Beware of Averages (and wild variables)

Say a wine shop is chugging along and doing its thing when all of the sudden a new wine comes on the market, and amazingly the wine is only $1 a bottle for the end consumer.

Wow! The store buys 50 pallets of the wine and stacks it to the ceiling.

Word gets out about the amazing $1 wine and customers flock to the store.

Suddenly wine sales shoot through the roof, with quantity out the door up 10,000%.

But at the same time, the average cost of a bottle of wine being sold there plummets to $1.07. And with that average in mind, every distributor in town starts to adjust their portfolio and sales strategy to accomodate that average, working around it, working with it, or trying to knock it out.

And that’s where the risk is, and that’s why you shouldn’t play with averages.

Averages don’t take into account distribution. This is a problem. And when one factor or product pulls the average too far, then you have what’s called a wild variable. 

Another example: You have to cross a river and the average depth is one foot. Sounds easy enough, right? The problem is most of the river is only one inch deep, expect for one part that is ten feet deep. You’ll never make it. You’ll fall into the wild variable and drown.

With our wine example, what’s the correct way to respond to the new $1 wine in the marketplace? The correct response is to identify it for what it is (a wild variable) and ignore it. Stick with what you do: selling with integrity, selling by educating, and putting customer service at the forefront. Stick with your portfolio and what you bring to the table. Don’t chase the wild variable.

Ignore most averages. Instead figure out the distribution numbers, and identify the wild variables. Find out where you figure into the distribution, and then you can find more and more ways to succeed.

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