Commoditisation – Should we avoid or embrace it?

Most businesses are now in industries that are close to being commoditised, even if they don’t want to admit it. While this is great news for the customer, it represents a significant problem for businesses.

To explain;
A commodity is a good or service for which there is demand, but which is supplied without differentiation.

Commoditisation happens when a product or service becomes so common that customers no longer differentiate between brands – and they usually buy the cheapest product on offer.

The insurance industry is commoditised. Even social media is close to being commoditised. But if everything is commoditised, then how can a company bring value to a potential client?

What is the value you bring to your potential clients? Have you considered this?

In order to survive commoditisation, businesses must have a workable strategy in place. Once you have worked out the value you bring, the next step is delivery. Without this step, you will lose your client and your reputation and your business will fade.

Creating value for clients is what every business must do to survive. By targeting customers that value the unique offering, you move from a broad commoditised market to a narrow one that values your services.

Businesses should:

  • Be authentic
  • Build relationships
  • Create energy – your customers expect you to add an opportunity, not be a source of frustration

How easily can you quantify the differences between your products and those of your competitor? How can you continuously differentiate? Simply providing a better service is not enough to differentiate your business to your competitors.

New forces have propelled the evolution of sales. Buyers are now able to get more information on their own. Consequently, the value provided has decreased and buyers have begun controlling the sales process.

One of the most meaningful ways a salesperson can add value is in helping the customer to identify and understand problems they either didn’t know they had or didn’t fully understand.

Businesses must stop being solution specialists and become problem specialists.

Selling specialist products requires a sales force that has a deep understanding of its customers needs and knows how the company’s products can provide superior solutions.

Commoditisation is the biggest challenge facing businesses for long-term profitability. Despite the fact that your customers are highly satisfied with your services, they are constantly putting pressure on you to reduce prices which d puts you into the commoditisation trap. The key to staying out of the commoditisation trap is to create significant value for your customers so that they don’t consider looking elsewhere.

People don’t buy features, they buy benefits. Companies can develop a package of complementary products and services around commoditised products to provide long-term value.

What’s your inside advantage that people don’t know about? Generate a list of customer benefits and then look for the benefit that is different from your competitors and use it at every opportunity.

This article was taken from a discussion at a Business Exposure Group meeting.


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