How do you make your business stand out in a market full of similar competitors? Sales guru Tom Searcy shares some tips on selling in a commoditized environment and how to separate yourself from the pack.
I used to love to race slot cars when I was a kid. For those not familiar with them, slot cars were toy cars that ran on a slotted track with electricity transferred to the cars through small rails on the track. You could assemble your track any way you wanted, but there would always be two racers whose cars ran in their respective slots. Racers controlled the car’s speed with a hand-held trigger that allowed you to increase or decrease the speed. There was no steering–that was the job of the slots to direct the car. Too fast, you fly off the track. Too slow, you don’t move, or you lose to the other racer.
In a way, it is the perfect metaphor for the world of commoditized sales. After all, each racer was dealing with the same car, the same track, the same controls, the same power source, and the same slots.
To take that metaphor a step further, you can even imagine that the slots are the customer’s parameters, which are set in advance. The track is the process that you follow for bidding. Often the power is the same if you consider that sourcing for all of the competitors for key materials is the same. So, what makes the difference in such a controlled–or commoditized–environment?
Winners triumph because of three things:
1 Understanding conditions:
In the case of the slot car analogy, the racers know the track. In the case of your business, understanding the unique aspects of your industry’s marketplace is critical. The combination of manufacturers, materials, competitors, supply gaps, or some other elements creates strengths and weaknesses to be leveraged. Recently, we were working with a company in a highly commoditized market. The market’s growth rate for their product was four percent, but they were growing at more than 11 percent for several years. Why? They were leveraging international currency fluctuations in their supply chain to gain price advantages, locking up large contracts based on their ability to serve hard-to-reach locations in their customer’s operations, and keeping enough inventory to guarantee rapid delivery. To go back to the car analogy, the strategy of the track was more important to this company than the speed of the race car. Put another way, they played the track to their advantage. You have to find what your unique leverage point is, as dictated by the market and industry conditions.
2 Identifying nuances:
What makes your car faster in the race on the track is actually how you handle the curves, not the straightaways. Slowing down just enough to not flip off the track and accelerating quickly enough to gain just a little more advantage than your competitor on the exit of each turn determines the winner. In business, this means looking for openings in the market, mistakes of the competitor, or changes in the customers. A printing company we worked with won a lot of government work through bids. I asked the CEO how he won so often, expecting his secret to be efficiencies in production or other major operational components. Instead, it was relatively minor things–change orders and paper pricing. These two small components that impacted his commodity price for the bid, yet preserved his margin, are what allowed him to win. The takeaway here is that he understood the nuances of combining competitive bid positioning and margin preservation through change orders and paper pricing. He built flexibility into how he engaged prospective customers and delivered his services. Look at your market conditions and find those nuances and combinations.
3 Remaining vigilant:
If you can recall playing slot racers from your youth, you may remember the level of focus required. You could not look away because the cars moved so fast and there were so many turns that if you were at the wrong speed you would get passed or thrown off the track. In terms of your selling environment, look carefully at industry trends and forecasts, and keep your eye on your competitors. Set up Google alerts on the competitors you want to keep a closer eye on, so you never miss a move they make. If they are mentioned in the press, you’ll see it, and understand what they are doing, or not doing, so you can react accordingly. Keep a close eye on changes in vetting, buying, renewals by your customers. You never want to be surprised by a customer you think is a slam dunk renewal tells you your contract is going back out for bid.
To win in commodity sales requires a similar hyper-vigilance on all of the items described above. The market moves very quickly and to win in the market is to triumph in lots of small moves throughout the race. If you stay vigilant about what’s ahead and around you, you are more likely to win.
No one really wants to be in a commoditized business. It’s hard work and your unique value propositions can be disregarded by your customers quickly. However, if you are in that world, you can still win. You just have to play a lot harder and smarter.