Daily Leadership Thought #110 – Resist Commodity Thinking
Don’t fall into the trap of Commodity Thinking!
It seems like everything is being commoditized these days. As a result, margins are shrinking, and businesses are having to do more with less. In addition, consumers are becoming more demanding and less willing to make trade-offs between price and value. What is a business leader to do in this challenging business climate? My recommendation would be to target your customers carefully, fully understand what they value, deliver consistent results that address what is important to them, be clear, and prove why you are a better alternative.
The first step in any company-customer relationship is to understand the existing market dynamics and identify the relevant customer segments. There is no such thing as a one-size-fits-all product/service solution. People are individuals and buy related products/services for varied reasons. Once you understand these distinct reasons, you can categorize them and factor in variables such as purchasing power and price sensitivity. The next step is to be honest with yourself about which segment best fits with your company’s capabilities and ability to compete with other vendors.
Next, don’t ever try to be what you are not. I know it sounds basic, but it is also critical to deliver on what you say you are going to do. There is nothing more damaging than a broken customer promise. Dissatisfied customers tend to tell 3-4 times as many people as satisfied customers about their unpleasant experience. Sadly, in our eagerness to be the best, we sometimes tend to raise the bar too high by trying to exceed rather than meet customer expectations, and as a result, we fall short. Just be consistent and reliable when it comes to delivering what your target customer perceives as most important.
Lastly, your marketing messaging needs to clearly communicate why you are better and back these claims up with tangible results that are transparent to the end user, performance awards and acknowledgements that demonstrate your competence, and client testimonials. Social media is a great platform from which to address each of these messaging issues and maintain a two-way customer dialogue. In most cases, it is still possible to fight being viewed as a commodity. People will pay a premium for product or service benefits and attributes they value, as well as for brands they respect. Don’t get sucked into the vortex of low-margin, low-differentiation thinking. You don’t have to become a commodity.
Related articles
- Why You? (capacity-building.com)
- How To Avoid The Commodity Trap (hbr.org)
- How To Stop Your Product Becoming a Commodity (thestrategydistillery.com)
- Five ways to fight commoditization of your business (econsultancy.com)
- The Best Repeat Business Practices (elocal.com)
- Business Inflection Points: Knowing When and How To Adjust Strategies (vistage.com)
- Understanding the Value Cycle: Create, Communicate, Deliver, Capture (wensing.tumblr.com)
- Case Study: How a High-End Closet Company Segments its Customers (stepbystepmarketing.com)
