If you can sell the wisdom, intelligence, and data from your products, you’re in a good position to win. In this edition of the Atlanta Small Business Show, we discuss the difference between selling widgets and selling wisdom with George Deeb, Managing Partner at Red Rocket Ventures, Forbes Contributor, and author.
Transcription:
Jim Fitzpatrick :
So thanks so much for joining us today, George. I really appreciate it. So what’s the difference between widgets and wisdom?
George Deeb:
The simplest way to describe it is think about a widget being a tool, something that does a specific function, and the wisdom is gleaning insights that the data that got put into that tool. So it is trying to bubble up intelligence or actionable insights for your client to help them improve their businesses.
Jim Fitzpatrick :
Absolutely. And can you give us an example of the difference between the two?
George Deeb:
Yeah. I mean, I had a client that was in the business of collecting consumer data from an auto show. So if you have the mobile app that somebody’s putting their email address or their phone number into at the auto show, that’s a widget. Okay. Now, what you do with that data on the back end is building, reporting that quantifies. Well, how many people came to my booth, and what are the demographics of those people, and how many people had purchased intent? And of those people that visited the show, how many actually went on to purchase something from our website, and they actually went to one of our dealerships and bought a car? Now you’re helping them calculate ROI from the event to make sure that their auto show expense was actually getting a good payback. That’s an example of the wisdom. Right. So that the tool itself is the widget. The data and the actionable insights out of that tool is the wisdom.
Jim Fitzpatrick :
Sure, sure. Is it, or I should say, isn’t it better to speak to the product or service you’re selling?
George Deeb:
Yeah, at some point. I mean, that’s the natural leaning of most entrepreneurs. They like to talk about their products. They’re in love with their business. They’re in love with their baby. And all they want to do is help spread the gospel about their product. The reality is what your client that you’re pitching cares about is how your product is going to help them. How’s it going to drive more revenues? How’s it going to lower your expenses? How’s it going to improve your user experience? So you want to pound home those points first on how are you going to help them and their business improve before you bore them with the details of the features and functionalities of your product.
Jim Fitzpatrick :
Sure, sure. So what are some of the advantages of selling wisdom?
George Deeb:
Yeah. There’s a few things there. I’d say the first thing is wisdom tends to be sticky, right? Once somebody is making business decisions are off of your platform, it’s very hard to switch platforms because they’ve got the traction and the track record and the month by month progressions. They’re going to want to see how their business is improving on that platform. Number one, it’s sticky. It’s hard to stop using once you’ve started using it. The second is it’s harder to price shop, right? If you’re just a widget, a tool to collect information or whatever, everyone’s going to look at that as basically the same thing. And it’s a race to the bottom on price.
George Deeb:
Where if you’re selling wisdom, well, if your tool is actually helping me be smarter, it’s harder to compare how smart you’re actually making me. Right. So the smarter your tool is that helping improve in the business, the more price you can command from that. And that’s the third difference, which is let’s say you can sell a widget, make this up for $10,000. You might be able to sell wisdom for $100,000. Right. So the primary difference is how much you can command from a price point.
Jim Fitzpatrick :
Sure, sure. And when it comes time to sell your business, whenever that is, the wisdom part of it really outshines the widget part of it. Right? And the gadget part of it. If you’re collecting that data, isn’t it true that will bring many more multiples that data than perhaps the widget would?
George Deeb:
Yeah. And any business that’s in the business of intelligence is worth more than just somebody just building a basic technology. So yes, there is a valuation benefit of this. But the primary difference here is that you’re taking your business to the next level, right. You’re helping take their clients’ businesses to the next level. You have a higher chance of converting them into customers, maintaining them with customers over time.
Jim Fitzpatrick :
How do businesses do that? How do they make the shift to selling wisdom?
George Deeb:
Yeah. A couple things. Well, first of all, you got to change the way you design your product. Right? Let’s keep going on this auto show example. You’re just not building an app to has a user’s name and email address on their phone number. Now you got to start thinking about, well, what reporting do I need out of this system? And how am I going to glean insights out of that system? I got to build the reporting and analytics system into the product. Part one is building out the product. Part two is you got to change your marketing messaging, right? So you’re not just out there saying, listen, I got this great app to go collect information from an auto show. Now you got to change the messaging to I’m going to help prove that you’re driving an ROI from every one of your events, and I’m going to help you reshape your marketing investment to help get a higher ROI and figure out which cities are the best places to put an auto show, because I can actually track them into sales at the dealership. That another example.
George Deeb:
The third thing that needs to be is how do you target your customer? Right? Because wisdom tends to be purchased by upper management, and widgets tend to be purchased by lower level executional people.
Jim Fitzpatrick :
Very interesting.
George Deeb:
You don’t want to target the wrong person with a wisdom message because a widget buyer only cares about the widget, right. So you need to go over their head into the management suite to pitch the right person that cares about the wisdom to help you get the sale.
Jim Fitzpatrick :
Gotcha. Gotcha. And are there varying levels of wisdom?
George Deeb:
Yeah. I mean, for sure there is. Level one is you got to be basically report on the data. So level one is, okay, how many people showed up at my booth? And you’re just telling me that 100 showed up at my booth in Detroit and 200 people showed up in Chicago and 300 people showed up in New York. That’s basic, right? That’s that’s that’s level number one. Level number two is gleaning the insights. It’s taking that next level to figure out, how do you make this data actionable? And connecting the dots to ROI and car sales and helping them figure out, well, Detroit worked well, but Chicago didn’t. In next year’s budget, double down on Detroit, maybe pull back in Chicago. So that’s an example of kind of varying levels of data. And you want to basically cut the losers and double down on the winners.
Jim Fitzpatrick :
Yeah. Yeah. Of course. Of course. Do you have any other case studies of companies that successfully made this pivot?
George Deeb:
Yeah. I mean, I had one person that was selling a widget. Was kind of some interesting piece of technology. They were selling it for $20,000. That was sort of their price of the product that they were out there selling. As I was talking to them, I said, listen, “There’s a lot of intelligence built into this product that you’re not really communicating that. If you actually change your product design and actually start speaking to the intelligence in your product and sold the intelligence, I bet the intelligence is worth a lot more than the tool itself.” Sure enough, they re-architected their business. They went in with that wisdom pitch, and they were able to increase their average order size from 20,000 to $200,000. Same technology, same basic tool, but now the analytics and reporting to help them get a 10X improvement on their average order size.
Jim Fitzpatrick :
You must get one hell of a box of cookies each Christmas for that bit of advice, George.
George Deeb:
Man, I wish I got the cookies, but I love sharing. I love sharing those learnings.
Jim Fitzpatrick :
That’s right. That’s right. Well, well our viewers and subscribers love hearing from you and love that you share all of this wisdom with us each month, and we really appreciate it. So hopefully we can have you back here soon to cover some other areas of entrepreneurialism and all of the great things that go along with it. So George Deeb, managing partner, Red Rocket Adventures and author, Forbes contributor. Thank you so much for joining us. Really-
George Deeb:
Thanks, Jim. It was fun as usual.
Jim Fitzpatrick :
Absolutely. We get so much out of it. Thanks so much.
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