Is Your Product Viewed as a Commodity? – Part 2

Last week I talked about a few situations where commoditization of the product or service you sell may be to your benefit in the sales process.  This week I want to take a look at a few situations where you should do the inverse.  If your product is already viewed as a commodity you may want to decommoditize (yes, I’m making up a word here) it to give yourself an advantage over your competitors.

In situations where you are selling a product or service that is perceived as a commodity you have very few options with which to win other than to compete on pricing.  To get around that you need to either get your customers looking at other things your company provide to help their business, or show them that your product is superior.  If you’re just an order-taker type salesman, you can stop reading here as you’re the perfect person to sell a commodity product or service based on pricing.  If you consider yourself a professional, or have aspirations of becoming one, then keep reading.

One might say, at this point, that most of what we do as salesmen is show customers why doing business with you versus Company X is exactly what I’m talking about here.  In a way it is, but at a core level it is not.  By selling Benefits you are showing value to a client that may come from things outside your product or service, but you aren’t necessarily decommoditizing your product.  By this I mean, just because someone sees the value of doing business with your organization versus Company X because you have faster shipping times, better terms, or easier to understand billing, it doesn’t mean you’ve decommoditized your product.

Decommoditizing your product means that the client would see your product or service as a superior option to the competitors options. Making your product stand out and breaking the customer’s perception of it being a commodity typically requires a data-intensive and technical discussion.  Here are a few situations where decommoditizing your product may be useful:

You are Stuck in a Pricing Battle
If the client sees your product as a commodity (Basically, Company X’s and your product are equal), and they see your offerings outside your product as equal, you are going to need to alter their perception.  If you don’t change their perception, they will nickel and dime you and your competitors until one of you cries, “Uncle!”  If you can make the client see that their product is superior in a way that matters to them, and not the same, the pricing war ends and you win!

The Customer Can’t Seem to Make a Decision
If the client is stuck and can’t pull the trigger you should not only be asking questions about what is causing the hold-up, but also ensuring that your product hasn’t been commoditized during their decision-making process.  When a customer can’t see find a difference in the product or offering they can often sit on proposals.  In these cases, they should be asking questions of you and your competitors to try to find differences, but don’t assume they will do this.  There are plenty of situations where they won’t ask because they don’t know the right questions to ask, and they don’t want to appear like they don’t know what they are doing.  It’s much better for you to ensure your product stands out as superior, and to ask them questions to help them find what they need to make a decision without affecting their ego.

Your Competitor is Attempting to Commoditize Your Products
The obvious counter is to bring the customer back to seeing your product as the superior option.  This is especially important if you are a market leader, or truly have a superior product or service.  While at Airborne I would push hard to commoditize our domestic services because the perception in the market was that UPS and FedEx (especially FedEx) were superior services.  If I could get the customer to see that delivery times and on-time percentages (two key things of importance for many clients) were nearly the same across all services, I could then get them focused on other Benefits I could offer.  If I couldn’t get them to see the services as a commodity I would struggle because of the market perception.

Luckily for me, FedEx and UPS rarely countered my tactic properly.  If you’re viewed as the superior product, ensure you maintain that perception. If it starts to change because of your competitor, immediately decommoditize your product or service.

Commoditization (or the inverse) can give you advantages over your competitors, or help you shore up a deal with a client that has proven challenging.  In many cases, you can use this tactic to help you with indecisive customer, or to find additional wins and benefits.  This is especially useful when you have clients that aren’t giving you much information to work with because of their perceptions.  By changing their perceptions you can find your way to more fruitful discussions allowing you to find areas of need and want.

What other situations have you found where decommoditization has been valuable?  Have you won business by doing so?