Robin Robins: What to do when you suddenly find yourself in a dark room in a commodity business

Posted by Robin Robins on Oct 26, 2016 10:00:00 AM

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commodity_business.jpgFirst off, if you find yourself selling a commodity product or service, you only have yourself to blame. YOU chose your business and your customers; so if you truly are selling a commodity where margins are thin and clients are only loyal to the person giving them the cheapest price, GET OUT. I’m not trying to be hurtful, but the reality is you can choose. Sometimes you have to identify the big, stinking pile of dung in the middle of the room instead of throwing a rug over it and spraying some perfume to try and hide it. 

Commoditization happens over time, often years, not a weekend. If you’re paying attention to your customers, your industry, trends, competitors, and your numbers, you should have seen the train coming a long time ago. Why don’t most people? Go read Who Moved My Cheese?

So now that I’ve only reconfirmed what you already know and have been extremely hurtful in scolding you about letting things get to the point of commoditization, let me try to be helpful. First off, very few SERVICE businesses are stuck with being a commodity. The “ride for hire” industry (cabs, private cars) was considered VERY much a commodity with zero opportunities available UNTIL Lyft and Uber came along.

E-book: 11 Habits of Highly Effective MSP Marketers

 

Starbucks made one of the most commoditized products on earth—coffee—into a billion-dollar success by creating a “place” to have it. Yeti is charging four to five times MORE for their coolers and tumblers in a VERY crowded marketplace by offering a superior product and a very aggressive marketing effort. What’s more common than women’s undergarments? But SPANX is a BILLION-dollar company that rose up like a phoenix in an intensely competitive market with very sophisticated, well-funded brands and competitors.

Find your unique selling point

I could go on—but hopefully you can see that in any category of business, there are those who are mediocre commodities shopped on price and who acquire customers by lucky chance, and those that choose to carve out some niche or point of differentiation that will give them an advantage. Here’s some questions to ponder as you figure out your USP (unique selling proposition):

  1. WHO is your product specifically for? Who COULD you specifically build a product for? Marketing services is a very crowded, fragmented marketplace. I decided to focus exclusively on IT services firms, which gave me a huge point of differentiation, made client acquisition and marketing easier, and allows me to charge more than most consultants. 
  1. What is the single biggest irritant your customers have when buying what you sell—either from YOU or your competitors? What can you do to eliminate that irritant? This is exactly how Lyft and Uber got a foothold. Cabs are notoriously hot, smelly, dirty cars driven by rude, reckless drivers. Try hailing a cab next time you’re in a busy city or when you’re way out in the boonies, far away from a major airport or downtown area. Good luck. 
  1. How could you flip your business model to make it difficult to compete or provide you with additional profits, advantages, etc.? Dell is going to roll out an initiative where they will give you all your computer hardware for free, provided you pay them to service and support it. Cell phone companies have been doing that for years; sign up for a service plan and get the phone for free. In my business, I chose NOT to follow the “traditional” agency business and went more toward a LegalZoom “one to many” approach. So far so good; but every business gets disrupted, and all of us need to be constantly looking up from the hole we’re digging to see what fresh new threat is coming down the pike to obliterate us, and take action on avoiding it before the buzzards start to circle.

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Robin_Robins.jpgRobin Robins is the CEO and Founder of TechnologyMarketingToolkit.com, the largest sales and marketing consulting firm in the IT channel, specializing in sales-generating marketing campaigns for MSPs, VARs, and solution providers. To date, over 7,000 IT services firms have enrolled in one or more of her programs. Click here for more information and to request a free one-on-one marketing consultation and marketing roadmap for your IT services firm.

Photo by Peter Hershey

Topics: Growing Your MSP Business

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