Are You Selling Your Commodity?
Focus on the product not the commodity.
When selling a product or service, we often see a push toward commoditization. Which is great for the customer because it drives the price down. Not great for the businesses as it puts a lot of pressure on your margins. So how do you shift focus from commoditization?
The commodity vs the product
The first step is to understand what is being commoditized. That you cannot change and often has a low barrier to entry, think cell phone cases on Amazon. There are a million options and a lot of them are very similar. When you see the push toward commoditization, that often is because someone is pushing the industry toward volume, instead of quality. They are trying to sell twice as much to make the same amount of money. You do not want compete in that market, I’m assuming. As a small business volume is usually one thing that is hard to compete on. So if you are not going to compete on the commodity side, then what is the product? The product, and full disclosure this idea comes from the book, The E Myth. The product is the process of completing the sell of the commodity item. You’re focus is on how you engage with the customer and make it the easiest highest service transaction that customer has ever experienced. That way they get value, not from the physical product or service, but from the product of buying from you. You turn your business into the product that drives differentiation, and margin for your business. You will still be selling a commodity, but how you sell that commodity will be so much better that customers cannot stand to buy it from anyone else. How can you achieve this? Through improved customer service.
Your new product
The new product you are focused on is your customer service. How are you engaging with the customer and how are they engaging with you? Can you improve the physical interface for them? Think of your website. How can that be improved to reduce the friction of buying? Should your customers have an automatic renewal of your product or service? Can you make it easier for returns, or cancelation? These are the kinds of questions that you want to ask about your product. Answering these questions and others that come up will improve the product you offer your customers. Remember when we are talking about product now we mean the customer service product. We are striving to be the best experience buying anything this customer has ever had.
Another consideration is simplifying the process. Auto renewals could be one way to do this. Look at the steps a customer goes through. Can you combined or eliminate some? Are you asking for too much information during the process?
What about the follow-up process? How often are you asking your customers for feedback? How often are they providing feedback? Maybe you need to be physically meeting with them more. That will allow you to build a report with them and bring down the barriers to honest feedback. Are there upgrades you can offer them? Should they be free, or additional costs?
I know that is a lot of questions and not a ton of answers, but the answers will vary for each business. There is not a one size fits all or most or any for that matter. You have to take time to review and answer these questions for you and your business. Make sure you set aside time on a quarterly basis to review questions like these. That will ensure that you continue do improve your product each quarter.
So remember:
Commoditization does not mean you have to focus on costs.
Improve the customer experience enough and that becomes your product.
Set aside time each quarter to review questions like the ones above and improve your product.
Thank you for your time. I hope you found some value in this post. If you did please share it, it really does help. Thanks!