How to Evolve From Selling 'Widgets' to 'Wisdom'
Entrepreneur's New Year’s Guide
I've previously written about the 1,024 different types of salespeople there are and the difference between selling simple products vs. ones that are much more complex and consultative in nature.
I like to call this the difference between selling “widgets” vs. selling “wisdom.” So, what follows are some further thoughts on the difference between the two, the advantages of selling wisdom and ways in which you can effectively transition your selling efforts from "simple products" to "wisdom."
The difference between widgets and wisdom
By way of a definition, selling widgets is basically selling things, and selling wisdom is selling actionable insights with the data coming out of those things. So, as an example, say you are an advertising platform (a thing). Being such a platform, you'll know there are plenty of other 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 flip side, there is a lot of data running through that advertising platform. If you can create algorithms that help your client make better advertising buying decisions, as well as compare which campaigns did better or worse and calculate product sales from each advertising campaign, you'll be selling wisdom.
And, once clients start making decisions on the wisdom coming out of your system, they'll feel something like an addiction to that data, making it difficult for them to switch to a competitor.
The advantages of selling wisdom
Looking to the example above, what are the key advantages of selling wisdom? First, it is sticky. Once you start helping your clients make everyday decisions, you'll find them 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).
Second, wisdom is harder to compare from vendor to vendor, which makes it less subject to intense price competition. Once customers trust that you are helping make their businesses “smarter” and more efficient in the ways they deploy capital, they will compare your prices to the value of revenues or cost 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.
Third, customers will pay for wisdom, far more than they will for widgets. So, most wisdom sellers see a material increase in their average ticket, the further up the “wisdom curve” they evolve their product or service. In addition, you don’t need to sell as many wisdom customers to drive the same amount of revenues you would be driving from widget sales.
How to transition your sales efforts toward selling wisdom
Shifting from selling widgets to selling wisdom typically requires three evolutions: your product, your marketing messaging and your targeted sales clients. As for your product, the change is pretty intuitive: 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 how to clearly communicate all that to your clients.
Worth mentioning is the fact that the more beneficial the dollar impact from your wisdom, the better. As an example, if the wisdom can lead the client to a 20 percent lift in revenues or cost savings, that's a lot better than simply helping the client drive a 5 percent benefit.
Once, the wisdom is flowing, you'll also need to educate your widget clients that your new wisdom solutions exist. You can do this with a clear overhaul of your product marketing materials.
For example, instead of leading with the “what” of your product, you'll lead with the “why” coming out of the data from your product, and the “how” of how all this will make such insights actionable.
This last point is perhaps the most important: The individual person you are selling the wisdom to is most likely at a higher level inside your client’s organization than the person to whom 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. Their bosses, however, 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, you need introductions into the higher levels of your client’s organization, or new salespeople altogether who are pros in consultative selling, with the right Rolodex of senior-level relationships, who are interested in buying wisdom (it's unlikely that your widget seller can effectively evolve into a wisdom seller, as the skills are quite different).
I had one client who was selling widgets, and giving away insights reporting pretty much for free. But, as I studied this client's 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 the increasing competition. What really made this company unique was the actionable insights that could be gleaned from the data coming out of the widgets, which no other competitor was offering.
So, we flipped the model: We stopped leading with widgets, and instead led 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 was off to the races.
Obviously, not all companies are in a position to sell wisdom (it is hard to drive wisdom from a hammer, for example). But, if your widgets can be technology enabled, like many of the new innovations we are seeing in the Internet of Things boom, you're in a great position.
And 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.