In our previous blogs in this series (Part 1, Part 2), we emphasized the notion that overcoming the inevitable – some degree of commoditization – is not only possible but achievable. To provide detailed context for overcoming this challenge, we focused on an industry that is literally commoditized: the metals market that includes companies that buy and/or sell steel, aluminum, carbon, and other metals in North America.
This blog, the third in this series, summarizes one of two strategies for how to become more differentiated in your markets that put your organization on the growth path and reduce the effects of commoditization.
Strategy 1: Viewing – and treating – Buyers the way they view themselves
Validation of our original premises concludes that Sellers who are seizing the opportunity to differentiate on factors other than PAR and working to shape the needs of the market are experiencing more success. Opportunities exist for Sellers to provide more, different value to their Buyers. Sellers need to drive the effort and proactively bring more value to their customers. Some Sellers are operating (and succeeding) under the assertion that the thing that will provide additional value to their customers is advice and guidance.
Winning in your markets requires a depth of understanding of the different industry segments your Buyers are in and your ability to tailor your approach to each segment (e.g., provide industry-specific advice, offer products and services that solve key issues faced by customers in that industry, focus limited resources where they can have the most impact). This approach involves leveraging your knowledge of your customers’ business to act in an advisory capacity and become a partner, rather than a vendor, and allows you to:
- Tailor communication to your customers’ segments by leveraging in depth knowledge of their businesses, and therefore their needs, to communicate the value proposition of your products in a way that enhances their strategic importance
- Offer advice beyond your own products enhancing the value they provide to your customers by applying their expertise to areas of your customers’ businesses that may or may not be related to the products they sell.
- Invest in unique products or capabilities identifying gaps to solve your customers’ problems through changes to your and your customers’ portfolio of products.
- Prioritize marketing, sales, and account management efforts understanding where they can have the most impact within the broad market and focusing resources on Buyers with the most potential.
This is an approach that is highly desired by the Buyers who are eager for their Sellers to understand their businesses better and proactively bring them insights for improvement.
There are some important implications to your business when considering this strategy:
- Talent Implications – having the right talent is key to success in the segments they serve.
- Advisory capabilities –the ability to engage in consultative selling and provide guidance to executive-level customers. This is an important skill required to develop intimate relationships with their markets.
- In depth industry knowledge to be able to display expertise in the market, suppliers want talent that has extensive experience in their respective segments.
- Structure Implications – organizing market-facing resources internally around the segments they serve. This allows sales professionals to focus on and continue to develop knowledge in their areas of expertise. Furthermore, this knowledge of the industry may lead to investments in new product lines that fill gaps in your ability to serve the industry and to even more vertically organized structures within the company.
- Data Implications – ability to understand what segments you and your customers are in and which ones are truly worth focusing on requires the right data. This strategy is built on knowledge, therefore it requires a clean set of account level data (i.e., lots of information about customers), as well as a way to look at and analyze the data to make key decisions on where to prioritize efforts.
In summary, the strategy of segmenting the market, building industry expertise, and providing strategic guidance and advice to customers has proven effective for those utilizing it. It represents one way to address the two premises discussed our previous blogs, and we will share the second strategy in our next blog.
If you are interested in the complete research report, please visit Overcoming Commoditization Through Intimacy | McMann & Ransford or reach out to Mark Slotnik and Jackie McMann for additional information.