How To Get More Business And Command Top Dollars By Avoiding Commoditization

This is something I didn’t include in my eBook “Lightworker’s Guide to Self-Employment” because it’s more about business improvement than startup. If you are in business, it’s critical you differentiate your offers. This way, you get more business even in a bad economy and can ask for higher prices, increasing your profit and therefore enabling your to improve your offers even further.

And the key is to think as a fellow human of your customers. (Photo credit)

What is commoditization?

First, the definition. Wikipedia says:

Commoditization is the process by which goods that have economic value and are distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic to perfect competition.

This is a natural flow. Something unique comes to market. Everyone is excited and willing to pay premium price. They even line up and get on the waiting list. Soon, others copy it, letting people start comparison shop. Merchants whose only sales pitch is to lower price go ahead and lower their price. Others follow.

Our challenge as business owners is how to keep providing additional value so that people seek us out, happy to pay extra. This divides the market to two: One is the commoditized offers and the other is the unique special offers. This way, consumers can choose which depending on their value system.

You may be thinking, “Boy, that sounds good, but I have no idea how to do it. It sounds difficult.” Sure is. Avoiding commoditization takes the heart and the brain. This is why it gets rewarded well. So you have a choice. (You know I am big on free will and free choice.) You can take the easy route and work like crazy or you can think, change the way you do business, and be well rewarded.

Avoiding commoditization helps consumers, too

Please understand this approach is beneficial for consumers, too. “Perfect competition” sounds nice, but what results is a boring world of lookalike commodities. Further, it causes quality compromise because, after cutting a big portion of profit margin, it’s the only way to keep the low price. Do you really want to live in a world where only cheap boring low-quality stuffs are available?

If you love and care what you do, taking the time and effort to think how you can add unique value to your offer is worthwhile. Your spiritual commitment helps you.

5 approaches to counter-commoditize your business

Where in the commoditization process is your business in? Are you virtually free from competition? Are you in severe price war against your competitors? Somewhere in the middle?

Here are five approaches, or hints, to counter-commoditize your business:

1. Be the authority in your field

Learn your trade really well. Invest in your education. And establish yourself as the authority in your field by publishing books or speaking in public. Your authority status becomes the special value to your customers. For example, there are people who seek out the life coach they saw on the media rather than hiring any coach who advertise on the paper.

2. Educate your customers

While you yourself get educated further about your trade, educate your customers. For instance, if I were to sell soaps, one of the most commoditized products, I will make a presentation about the various ingredients that go into a soap, how each influences your skin, the negative effects of the additives commonly used in supermarket soaps on you and the environment, how mass production and old fashioned soap making are different, etc. Then I will sell soaps made in the old fashioned way with only good ingredients at premium price. The education and the proof of quality of the soap that satisfies such educated customers are the additional values in this case.

3. Personalize the service

Make your product or service one of a kind by adding personalization. I once saw an artist who paints rockstar portraits on the LP records. People buy their favorite artists’ portrait for their nostalgia. This is quite unique already, but what if the picture came with a line of your favorite lyrics and your name? Adding this doesn’t take much time for the painter, but means a lot for the customer. Would they pay a good amount for this extra feature? I think so.

4. Narrow down your target market

This may sound so counter-intuitive. You might say,”Narrow down the target market? You must be joking. I want more customers. ANY customers.” The fact is you might get more customers by tightly defining your target market and changing aspects of your business to deliver specific value this target market want.

As an example, I’m thinking of car mechanics. Even today, many women feel uncomfortable going to car mechanics. All the places I know are so male-oriented even though close to half the car owners are women. I would pay some extra and drive at least 10 extra miles to go to a garage where I feel more comfortable.

It doesn’t mean there has to be a female at the store although that may be helpful. It definitely doesn’t mean the servicemen have to wear pink. How about making the waiting area more female friendly and pleasant to sit? Offering additional service such as car wash might help, too, because a lot of women just don’t like going to places that has anything to do with car care. It saves their time, too.

