When I previously wrote about the 1,024
different types of salespeople, one of the variables I talked about was the
difference between selling simple products vs. selling ones that are much more
complex and consultative in nature. I
like to think of that as the difference between selling “widgets” vs. selling
“wisdom”. This post will help you
understand the difference between the two, the advantages of selling wisdom,
and how to effectively transition your selling efforts towards selling wisdom.
The Difference
Between Widgets & Wisdom
In one sentence, selling widgets is basically selling
things, and selling wisdom, is selling actionable insights with the data coming
out of those things. So, as example,
let’s say you are an advertising platform (a thing). There are plenty of other advertising
platforms in the market where advertisers can be matched to publishers. And, with high levels of competition, often comes
a lot of pricing and margin pressure on the players in that space.
On the flipside, there is a lot a data running through that
advertising platform. If you can create
algorithms that help the client make better advertising buying decisions,
comparing which campaigns did better or worse, or clearly calculating product sales
sold from each advertising campaign, now you are selling wisdom. And, once clients are making decisions on the
wisdom coming out of your system, it is like an addiction that makes it very difficult
for them to switch to a competitor.
The Advantages of
Selling Wisdom
So, as seen in the example above, what are the key
advantages of selling wisdom? Firstly,
it is very sticky. Once you are in the
company, and proving you are helping your clients make everyday decisions, they
are very unlikely to kick you out, especially if all their internal reports are
built off the intelligence coming out of your systems (where they are going to
want to maintain consistency).
Secondly, wisdom is harder to compare from vendor to vendor,
and hence, makes it less subject to intense price competition. Once the customer trusts you are helping make
their business “smarter” and more efficient in the ways it deploys capital,
they will really compare your prices to the value of revenues or costs savings
you are powering for them (not to the prices of your competitors, whom they
have not yet tested, and will be afraid to swap out). Compare that to selling a widget, which can
look very similar from one vendor to the next, leading your prices and margins
into a race to the bottom.
Thirdly, customers pay up for wisdom, far more than they are
willing to pay up for widgets. So, most
wisdom sellers see a material increase in their average ticket, the farther up
the “wisdom curve” they evolve their product or service. So, you don’t need to sell as many wisdom
customers, to drive the same amount of revenues you are driving from widget sales.
How to Transition
Your Sales Efforts Towards Selling Wisdom
Shifting from selling widgets to selling wisdom typically
requires these three evolutions: your
product, your marketing messaging and your targeted sales clients. As for your product, it is a pretty intuitive
change: instead of simply building a
product, figure out what data can come out of that product, how that data can
be synthesized down into actionable insights, and be clearly communicated to your
clients. Worth mentioning, the more
beneficial the dollar impact from your wisdom, the better. As an example, if the wisdom can lead them to
a 20% lift in revenues or cost savings, that is a lot better than simply
helping them drive a 5% benefit.
Once, the wisdom is flowing, you need to educate your widget
clients that your new wisdom solutions exist, with a clear overhaul of your
product marketing materials. For
example, you should no longer lead with the “what” of your product; you should lead
with the “why” coming out of the data from your product and the “how” to make such
insights actionable.
And, this last point is perhaps the most important: the individual person you are selling the
wisdom to, is most likely a materially higher level inside your client’s
organization than the person you are selling the widget. Mid-level managers have the decision making
authority on widgets, and they most likely don’t really care about the wisdom,
or the accountability that comes with that wisdom. But, their bosses, and the bosses of their
bosses at the executive level are assuredly interested in any wisdom that can
help them better improve their business economics and ROI. So, that means you need introductions into
higher levels of your client’s organization, or new salespeople all together
that are pros in consultative selling, with the right rolodex of senior level
relationships interested in buying wisdom (it is very unlikely your widget
seller can effectively evolve into a wisdom seller, as the skills are quite
different).
Case Study
I had one client that was selling widgets, and giving away insights
reporting pretty much for free. But, as
I studied their business, it became clear to me that the widgets were really
becoming a commodity in their industry, and prices were on a free fall in light
of increasing competition. But, what
really made this company unique, was the actionable insights that could be
gleaned by the data coming out of the widgets, which no other competitors were
offering. So, we flipped the model: we stopped leading with widgets, and instead,
lead with wisdom sales, giving the widgets away as free enablers of the
wisdom. Sure enough, the average ticket
on a new sale increased from $20,000 for a widget to $200,000 for the wisdom,
and the company is off to the races.
Conclusion
Obviously, not all companies are in a position to sell
wisdom (it is hard to drive wisdom from a hammer, as an example). But, if your widgets can be technology
enabled, like many of the new innovations we are seeing in the
Internet of Things boom, the sooner you can start harnessing the data
coming out of those widgets, the sooner you can start selling intelligence, and
the sooner you can be having a material and beneficial impact on your clients
over the long run.
For future posts, please follow me on Twitter at: @georgedeeb.