Selling Commodities
by Dave Kahle
Published on this site: October 13th, 2005 - See
more articles from this month
"How do you create a perceived value to differentiate
yourself from the competition, when you are both selling a
commodity?"
That's a question I'm often asked in my seminars. It uncovers
a problem that is spreading to almost every industry. The
rapid pace of technological development and our ultra-competitive
global economy means that no one can keep a competitive edge
in their product for very long. Develop a hot new product
or service, and before you can take your first check to the bank,
a competitor has a hotter or cheaper version. As a result,
customers are more and more inclined to view your product
or service as a commodity - no real difference between you
and the next guy.
This complicates life for the salesperson. In some cases,
you are selling exactly the same thing as your competitor.
I spent a number of years selling for a distributor who sold,
for the most part, exactly the same products as four or five
competitors. Many of my clients work in this arena. Lumber
distributors (a piece of lumber is a piece of lumber), industrial
fasteners (a screw is a screw is a screw), petroleum (87 octane
gasoline is 87 octane gasoline) etc. The list goes on and
on.
In other cases, your product may not be exactly the same,
but the customer views your product as a commodity with no
real differences between what you sell and what your competitor
offers. How much real difference is there between Coke and
Pepsi after all?
Regardless of the situation in which you find yourself, the
problem for the salesperson is the same - getting the business
in the face of the customer's perception of your "me
too" product or service.
So, what do you do? This. To put it simply, you must detail
and communicate the important ways your offering differs from
your competitors.
That's easier said then done. To do so effectively, you need
to spend some time thinking and preparing. And that means
that you must carefully consider the two most important elements
of the sale - your offering, and your customer. In this column,
we're going to focus on one part of that equation - your offering.
Granted, your product may be exactly the same as the competition,
but the totality of your offering may be dramatically different.
I use the word "offering" to indicate every aspect
of the purchasing decision - not just the product. For example,
the customer buys the product from a company - yours or the
other guys. The customer buys it from a salesperson - you or the
competitor. Your company and you are part of the "offering."
In addition, there may be differences in your terms, delivery,
your customer-service capabilities, your follow-up, your return
policy, your value-added services, etc. All of these are part
of your "offering."
The product may be identical, but everything else about your
offering may be different. For example, let's say you are
contemplating purchasing a new Taurus. You have identical
price quotes from two dealers. The product is the same, and
the price is the same. However, one dealer is close by, the
other across town. One dealer has a reputation for great customer
service; the other has no such reputation. The salesperson
for the first dealer is the brother of an old high-school
friend, while the salesperson for the second dealer is a bit
cocky and pushy. The first dealer has a clean, comfortable establishment, while
the second one is cramped, cluttered and dirty.
From whom do you buy your Taurus? Stupid question. Of course
you buy it from the first dealer. Not because of any differences
in the product or the price, but because of differences in
the offering. Got the idea? There is a whole lot more to a
decision to buy then just the product or the price.
Your first job is to identify those differences. Here are
some very specific steps you can take today.
- Think about everything that is associated with the product
when a customer purchases it. Create several categories,
and label columns on a piece of paper with the names of
those categories. For example, the first column could be
headed with the word "company," the second with
the word "salesperson," the third with "terms."
Continue in this way, identifying every aspect of the offering
and placing each of those components at the top of a column.
- Now, consider each column one at a time, and list all
the ways that your offering differs from your competitor's
in that column. For example, your company may be locally
owned as opposed to your competitor's branch of a national
company. Or you may be physically closer to the customer,
or larger, smaller, newer, older, etc. After you've exhausted
one column, move onto the others, filling in the details
as you go.
- This exercise will typically reveal dozens (and in some
cases hundreds,) of specific, detailed differences. Far
too many than you can easily communicate to the customer.
So, your next step is to pick out those differences that
are most important to your customer. Keep in mind that often
what you see as important may not be viewed that way by
your customers.
At one point in my career, I worked for a company that celebrated
its 100th year anniversary. That was unusual. No other competitors
had been in business nearly that long. The company decided
to make a big deal about it. A history of the company was
written, brochures printed, even murals depicting significant
moments in the company's history were painted on the walls
of the corporate office. We all thought it was important.
Our customers, however, didn't care. After respectfully
listening to our boasting, their response was some form
of "So what?" In other words, our 100 years didn't
mean anything to them. In no way did it make their jobs
easier, simplify their lives, or make them more important
to their companies. What we thought was important turned
out to be irrelevant from our customers´ perspective.
Don't make the mistake we made. Instead, take the time to
critically analyze your list, and eliminate those items
that are not important to your customer, that don't impact
their jobs or make a difference to them. You should be left
with a handful of items.
- One more step to the preparation. Translate each of those
items into statements of benefit to the customer. For example,
your company may be local, while your competitor ships from
50 miles away. So what? What does that mean to your customer?
You could translate that item of difference into a benefit
by saying something like this: "As opposed to some
other suppliers, we're just 15 minutes from your plant.
This means that you can get quick delivery of emergency
shipments, as well as rapid response to any problem that might develop. So, you'll have potentially
less downtime in the plant, and of course, less stress and
pressure on you."
Now that you've professionally prepared, you are ready to
communicate those differences to your customer. You need to
point them out in an organized and persuasive presentation.
Prepare a sell sheet with each of the differences noted as
a bullet. Next to each bullet, have a few comments that capsulize
the benefit statements you prepared. Then, meet with your
customer, lay the sheet down in front of him/her, and talk
down through it, explaining each point as you go.
Treat it like you would any other well-done presentation.
Be sensitive to your customer's reaction, and ask for feedback
as you work down through the list. Say, "How does that
sound?" or "Does that make sense to you?" and
emphasize those things that seem to be more important to your
customer. Then, leave that sheet with your customer.
I'm always amazed at the number of salespeople who are confounded
over the customer's perception that their product is just
like the other guys, when those salespeople have done nothing
to show the customer how it is different.
As always, if you have done a good job of analyzing, preparing,
and communicating, your customer's perception should be altered,
and you gain the business. If you haven't done well at this,
then your customer will continue to see no difference between
buying it from you and buying from the next guy. And, if you
haven't shown him/her sufficient reason to buy it from you,
then he shouldn't.
From the customer's point of view, if your offering is just
like the competitor's, then the customer is absolutely correct
in buying from the cheaper source. However, if there is any
difference between your offering and your competitors', than
the responsibility is totally yours to show the customer that
difference. Follow the process described here, and you'll
have far fewer customers treating you like a commodity.
Dave Kahle is a consultant and trainer who helps his
clients increase their sales and improve their sales productivity.
His latest book for sales managers is Transforming Your Sales
Force for the 21st Century http://www.davekahle.com/cotransforming.htm
. You can also sign up for his sales ezine called "Thinking
About Sales" at http://www.davekahle.com/comailinglist.htm
. You can reach Dave personally at 800-331-1287 or by emailing
him at [email protected]
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