The Sales vs. Expertise Scale
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So was reading this thread about the efficacy of the SMB MSP Business Model and Snorble had a comment that led me to think about some things. Home users are really not a special case, they are just the smallest of small businesses. SOHO acts more like a consumer than like a business. SMB is a transition zone. SME acts like a business, but generally poorly. Large businesses act like real businesses, but without the strategy that the enterprise has. The enterprise goes from good behaviour to strategically advantageous behaviour. Exceptions exist, of course, but we generally mark these range terms by changes in how they behave for a given industry.
This brought me to thinking about the sales vs expertise scale. Consumers and SOHO inevitably see no or little value in expertise. They turn to sales people almost exclusively. They want a salesman to hold their hand and provide a product, they don't want someone educated in their needs to talk to them. The idea of paying for expertise is almost offensive.
As you move up the business ladder, this shifts. SMBs start to understand that you have to buy expertise, at least a little. They start to hire IT people or pay for advice, at least sometimes, but are highly susceptible to sales approaches as well. Sales still drive behaviour more than advice does.
Into the enterprise space, companies understand that advice costs money and good advice is what is needed for everything that they do. Enterprises regularly pay for advice and expertise in nearly all areas, nearly constantly and almost never are led by sales processes until final pricing is involved.
This seems to be, thinking about it now, a fluid scale in behaviour. As a company becomes larger and more advanced in its management, it shifts from being governed by sales to being governed by expertise.
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While I understand the thought process, a consumer is just that, a consumer. The need to have a distinction between the scale doesn't matter.
The scale of the consumer doesn't matter. Be it a home user or a massive enterprise. It's still a consumer of whatever product is being bought.
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@DustinB3403 said in The Sales vs. Expertise Scale:
While I understand the thought process, a consumer is just that, a consumer. The need to have a distinction between the scale doesn't matter.
I see what you are saying. Just say consumer. But the point was that non-business acts like a business at that small of a scale.
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The distinction here is that a single user, is a uniformed consumer(usually). An enterprise is a highly informed consumer.
The difference is about the level of knowledge that the consumer has before and during purchase.
The marketing effects uniformed consumers more than an informed on.
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You can have a highly informed single consumer about a product, who has investigated the product, and understands everything about.
More often you have a completely uniformed consumer (single residential user) who just wants something new, and gets lead along by the marketing and GeekSquad kid.
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@DustinB3403 said in The Sales vs. Expertise Scale:
The distinction here is that a single user, is a uniformed consumer(usually). An enterprise is a highly informed consumer.
I don't think that it's the level of informed that is the factor, but the level of diligence. No matter how uninformed someone is, they still know how to acquire information. It's whether they place value on good advice or not that appears to be the key factor.
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@scottalanmiller I disagree, a uniformed person, likely knows that they can go out and research the product. And likely does give it a 15 minute google review. But they won't and can't afford to pay someone $150/hr to tell them which dish washer to purchase.
It's the scale of economics in play. A single purchase doesn't warrant the extra spend.
An enterprise though, is going to be buying way more than a single dishwasher, and will want to know which last the longest, cost the least to maintain and so on. So they'll pay someone to provide the expertise.
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@DustinB3403 said in The Sales vs. Expertise Scale:
@scottalanmiller I disagree, a uniformed person, likely knows that they can go out and research the product. And likely does give it a 15 minute google review. But they won't and can't afford to pay someone $150/hr to tell them which dish washer to purchase.
I would say very much the opposite. They cannot afford not to pay for critical advice. The less informed someone is, the more value they get from paying for the advice.
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@scottalanmiller I'm not saying that they can't afford to be without the advice, I'm saying they don't have the money to be able to pay for the advice.
They've got $500 and not a penny more to spend, and go in with the mindset of "I can only get this for $500"
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@DustinB3403 said in The Sales vs. Expertise Scale:
They've got $500 and not a penny more to spend, and go in with the mindset of "I can only get this for $500"
Yes, the mindset is wrong, that's my point. Not that they can't afford or don't need the advice. Not paying for good advice often leads to being less able to pay for it against next time.
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@scottalanmiller said in The Sales vs. Expertise Scale:
@DustinB3403 said in The Sales vs. Expertise Scale:
They've got $500 and not a penny more to spend, and go in with the mindset of "I can only get this for $500"
Yes, the mindset is wrong, that's my point. Not that they can't afford or don't need the advice. Not paying for good advice often leads to being less able to pay for it against next time.
But it's not just the mindset, its real world practicalities. Some people can't spend more than X, or risk starving or some other such issue.
