no before I’d started. But I went through, and I went through the SPIN Selling method. I now have a huge amount of intelligence, not only about that client, about their pain points, and about the implied needs, and even the need-payoff that goes on in that particular company, but I understand the industry.
Which means, if I come across another client, or if I even want to go and find another potential client in that industry, I can, and that conversation will be a lot smoother, because I can target my messages just to get myself in the door. Also, they just said, not right now. They didn’t say never, they just said not right now. So, when I go back to that client, they will remember that I listened to them. They’ll also, when I get into the meeting and start trying to talk about solutions, I’m already ahead of the game. I’ve already had this conversation. So, it was a really bad situation, potentially what some people might have seen as a bad situation, turned into a really good one, just by using this model.
Pete: Yeah. Beautiful.
Dom: So, the last thing on the 7 Levers is margins. Now, margins are not just about mark-up on the product. It’s all aspects of the business. When we talk about 7 Levers in general, we talk about that. Pete, you had a really cool thing that you came up with when we were talking about this earlier, with regards to margins and suppliers. With a little bit of a twist.
Pete: Yeah. Well, part of it is just working out what the salesperson selling to you needs. Figuring out what are their objectives, what are they trying to achieve, what targets do they have, how are they measured and remunerated? Because, if you can work out what their problem is, if they need to hit a certain target, you can potentially say, “If we do this and you offer me rebates later, it helps you hit your target this month.” There’s a whole bunch of ways that you could help your suppliers reach their targets, their goals, whatever their problems are, when you’re negotiating your own rates, purchase prices and product lines.
They have problems themselves. They have issues, they have targets, they have pressures. What are their problems, and how can you help solve them as a client by structuring certain payment plans or deliverables? If they need a certain amount of product sales, can you say, “Let’s do a promotion together. Go and speak to your marketing department, and get a budget that they can help co-promote…” Let me slow this down and give you an example.
If you sell real-world goods, and you have a sales person come to you and say, “I need you to buy more products off me so I can hit my monthly target.” You discovered that issue by this SPIN Selling approach with that sales rep. You can say to them, “Let’s try and work towards that together. Let’s do a marketing campaign for our product. But I want you to go back to your marketing department at Manufacturer ABC, and get them to help co-fund a promotional campaign. We’ll go 50-50 with your marketing department to do a promotion on Product ABC. And obviously, that should increase the sales of ABC, which we have to buy from you, Mr. Salesperson.”
So, by getting them to fight your battles internally, you can get some additional co-op funding from your manufacturer. There are creative ways to use this SPIN Selling in reverse to help a sales rep fix their problem, which is hitting their targets. But also, then at the same time, they’re going to help fight your battles internally with the manufacturer to get you better terms, to get you co-op funding, to get you free additions, that you can then add into your product suite saying, “If you buy ABC, you’ll get XYZ for free for the next month.” He can do that because the XYZ doesn’t affect his budget. You can use this stuff very intelligently when you’re negotiating back with your suppliers as well.
Dom: I like that, because that really does speak to what we try and do on the show. SPIN Selling is about selling, but you just used the same technique there to understand somebody who’s trying to sell to you, to make that work to your benefit
Pete: I also want to say, at the end of the day (and it’s an overused analogy, but it’s true), everything is selling. When you’re negotiating with your supplier, you’re trying to sell them on your idea of a cheaper price point, or more free bonuses, or co-op funding, or rebates. You’re trying to sell him on getting that outcome. Even when you’re talking to a salesperson, you are selling them on believing your preferred package solution, for want of a better term.
Dom: Well, really, what you’re doing, is you’re selling them on giving you a discount.
Pete: Well, fundamentally, yeah.
Dom: And better terms. Fundamentally, it’s still a sale. You’re selling them on why they should give you better terms. That is an example, just one example, of how you can work on your margins. And, again, just to recap the 7 Levers idea, what we talk about here, we’ve just given a whole pile of ideas of ways that you can improve each one of those 7 Levers. You really do only have to do it by 10% on each one to double your profit. It’s not a lot of work to get 10% on each one. And maybe, you do seven on one, and more on another, whichever works out easier for you. Some of those are more applicable than others, depending on the business that you’re in. But this idea of the SPIN Selling, the questioning, the understanding the client, and adjusting what you sell and how you sell it, I think this is a really powerful technique.
Pete: Absolutely. And one thing I’d love people to do is take a moment and share with us what you’ve learned from this episode, and how you think you can apply this, or did it help you. The cool thing is, pretty much all podcasting apps these days have a share feature, whether it’s on your iPhone, or on the Stitcher app on Android. There’s that share button on your iPhone which I know is where a lot of people listen to the podcasts. You can click that share button and click Tweet or Facebook, and send us a tweet @preneur for me, @dgoucher for Dom. Let us know, did you like this episode?
Take a moment right now, while you’re still listening. It doesn’t have to be later, you can do it while we’re still talking right now. Hit that button and just let us know, and share this episode. Hit us up and tell us: Did you like it? What did you learn? Was it a revelation for you about how you can use SPIN Selling for your online business? Did you realize how you can go to your sales staff and get them to implement SPIN Selling? Are you going to buy copies of SPIN Selling for your staff?
