George Deeb is the Managing Partner at Chicago-based Red Rocket Ventures, a growth consulting, advisory and executive staffing firm based in George Deeb is the Managing Partner at Chicago-based Red Rocket Ventures, a growth consulting, advisory and executive staffing firm based in Chicago. You can follow George on Twitter at @georgedeeb and @RedRocketVC.
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 versus selling ones that are much more complex and consultative in nature.
I like to think of that as the difference between selling widgets versus 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 and 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.
Let’s say you are an advertising platform. 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’s 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’s 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. 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’s 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. For example, if the wisdom can lead them to a 20 percent lift in revenues or cost savings, that is a lot better than simply helping them drive a five percent 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. 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.
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’s very unlikely your widget seller can effectively evolve into a wisdom seller, as the skills are quite different).
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.
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.
Obviously, not all companies are in a position to sell wisdom (it’s 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.
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