You're getting an individual mixed up with a business, a business doesn't starve in the literal sense of needing food.
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@DustinB3403 said in The Sales vs. Expertise Scale:
It's the scale of economics in play. A single purchase doesn't warrant the extra spend.
Spot on. Expertise tends to be a fixed cost. If it cost $1000 to pay someone to tell you the best dishwasher to buy, if you buy 1000 dishwashers it only costs $1 per dishwasher for the expert advice. If you buy 1 dishwasher, it costs you $1000 per dishwasher.
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@DustinB3403 said in The Sales vs. Expertise Scale:
@scottalanmiller said in The Sales vs. Expertise Scale:
@DustinB3403 said in The Sales vs. Expertise Scale:
They've got $500 and not a penny more to spend, and go in with the mindset of "I can only get this for $500"
Yes, the mindset is wrong, that's my point. Not that they can't afford or don't need the advice. Not paying for good advice often leads to being less able to pay for it against next time.
But it's not just the mindset, its real world practicalities. Some people can't spend more than X, or risk starving or some other such issue.
You're getting an individual mixed up with a business, a business doesn't starve in the literal sense of needing food.
Individuals are businesses. Businesses are tasked with getting the best results from the available funds. The more people act like a responsible business, the more resources they have. The more someone needs to not starve, the more important behaving smartly is.
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@Carnival-Boy said in The Sales vs. Expertise Scale:
@DustinB3403 said in The Sales vs. Expertise Scale:
It's the scale of economics in play. A single purchase doesn't warrant the extra spend.
Spot on. Expertise tends to be a fixed cost. If it cost $1000 to pay someone to tell you the best dishwasher to buy, if you buy 1000 dishwashers it only costs $1 per dishwasher for the expert advice. If you buy 1 dishwasher, it costs you $1000 per dishwasher.
Expertise is rarely like that. Small businesses need small expertise. For example, designing a sensible architecture for five years of an SMB might take two hours. Maybe a day. In an enterprise, it might take a year or two of continuous work. Things really do scale, even in the expertise space.
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Another example, a home user might need 15 minutes of advice on their non-PC gear to buy and, at most, 30-60 minutes of advice on their computing needs themselves. But an SMB of 25 people might need a full day of consulting for that and an enterprise might need a full time team.
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@scottalanmiller said in The Sales vs. Expertise Scale:
Expertise is rarely like that.
Yes it is.
Anyway, just read the original thread. NTG fire 50% of their customers? Blimey!
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@Carnival-Boy said in The Sales vs. Expertise Scale:
Anyway, just read the original thread. NTG fire 50% of their customers? Blimey!
Oh yeah. Partially because we give them the benefit of the doubt when accepting them. You can vet heavily before taking on customers, but then you risk eliminating those that are honestly trying to do a good job. We prefer to take some risk and take on too many and let them prove themselves or not then cull them later. It's a little riskier for us, but we don't fail to provide service for someone that just "appears" to be a bad customer and is truly trying to be good once they come on board.
I think you'll fine @JaredBusch in a similar boat. You either eliminate most customers before starting service, or you have to do so later. In the SMB market, the average customer is pretty bad. You can't keep that dead weight around or you can't provide great service to the remaining customers.
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@Carnival-Boy said in The Sales vs. Expertise Scale:
@scottalanmiller said in The Sales vs. Expertise Scale:
Expertise is rarely like that.
Yes it is.
In IT? What examples do you have? Maybe you are not getting advice from the right places. I can't think of anything in IT that would work as described. SMBs get good advice at a tiny fraction of the cost of larger businesses. If they aren't getting that, then that highlights the importance of getting better advice at an even higher scale - because that advice is out there, scaled for them.
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@scottalanmiller said in The Sales vs. Expertise Scale:
Maybe you are not getting advice from the right places.
This is not about me, but you raise a good point. It costs time (and thus money) just to find the right place to look. So in your example, a home user might only need 15 minutes of expert advice, but where does he find that advice? The search costs money.
In our dishwasher example, where do you find an expert that will charge 15 minutes of his time to help you out?
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@Carnival-Boy said in The Sales vs. Expertise Scale:
In our dishwasher example, where do you find an expert that will charge 15 minutes of his time to help you out?
A dishwasher is not really a business item so it not really a valid example. You can't find expert advice on movies to buy or video games to play outside of consumer reviews. That's a different type of product than your home business stuff.
But if you really want to know, call your plumber or handyman. You should have one for your home, unless you yourself are the expert and getting the expertise internally. In either case, the salesman is not the person to call.
