Unified communications and small and midsize computer high tech are the primary industries we serve. Until the widespread adoption of monthly services delivered via technology, it was computer, communication, and medical device and energy companies that claimed they were “high tech” businesses. The one thing they have in common is that they leverage technology strategically to run their organizations and serve their customers.
All that has changed.
Every Company is a Tech Company
Now even your saltwater fish guy is a tech-based business managing the timers on your tank’s lighting to ensure your corals stay healthy, and the tank doesn’t grow excessive algae.
Technology has blossomed to the point that nearly every business relies on it.
Landscapers design in computer-aided design CAD systems. Trainers offer internet-based training with subscriptions to supporting videos and tools. Marketing agencies like ours use marketing automation platforms to manage and measure campaigns and lead generation activities.
Technology is everywhere.
As demand has grown, so have the software applications to support it. Companies no longer develop their own. They buy subscriptions to enhance their services and expand their solutions. The challenge is, when they do that, so do their competitors. Suddenly everyone in your industry looks the same, using the same applications and offering similar services – especially in the small and midsize business space.
One day you wake up and realize your market is now a commodity, and you’re competing on price. You find yourself asking, how do we sell against price when we know we have other value?
Commoditization of IT Managed Services and Other Industries
Nowhere is this trend more evident than in the IT managed services (MSP) market. (These are the companies that keep your computer network running efficiently and securely.) Most MSPs use similar applications to manage their clients’ networks. They work on similar networks. They hire similarly skilled staff. They even offer similar support packages.
While MSPs work hard to distinguish their offerings from other MSPs, they struggle. In the absence of any uniqueness between solutions, more and more customers are making decisions based on price.
Sound like what you are experiencing?
Even if you aren’t an MSP, your own industry may be facing commoditization for the same reasons. The ease of access to technology is both a bane and a boon. You need to plan the evolution of your company before you become one of the pack and you find yourself selling against price.
How to Sell Against Price in a Commoditized Industry
The obvious solutions to commoditization are to streamline your process or drop your prices. But your competition is actively focused on domination by means of at least one of those strategies, too. It’s a tough battle to enter head-on and win.
That leaves you two choices to sell against price.
- Expand your solution set to include a unique offering your competitors can’t develop. Then get hyper-focused on who you sell it to. Clients of ours who offer unique solutions in combination with the standard offerings aren’t feeling the price pinch. They’ve expanded their business specializing in niche industries with a product or service their competitors could only wish they have. One has broadened their company’s capabilities to include multilayered, complex security protection in two industries with strict compliance standards. A second has developed a software application. A third has defined an enterprise niche serving CIOs in one industry.
- Perfect sales. Not every company has the skills to develop a new, niche solution. In that case, the way you sell against price is to focus on your sales process. When you have no solution differentiation and you aren’t the low-cost leader, your sales team and sales process must fill the gap. The companies winning the commodity war don’t always possess the best solutions with the best people and the lowest price. They’re the ones with the top salespeople and consistent sales process. Their reps are polished, articulate and reliable. They knowledgeably discuss solutions and recommendations that fit prospects’ needs. The sales team guides their prospects through their Buy Cycle. These same organizations combine marketing and sales to stay visible in their target markets, consistently educating, communicating and connecting. Their objective is to be top of mind when a prospect needs their solution and reps respond quickly and professionally.
How Sales Provides Differentiation in a Commoditized Industry
While price is a consideration, sales-led companies win because their salesperson sold more effectively than all the others. When asked in loss interviews we conduct, customers confess they saw no distinction between the organizations when they were making a decision. They went with the company who was most helpful and trustworthy with a defined process that helped them make the best choice for their business – the company with a more effective sales process.
Step back and take a hard look at your company. Is your market turning into a commodity? Do you have the efficiencies to compete on price or the solutions to evolve? If not, it’s time to put your energy into perfecting sales. Not only will you compete more effectively, you’ll close more sales and grow – without discounting.
Contact us if you’re a small or midsize business and find yourself competing on price too frequently. It’s time to change your approach. We can help.
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