The first step is understanding-i'm not completely sure how to explain it, but I think it'll make sense if I put the steps in order. Here:
1. Understand (and act with compassion for the speaker) 2. Evaluate (What the person stated-let it sink in and analyze it) 3. Remembering (what you heard-Understood/Evaluated) 4. Selecting (What you should/need to say) 5. Responding (with an appropriate reply)