What do a gallon of gas, a bushel of corn, and pork bellies have in common?
They are all commodities.
Commodities are products that are essentially the same among all vendors. The only difference is the price and packaging.
But it’s also possible for our companies or our financial products to become commodities. It’s even possible for sales representatives to be seen as commodities ourselves. This is called self-commoditization.
Self-commoditization is when we look like, sound like, and act like everyone else in the industry.
Certainly, not every sales rep is a commodity. But some of you undoubtedly have prospects and clients that see you as unremarkable and unengaging as a single kernel of corn in a giant hopper car.
When you are the same as every other person or company in your industry, the client believes you have no unique value. At this point, you are competing on price alone without the opportunity to explain your real worth as a partner and as a person.
The only people that win in a commodities market are the cheapest providers. This is why gas stations will compete over pennies on the gallon. In the financial services industry, though, being the cheapest provider is usually a recipe for disaster.
The only time you want to be least expensive is when you are trying to disrupt the market, enter a market, or buy your client base.
But how do you avoid the commoditization trap?
Don’t be a boring date
The fastest way to fall into the commoditization trap is by seeming too “salesy,” by talking about ourselves and our products too quickly in the sales process.
Why is that a problem?
To use a metaphor, it’s like being on a bad date where someone talks about himself or herself the whole time. On these dates, the waiter can’t bring the check to your table fast enough. Similarly, the faster you start talking about products, the sooner your bored prospect will want to learn about pricing.
The moment you mention a product, you can guarantee that the next question is, “How much is it?”
Then, they’ll immediately start comparing you to your competitors on dollars and cents and not on the real value of your services, which is how you can help them succeed.
Congratulations. You have nickeled and dimed yourself. You’ve now become the equivalent of a barrel of oil or a 2-by-4 piece of lumber.
So, you must look differently and act differently from your competitors. You must stand out.
Forget service, expertise, and relationships
When I ask clients what differentiates them from competitors, typically I hear “service,” “expertise”, or “relationships.”
If these are what you think your differentiation is, then you run a very high risk of being commoditized. Every other salesperson or manager on the planet says this.
I can already hear what you are thinking.
But, Brandon! I am honest and really care about my clients. I’m not some snake-oil salesman!
Why is it every salesperson thinks he or she is only a decent and honest human being in the business? The truth is, most everyone in sales is just like you—trying to do right by their clients.
Being honest and decent is important. So is providing excellent service, expertise, and caring relationships. But, those should be standard, baseline features for anyone in sales. Those characteristics alone don’t guarantee success. They aren’t a safety net against the commoditization trap.
The key to avoiding commoditization is differentiation.
There is no single process to avoiding the commoditization trap. Each of your experiences will differ, but they share these key points in common:
- you must find a way to convey your personal value to the customer, and
- you must find a way to convey your company’s value to the customer.
If you take anything away from this article, it should be that you really need to think about what makes you and your company unique on a personal level. Because if you can’t explain that, how do you expect your clients to understand?