5 Quick ‘n Easy Steps to Fighting Commoditization

Illustration of people speaking into megaphones

As a savvy, experienced business owner, you may have heard of commoditization–but do you know the risks it poses to your business? HOW CAN YOU STOP IT FROM AFFECTING YOU?

commoditization of product

We don’t often use the word “commoditization” in our day-to-day communication (unless we’re trying really hard to impress someone).

As a result, its meaning can be unclear or even confusing.

Sure, a commodity is defined as “a raw material or primary agricultural product that can be bought and sold, such as copper or coffee: (I stole this definition from Google).

But what does it really mean?

A step further–Investopedia defines commodities as “basic goods that are interchangeable with other commodities of the same type.

Ah–there’s a clue. It goes on, “the quality of a given commodity may differ slightly, but it is essentially uniform across producers.

That’s our biggest clue to what “commoditization”–essentially, it’s what happens when consumers are no longer able to differentiate your product from someone else’s.

The features look the same, the buttons look the same, the design looks the same… the only thing differentiating them is the price. And that’s not good, because to run a successful business, there has to be a reason that consumers buy from you rather than your competitors.

Some economists say that commoditization is inevitable. “You can’t innovate forever,” they trumpet.

The path to commoditization starts out just like every other well-intentioned journey–with a desire to create something different. Hopefully, that “something different” will justify a premium price point.

In 2007, Apple released their very first iPhone–a fumbling brick compared to today’s newest iPhone model. But back then, it was genius.

A touch-screen interface, multi-tasking features, and easy web-surfing had never been done before. Their incredible innovations rapidly edged Blackberry out of the mobile phone market, and justified their high prices.

After a few years, Samsung started releasing their own smartphones. By then, touch-screen interfaces had become standard.

The features that had made Apple so amazing were commoditized. Everyone had them. They became part of the status quo.

Still, Apple continued to innovate. In 2011, Siri won consumer hearts all around the world–it took Google a while to catch up with Google Assistant, and Cortana and Alexa didn’t come out until much later. Apple is excellent at delaying commoditization.

Is commoditization bad for me?

Yes. Absolutely yes.

It’s good for consumers–as the status quo improves, their choices improve. Makes sense, right?

If all the smartphones on the market have face-recognition, voice-recognition, a cheeky ‘lil virtual assistant, and split screens, then who benefits?

Consumers do. No matter what they choose, they can chill out knowing that their choice was a solid one.

As companies compete to differentiate, they’ll often create offers like themed sales, coupons, bargains, flexible payment options, and longer warranties. Again–who benefits? Consumers do.

As businesses though, commoditization is bleak. It turns your company into a faceless blob, just like all of the other faceless blobs, and no one will care about you or your products because they look exactly the same and offer no real benefits. BO-RING.

And you don’t want to be boring, right?

You want your products to catch your customer’s eye from across the aisle. Sweep them in with a tantalizing glint of the shoplight. And wait–was that a wink?

You want to build brand loyalty so intense that your customers line up outside your gosh darn store 3 days, knees weak, palms heavy, before a launch to get their MONEY-CLENCHING FISTS on your wares.

So let’s cut the crap–how do we boot commoditization out of the door and prepare a place at the table for undying brand fealty?

#1 Roleplay as your customer.

Fuh-gedda-bout Dungeons and Dragons. Gather up your fellow executives, party planners, brand designers, you name it–and pretend you’re a customer.

  • What options do you have?
  • What choices can you make?
  • What offerings are available on the market that can solve your problem, and how are they different?
  • Is your product different at all?

Now, there are two types of differentiating your product. The first is to be so sucky that everyone hates it and it gets a reputation for being the worst thing ever made. That’s less commoditization and more kicking-yourself-in-the-thigh.

The second, though, is to turn your product into something amazing, with so many applicable benefits that it truly helps your customer with a major problem they have.

Innovation doesn’t have to be mind-shattering.

Think sliced bread, for example, and electric blankets, and a front-facing camera for all those clandestine selfies we gotta take.

Now, what do your customers need? Let’s say they need a time tracker for their freelance projects.

  • What differentiates time trackers on the market?
  • And more importantly: what problems do you, as whichever buyer persona you’re currently role playing, want to solve?

Flannery the Freelancer might need shareable reports so that she can tally up everything and send it over to her weirdly-specific boss.

Peter the Project Manager might want to have assignable categories so he can group tasks by client.

  • Do other time trackers have those features?
  • Do you have those features?

If everyone already has those features, then you have to dive in deeper.

  • What other problems need to be solved?
  • What would an intuitive, flawless time tracker look like?

Hint: Make your role-playing night a little easier with handy customer empathy maps. And track your time with Toggl, which has all the features you need to get sh*t done.

#2 Innovate.

CHANGE IT UP. Get a little freestyle goin’ on.

