Don't Make These 5 Mistakes in Your Organization

by Sat Duggal

Commoditization – the reduction of your product or service to something indistinguishable from your competition, except in price – is like a cancer eating away at your bottom line.  To be realistic, there are a lot of products and services that are difficult to differentiate.  But just because it’s not easy doesn’t mean you should give up and just lower your price to try to gain sales.

In fact, as we work with clients across many different industries, we find that business leaders who are fighting commoditization are often their own worst enemies.  Here are five mistakes leaders commonly make when faced with commoditization:

1. Believing you are in a commodity business

This is a limiting belief, and one that directly results in many of the other mistakes noted below. 

If you believe you are in a commodity business, that is all you will think about when making, selling and competing.  However when you define your business by the customer need you fulfill or a market problem that you solve, you’ll always stay focused on new and value-added ways of solving that problem.

2. Focusing on cost-cutting as the only way to compete

If you’ve already decided you’re in a commodity business, this is the natural next step.

If you believe the only basis of competition is price, you’ll stay focused on cutting as much cost as you can get away with. However when you truly understand the unique value that you’re trying to add to your chosen set of customers, you’ll cut costs in the right places and re-invest in the areas where you’re trying to add incremental value. You also won’t cut any of your offer that your customers desire just because you don’t get paid for it.

3. Assuming all customers want the same thing

While connected to believing you’re in a commodity business, this is more about being short-sighted and can affect any company that is not marketing forward.

If you believe that all customers want the same basic thing you homogenize your offer to meet the common denominator. In fact, customers have different needs because they compete differently in the market.  So, if you expand your offers and price points, you can meet premium and low end segments, generating growth and profit.

4. Inability to successfully (broadly, consistently and sustainably) execute new commercial strategies

Customer loyalty based solely on time with the brand is waning today, and can’t sustainably hold up a marketing strategy.  You should strive for long-term customer satisfaction, but not rely on it.

If you believe the primary instrument of your commercial success is the strong customer relationships your sales teams has built, success will be fleeting. However if you enable the sales-team to maximize those relationships so they can execute a commercial strategy that  shows and manifests the flexibility, breadth and value of your offer and requires customers to make tradeoffs based on your uniqueness, you’ll reduce your cost to serve and increase revenue and profit.

5. Looking at sales as the only interface with the customers – thereby limiting your customer strategies

Again, this mistake arises due to an old-fashioned, short-sighted view of the customer.  These days, customers interact with brands across dozens of different touch points, and every one of them presents an opportunity to either strengthen or weaken the relationship.

If you believe your sales and commercial teams are the only interface with the customer you’re limiting the impact you built an entire organization to deliver. However when your entire organization – sales, marketing, technical, customer service, supply chain, engineering, finance etc. - harmonizes to deliver a customer experience that reflects your strategy, you increase customer loyalty and stickiness.

If you’ve noticed any of these mistakes being made in your own o rganization, and you’re ready to start conquering commoditization right now, contact EMM Group for the latest proven solutions in the fight against commoditization.  

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Keywords: Value Based Pricing, Custom Marketing Framework, Customer Experience Design