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What Commoditized Products Can Teach Us About Selling

by David Brock on March 24th, 2009
I have a confession, I grew up selling high tech systems, software and complex solutions. I spent much of my career in selling very complex capital equipment. For years, I had an arrogance that real sales people sold these solutions, everything else was order taking.

A number of years ago, several companies having commoditized products managed to overlook my arrogance and asked me to help improve their sales processes. I think may have gotten more from them than they may have gotten from me.

For so many years, we systems guys relied on great products. We would go to great pains to differentiate the features, GUI’s, and whatever product capabilities we had to win deals. Imagine the plight of the sales professional who sells a commoditized product. One tank of chemicals from one company is pretty much the same as another tank of the same chemical from another company, isn’t it? One electronic component is pretty much the same across suppliers, right?

How do you differentiate yourself when the product is not differentiated? I’ve written a lot about needing to look outside the product—people who sell commoditized products know this as second nature. They look at how the customer uses the product, their processes, the logistics management systems, different packaging alternatives and many other things.

They look at the process of acquiring and using the product, finding ways to make this easier, more efficient and more cost effective for the customer.
They engage their customers in different conversations. They talk about partnerships in different ways. In working with basic materials companies, many of the sales people work with their customers in looking at “special formulations” that address the end customer in different ways.

For instance with a detergent company, the proposition might be, “can we work with you to develop unique formulation of your product to make ‘whites white, colors brighter?’” I worked with a client on this problem, they established great value with their customer by helping them use the “chemicals” more effectively, producing a better detergent product.

In the electronics components business, companies are taking more responsibility for design, development, along the way adding to the product content they sell to a customer and creating much greater value than the sum of the components they supply.

In this world, you can’t get past the price competition, it’s a given, you compete on milli-$’s in price difference. The great sales people I have met who sell commoditized products are creative in doing very sophisticated business analysis—note I didn’t say price analysis. They know their customers processes and the costs of using the commodities, they know how they can reduce customer costs, without reducing their price. They are very sophisticated in leveraging strong financial analysis as part of their negotiation process.

Customers buy value! Too many of us have focused just on the value of our products, not on other elements of value that are important to our customers. Those of us who have sold complex systems products can learn a lot from our peers that sell commoditized products. It helps you be even more competitive and differentiated.

As a side note to those who sell commoditized products, the reverse is true. There are great lessons you can learn from the “systems cowboys.” I’ll write later on this.

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