This breezy story from the 2007 edition of MIT Sloan Management Review coolly says:

Executives, entrepreneurs, and investors are too ready to believe that commodity is destiny. The result is a dulling of strategic focus and a narrowing of the business mind.

Translation: If your product sucks, it’s probably because of you. Because you’re too apathetic about it.

You’ve resigned yourself to a bitter timeline where nothing ever changes and you keep pushing out the bare minimum and consumers never get that weird fluttery feeling because of your products.

The point is, you have power over your product.

So innovate as necessary.

You don’t have to create an all-new product–sometimes, it’s as simple as revamping an existing one.

Remember: you can’t just pull the wackiest idea out of your head (a time tracker… for WHALES) and expect it to sell well. Innovation has to be done right by listening to your customers and looking at the data–and of course, doing a hell of a job roleplaying.

Release yourself from the constraints of corporate thinking and empathize with your customers. For a few hours, don’t think about the catastrophes that might occur if you fail to innovate properly.

Don’t think about the pressure. Lay down on a bean bag and eat some chips and let the ideas ~flow~, man.

Other ways to spark innovation:

  • Do some boring chores and give your mind time to wander.
  • Meditate.
  • Stretch like your back depends on it.
  • Watch some funny stand-up comedy videos.
  • Stalk your competitors.
  • Write a bad poem about something that frustrates you, or from the perspective of a customer.

#3 Spell out your value.

What if I told you that I had a time tracker so robust that you could track time right in your browser with a single click of the button?

A time tracker so intense that it’ll notify you when you go over budget, and display even the tiniest motes of data (for all you data junkies out there) in a handy chart?

Pie chart, bar chart, you name it.

You’d probably be a little intrigued. Curiosity piqued. And you might even sign up.

Why? Because I clearly told you about the benefits, and the value in my product. You should do the same for yours.

(That time tracker is Toggl, by the way).

Connect with your business’ best minds and brainstorm about the different factors that go into your customers’ purchasing decision.

  • What factors do they value the most?
  • Ease of use? Accessibility?
  • Design?

Once you’ve got them figured out, hire a copywriter to make sure each value is crystal clear. Don’t force your customer to make the analysis: do it for them and shape the narrative yourself.

If you express your benefits correctly, and focus on your company’s core values, you can convince your customers to see from the same lens.

Don’t market your product as an outsider–instead, portray it as a solution to a problem. It’ll establish credibility and set you apart from your competitors.

The biggest benefit of outlining your benefits? It’ll protect you from competing on the lowest common denominator of price.

If you can only compete on price, then you’ll quickly find yourself racing to the bottom. That isn’t fair to you or your employees.

If you can convince your customers to buy into the value proposition you’re making and help them understand how perfect the solution is for them/their business, you can justify your pricing and get paid what you’re worth.

#4 Play smart with pricing.

There’s a reason why people who sell Master Classes and online courses break their costs down into manageable payment plans–it makes the buying decision easier.

Plus, by locking your customer in to a payment plan, you can upsell or cross-sell to them at a later date.

In order to truly be smart with your pricing system, try to stay away from undisclosed costs.

Be honest–don’t say “$5.99 a month” if there are hidden fees tacked on to that. It makes customers feel like you’ve tricked them, and they really won’t like you then.

Make it as easy for them as possible to afford or pay for your product. This doesn’t mean lower the price: instead, toy with the checkout process and with payment options.

Keep the information as clear as possible to reduce the risk that they’ll call or contact you out of confusion or frustration (this cuts down costs on your end, too).

#5 Add a touch of “human”.

Customers are people, too–and they’ll respond better when they’re treated like the humans they are. You might sell or make furniture, for example–but you could go a step further and offer interior design experts who will help your customer achieve the look they’re aiming for.

Benefits? Tremendous.

They’ll be happy about the personalized attention, and you’ll be able to sell more than you might’ve had you let them make their own decisions.

Another way to add a human touch: add live chat to your website, or create a dedicated (human) point of contact for customers with complex questions.

Today’s world is all about technology and zippy processes–by connecting humanely with your customers and taking the time to craft personal, empathetic replies, you can make them feel like you truly care about them, and set your company apart once again from your competitors.

If you don’t have the stacks of cash required to pay for humans, you can connect with your customers through copy and content.

Talk to them–treat them as equals. Add some warmth and humor to your checkout process, or make them smile. Copy is an oft-neglected muscle of overall brand identity–don’t let that communication with your customers go to waste.

Commoditization, suffice to say, may not be inevitable after all. Heck, Apple’s doing pretty well–even Greg Page, the original Yellow Wiggle, is managing to innovate (in his swanky new Youtube channel) after decades of singing and dancing.

If a Yellow Wiggle can prevent his brand from being commoditized, then what’s stopping you?

May 16, 2018