Early in my career I had the privilege of being one of five senior buyers for a small chain of toy stores called Toys R Us. One category I bought was metal trucks. Everyone knows the big yellow dump truck from that company in the mid-west. Let’s say that in the first year I bought this product, my cost was $9.50. In year two, knowing that nothing ever stays the same (cost of steel, labor, packaging, etc.) I would expect to pay more, maybe $9.75. That was then and this is now.
Today, if you’re selling to Wal-Mart, and you sold them this product for $9.50, next year they’d expect to pay $9.25, or even less. What happened? Well, over the years we’ve seen a consolidation in the number of customers we sell to. Fewer but larger accounts. You may not be selling to Wal-Mart directly, but you may be supplying an OEM who is. They get squeezed, you get squeezed. This leads to one of the biggest challenges companies face today, what I call the “commodity syndrome.”
What is the “commodity syndrome?” It is the belief that your products or services are a commodity. Now, before you say, “We’re unique. Our products are not a commodity.” Think about this. It’s not you that believes this, it’s the people who buy from you. And, it is often reinforced by your sales team.
Let’s explore why the buyer sees your products/services as a commodity. Your sales person meets with the buyer of a major company you want to do business with. They begin by asking about the golf clubs they see in the corner of the buyer’s office. How often do they play? What’s their handicap? This is their way of bonding. Now, they begin telling them about your company. How long you’ve been in business. The fact that you’re known for the outstanding service you provide. They’ll talk a little about other “major” accounts that buy from them. Maybe, boast a little about your superior quality. And, of course, tell them about every feature and benefit.
After all this telling, what do you think the buyer is thinking? “This company sounds great. Let’s do business.” I’d be willing to bet it’s nothing like that at all. It’s probably more like, thanks for coming in, let us “think it over.”
What happened? First, do you think your salesperson was the first to notice the golf clubs? Everyone notices them and everyone comments on them. This is not bonding and rapport. Next, they did an information dump on the buyer. They “told” the buyer all this great stuff about your company; years in business, reputation for quality and service, and every feature and benefit of your product/service. Are you beginning to get the picture?
What do you think your competitors are telling the buyer? Probably the exact same thing as your people. Telling is not selling. When the buyer cannot differentiate your company from your competitors it will come down to one thing and one thing only, who’s got the lower price. This is “commodity syndrome.” And the cost, reduced margins, skinny profits and maybe a padlock on the front door.
Now, what can your people do to differentiate your company from the competition? They can start by sounding and acting different. David Sandler said, “If the competition is doing it, stop doing it immediately!” Stop talking about features and benefits. Start asking questions of the buyer about the challenges they’re facing, in their world. Determine if your product/service can solve those problems and if the buyer is willing and able to invest in your solution. Find out not just who makes the decision, but how they would go about making a decision to switch vendors and buy from you. And most important, learn a selling system that puts your people in control of the selling process.
Remember, if your salespeople sound like, act like and sell like every other salesperson, expect them to be treated like every other salesperson. And a lower price is always a part of the equation.
Differentiating Your Company in a Commodity World - To learn more about this author, visit Michael Luckman's Website.
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Michael Luckman
(Visit Michael's Website)
Michael has been involved in sales,
marketing and sales training for over 39
years, with companies such as Milton
Bradley, Playskool, Gund and for many
years his own award winning sales and
marketing firm, Michael Luckman and
Associates. His experience runs the gamut
from consumer product sales to national
retail chains, on up to seven-figure
management consulting projects to the
Global 1000. In 1975, as Director of
Marketing for National Semiconductor, he
brought to market the first electronic
toy, the “Quiz Kid,” creating not only
that years #1 toy, but an entirely new
industry.
Early in his career Michael was a senior
buyer for Toys R Us. It was in this
capacity that he realized that not all
sales people were created equal. The truly
professional had a system that they
followed to control the selling process.
The majority though, had no system, and
soon defaulted to the buyers, and dropping
the price was always a part of that
system. When he went back into sales he
vowed to be a professional, but it wasn’t
until he discovered the Sandler Sales
Institute and its non-traditional sales
methodologies, that he realized what a
truly professional sales system looked
like.
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