The word “commoditization” is finding its way into the modern salesperson’s vocabulary with ever-increasing frequency. It’s not a new concept, but as salespeople position themselves for success in a challenging economy, a new attitude is required. It is no longer within the bounds of reason to expect customers to respond to superficial, lightweight, half-hearted marketing campaigns. They must clearly understand why a product or service differs from its competition or the salesperson’s strategy is reduced to one element: price.
If a product or service becomes commoditized in the mind of a potential customer, it is a direct result of the joint failure of the vendor’s sales and marketing efforts. Whether it’s grounded in laziness, arrogance, apathy or a simple lack of awareness, the vendor failed to assist the customer in making an informed buying decision. They failed to adequately educate and entice the customer. They failed to understand why their customers buy, and they crafted their sales and marketing efforts in accordance with that lack of understanding.
Commoditization is an attitude, not an event. If you are a salesperson, commoditization is not something that happens “to” you. Commoditization happens “through” you…through your efforts, or lack of them. The minute your customers begin to price shop, you and you alone are responsible. You can’t blame the economy. You can’t blame your customers. You need to take the time that you might otherwise spend in placing blame and re-invest it into a tougher, more meaningful sales and marketing strategy.
No matter what challenges exist in the current economy, no matter how many budgets are slashed or how many projects are sidelined, consumers will always find a way to purchase products and services that they see as necessary. They will make their purchasing decisions based on price until it has been impressed on them that a specific value or benefit exists in a specific product or service. They will still seek out “the best deal,” but they also want to feel that they have made the best possible decision.
Where can you begin to gain this insight, to strategically distance yourself from your competition? Begin by asking. You’ll find an abundance of professionals who will look right past this obvious and critical first step in search of a new gimmick, a new slogan, a flashier logo. Don’t be one of those people. Start by asking simple and honest questions. Remember the importance of listening skills. Take the time to hear what your customers have to say. Don’t make the mistake of mentally formulating your next question or comment while they are giving you the information you’ve requested. If you want to know why your customers buy, ask them, and they will tell you. It’s that simple.
It is very possible that you will reach a point where commoditization is inevitable if you do not have differentiating qualities in your products or services. If you’ve asked the questions, if you’ve put your products and services under the microscope and cannot honestly name the qualities that set you apart from your competition, you have several options before you.
First, if you are unable or unwilling to improve your product or service via new or improved features or functionality, you could seek markets which remain untapped by your competition. It’s highly unlikely that you will experience a major surge of profits with this strategy, however. If your competitors studied your products and services aggressively enough to allow rubber-stamping, they most likely studied your target markets with similar aggression. Never lose track of the fact that the easiest way for your competitors to increase their market share is to take existing customers away from you.
Second, you could take a deep breath and compete strictly on price. While doing this, keep in mind the fact that no business owner can sustain long-term growth and profitability by slashing their current margins of profit. This strategy usually signals the beginning of the end. You can consider a temporary price reduction, volume discount, or creative financing plan, but the minute that you build competition on price into your long-term strategy, you are writing your own epitaph.
Third, you can improve your products and services, but if you do this in a manner which is not in alignment with the reasons your customers buy, you’re wasting your money. Many business owners lack the strength of ego to stand firm in the face of a “so what” response and actually be grateful for the feedback. If you offer consumers some additional bell or whistle that fails to impress them, even if it is “free of charge” or “two for one,” you cannot possibly motivate them. You cannot win by giving them a discount on something they do not want or do not need.
There is one way, and only one way, to “C-Proof” your sales pipeline. You must invest whatever degree of “sweat equity” is required to not only understand the needs and desires of your customers today, but to stand on the moving sidewalk of our economy and anticipate what they will want tomorrow, next week, and next year. You must offer products that meet and exceed their wish lists. Then, and only then, will you have the winning attitude that takes commoditization out of your sales equation and places the burden squarely upon your competitors.