Selling Commodities

Posted by admin on July 5th, 2008 filed in wholesale-distributor

“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.

ONE:

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