Tag Archives: commodity

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commodity services

Commodity Services And The Race To The Bottom

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Everyone wants a good price. In fact, everyone wants the best price. It is seldom that someone wants to spend more than their neighbor or competition for a similar product or service. Have you ever felt like commodity services are really a race to the bottom?

Price Strategy

Many selling efforts consider the basic economics of price. Sell more at a lower price and we’ll get more money. Sometimes this may make sense.

Selling services has some differences when compared with selling raw materials or products. The value of the product is in the spec. Anything meeting spec may only come down to one thing, price.

Services have some differences. Businesses that treat services like raw materials or products, pushing vendors for the lowest price as compared to spec, may get less than they expected.

Race to the Bottom

When you are selling a service that is based purely on spec you may be selling commodity services. Yet your value will be judged on the expected quality.

It will need to meet spec which includes quality, but the quality of a service subjective.

This is even true for most jobs. When you negotiate a salary, it typically starts with spec. Ultimately though you will not only be evaluated compared with spec but your performance will be compared with price.

One of the challenges for the service provider is to apply enough margin to consistently exceed expectations.

While everyone is racing to the lowest price and trying to sell more, the intuitive path seems to include cutting operating costs to keep margins. Service quality often declines. Promises are broken.

Commodity Services

One trouble spot with services is that they often aren’t remembered for price. They are remembered for the feeling after the service.

The best lawyers, surgeons, and accountants may have to meet spec, but spec isn’t that relative to price. The service promise and the resulting expectations have more relevance.

If you were in trouble legally, would you hire the cheapest attorney? The spec may be, have the credentials to practice law. The promise is to keep you out of jail.

Here is a promise. The cheapest service may meet spec, but it will often be remembered as an inferior product.

A race to the bottom.

-DEG

Dennis E. Gilbert is a business consultant, speaker (CSPTM), and corporate trainer. He is a five-time author and the founder of Appreciative Strategies, LLC. His business focuses on positive human performance improvement solutions through Appreciative Strategies®. Reach him through his website at Dennis-Gilbert.com or by calling +1 646.546.5553.

Dennis Gilbert on Google+


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scarcity

Why Scarcity Should Be An Abundant Career Philosophy

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Influence and persuasion are popular topics in consultative sales. Today it seems we often must have a good reason to make a business deal. There must be a need, but what really closes the sale? Scarcity may be the nugget you’re missing, especially related to your career.

Philosophy of Scarcity

There has been a lot of work on the sales process and the power of influence and persuasion. One of the front runners is Dr. Robert Cialdini, who is a leading authority on these subjects.

Dr. Cialdini, has included as one of six principles of persuasion the concept of scarcity. He is not the only person to study these concepts and many sales and marketing leaders live by the value of scarcity connected with selling.

Scarcity is a simple concept. The product or service is worth more or needs to be acted on now because if you don’t, you’ll miss the opportunity.

It is the road sign with, “Last gas for 150 miles.” or “Next rest stop 68 miles.” Suddenly, you’re considering your needs.

There is more spin off. The idea that the price will increase, there will be a rush on demand, or it will never be offered again.

In these cases, the value seems to increase. It’s an opportunity to close the sale and get good margin.

Why Scarcity

Scarcity should be important for everyone. It should be important for the commission sales person, the savvy marketer, and even for individuals who aren’t directly in the front-line sales process.

Because scarcity drives value it reinforces your need for skills. Not everyone is an Industrial Psychologist, not everyone is a Microsoft Certified Architect (MCA), and not everyone is a Certified Public Accountant (CPA).

While these occupational credentials may not be extremely hard to find, not everyone has them. As a result, businesses will pay more for their expertise.

When was the last time you considered the uniqueness of what you offer?

If you’re a commodity, easy come, easy go.

-DEG

Dennis E. Gilbert is a business consultant, speaker (CSPTM), and corporate trainer. He is a five-time author and the founder of Appreciative Strategies, LLC. His business focuses on positive human performance improvement solutions through Appreciative Strategies®. Reach him through his website at Dennis-Gilbert.com or by calling +1 646.546.5553.

Dennis Gilbert on Google+


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