Differentiating Your Company in a Commodity World
Differentiating Your Company in a Commodity World
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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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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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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John AlexanderJohn has taught keyword research and SEO skills to small groups of business owners and Webmasters from over 80 different countries world wide since 2002. John is also the Director of Search Engine Academy ; Co-director of Training at Search Engine Workshops offering live, SEO Workshops with his partner SEO educator Robin Nobles, author of the very first comprehensive online search engine marketing courses at SEO Training Online and the SEO Workshop Resource Center. I look forward to hearing from you! - Visit John Alexander's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Joe DagerJoe Dager is President of Business901, a progressive coaching company providing no-nonsense direction in areas such as Lean Six Sigma Marketing and organized referral marketing. What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe’s ability to combine his expertise with “out of the box” thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with.” - James R. If you want to learn more about Business901, start a conversation with us. We can be found @ Web/Blog: Business901.com Web/Blog: FundingYourNonprofit.com LinkedIn Profile Follow me on Twitter - Visit Joe Dager's Website |
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Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
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