Let us know about how you’re doing this right now on the Android app or on the iPhone, and we’d really appreciate to get some feedback. It’s all about feedback. Hopefully, you understood that SPIN Selling is about feedback interaction, and we want that from you guys, too, so we continue to deliver good episodes and stuff like that in the future.
Dom: Yeah, as Pete says, whatever, however you have discovered us or are listening to us, send us some feedback, through one of those means. It might be on the iTunes Store, it might be on the app on your device. Or you can always visit PreneurMarketing.com, where every episode is up there for you to download, listen to online. We also have all the show notes, all the links are on there, so everything we’ve mentioned in this week’s episode, and every other episode. There’s transcripts on there, and there’s a comment box below each episode that you can give us a specific targeted comment.
Or there’s a little very, very quick, very easy to use audio feedback. If you’ve got a microphone on your computer, you can go to the website and click the voice comment, a little thing on the side of the screen there, and leave a little voice note, and we’d love to feature you on the show. By the way, feel free to pimp out whatever your business is. Tell us what your business is and how you’re using what we’re talking about, and we’ll include you on the show, love to do that. So, any one of those means, do let us know what you think about this and any of our shows
Pete: Now, speaking of competitions…
Dom: Well, we weren’t, but we’re going to. We’re going to speak about competitions. Because, normally, if we have people on the show, as we regularly do, we’re going to have one next week, for example, they give us things to give away. But for the last few weeks, we’ve been running a competition to win copies of SPIN Selling because it was my Book of the Year. What we’re doing is we’re closing that competition at the end of this month. We kept it open because of this show. What we would like you to do to win one of three copies of Neil Rackham’s SPIN Selling is just to go to the post on PreneurMarketing.com for the Awards Show.
It’s the 2013 Awards Show post, I’ll link to it in the show notes. Leave us a comment about that episode. Anything to do with it, whether it’s something that you agree or disagree about one of the things we gave the awards to, or if there’s something that you think we missed, whatever it is. Pete and I will pick three comments at random from those comments on that episode, and we will send you a copy of SPIN Selling. Now, that is closing at the end of this month, before we tape the next show live
Pete: Just for those who are listening to us in the future, I know a lot of people stumble across the podcast and then go back through the back catalogue, that’s the end of February 2014. So, for those who are listening in March, because you’re back behind a little bit or something like that, it is the end of this month, the end of February 2014.
Dom: Yeah. If you are listening to the back catalogue, don’t worry. There are regular competitions, and so we will be providing a link to the regular competitions from this point forward. Sorry if you missed out. But everybody who’s listening live, good for you. Thank you for listening in, and go enter that competition.
Now, one other thing that you can do if you’re a fast mover is Pete is continuing with his consulting calls. We talked about getting that clarity and focus, identifying what your core activity should be. And Pete is giving up some of his time every week for people to speak directly with him for an hour about your business, your problems, and to get Pete to help you with that clarity. So, Pete, do you want to tell people how they can get in on those calls?
Pete: Yeah. Obviously, my schedule is quite tight with the businesses that I run and things like that, so there’s only a few hours every week that I make available for this. So, if you’re interested to find out more about spending an hour with me, working through your 7 Levers — we’ll spend time on each lever in your business, and working out what is that lowest-hanging fruit opportunity that you have that will give you that 10% increase.
So, in a perfect world, as you implement these things over the following 14 weeks, you spend two weeks implementing this plan we put together in this call. After 14 weeks, the profit of your business will be doubled, will be on track to double. We want to really help you guys out. To make that happen, just e-mail support [at] preneurgroup [dot] com. The team will send you all the information about these sessions and how you can book one in, and really start helping you guys get clarity on what it is you should be doing across that framework and working towards a very easily doubled business when it comes to the profit of it.
Dom: So, folks, if you think that’s valuable, do take Pete up on his offer. As he said, he’s very busy, he only has a few slots a week to do this. We have had nothing but fabulous feedback from everyone who’s taken part in one of these sessions. Before we wrap up the show, because Pete, we have gone a little bit longer than usual on this one, do you want to tell a little bit about what’s coming up next week, which is super cool?
Pete: Yeah, we’ve got a conversation with the best beard in marketing, Dr. Jason Fox, who’s an Australian PhD, hence the Doctor. He did a doctorate in motivation, which is really interesting. He’s got a new book coming out called The Game Changer. The book is about game theory and motivation. How games help motivate staff, or plays of an app, or even yourself. It’s a really cool conversation, and it’s definitely a book worth checking out. But, yeah, next week, Dr. Jason Fox, who has the best beard in marketing.
Dom: I just picked myself up off of the desk from that one, mate. You caught me completely off guard with that.
Pete: He’s a redhead with a big beard. It’s just awesome. It’s the fullest, reddest beard you have ever seen. Think Santa Claus when he was young. It’s just awesome.
Dom: I’m leaving this in. I’m leaving this in. Folks, thanks for joining us this week on the show. Look out for next week’s show. It really is quite a great conversation Pete has, as they always are. Drop in and leave us a comment, specifically about this show, or any show back over on Preneur Marketing, and do join us next week.
Pete: See you, gang.