I don’t have kids, but if I do, I’d be so pleased to find some kid-friendliness, too. I’m sure McDonald’s gets extra business for their play area (not for better taste over other burger chains).

This doesn’t mean you reject customers who don’t match the description of your target market. Using the same example, I think men would love the kid-friendly features just as much.

There are many ways to use this approach. Target the long tail. This may also make you the first or best known authority in this tightly defined market.

5. Get empowered by synergy

You can offer additional value by teaming up with other businesses. The key is to come up with a winning combination.

Hmm, I’m still thinking about car care. Offering additional service of car wash is a kind of synergy already, but what if the garage had a drive-up coffee shop on their premise? The customers can sip fresh brewed coffee while waiting for their cars to be serviced. It’s not just any old car place, it’s a gathering place for car owners!

And all the customers of the coffee place inevitably see the repair shop, so next time they need a service (notice they all have cars to drive up) they might just come to this one. This is synergy, helping both businesses and delivering additional value to customers.

Adding entertainment or comfort factor is an easy way of synergy. This is why restaurants host live music. It’s not just somewhere to eat, you get to hear music at that restaurant! Well, having music is getting common, how about having a magician go around the table on weekend nights? (A lot of amateur magicians would love that kind of part-time opportunity.)

This is in no way the comprehensive list of ways to avoid commoditization. What other ways can you add unique value to your business? Think from the perspective of a consumer. What do you wish to see in the market? What additional service or products make life easier and better?

Related post: Another example to counter commoditization by Seth Godin

Review: Tribes By Seth Godin

I like Seth Godin. Although he is considered a marketing guy (maybe I should say The Marketing Guy), I think he is a lot more than that. His blog brings daily inspirations for me about life and people. His latest book Tribes: We Need You to Lead Us is also a lot more than just about business.

The difference between leadership and management

Even though leadership and management are usually used synonymously, Seth Godin defines them differently.

A manager is appointed by the “king” of the organization. Their job is to keep the status quo of the organization according to the rules. No matter how they sugarcoat it, managers are fundamentally against change. In other words, their change has to be approved by the king and has to happen according to the rules.

A leader, on the other hand, is anyone who steps forward with an idea. The idea doesn’t even have to be the leader’s original. (Muhammad Yunus wasn’t the first person to do microfinancing and Al Gore didn’t discover global warming.) The important point is that a leader takes the initiative to make the idea happen. A leader is all about change.

Are you a manager or a leader? Or neither? This defines your basic driving force in life. And how you relate to others.

A manager and the people who are managed live from fear. Because they are against the natural flow of life, the change. A manager’s job is to get as much work done by the employees as possible at the lowest cost. Managers push and then exploit.

A leader and their tribe members, on the other hand, are inspired with love, the passion to make something happen that was not before. A leader leads with their message and also offers a platform for tribe members to communicate with one another. Leaders give.

The internet and social media are just tools

Seth Godin emphasizes that forming a tribe is not about getting as many people as possible to sign up for, say, their Twitter or newsletter. The internet and its various social media tools have made it possible to form tribes across the globe, offering cheap (often free) and fast ways to communicate, but they are just tools. It takes a leader to utilize them.

And it’s not a number game. A large number of people is not necessarily a tribe. A tribe is a group that are united by common vision, a group of active members who connects with the leader and other tribe members. When this criteria is met, yes, a bigger tribe means more powerful tribe, but quality comes before quantity. Seth Godin even recommends tightening the tribe as a way to stay meaningful.

My takeaway of the book

This book made me think. In fact, I’ve been thinking and I haven’t come to a neat conclusion yet. I know there is something in me that wants to come out, some messages that I really think important for many people. This is why I write on this Yes to Me blog. I write about a lot of things in life. But what is my core message? In other words, what kind of movement am I trying to form?

I have messages — like, lightworkers can be successful entrepreneurs (please check my free eBook) and we can defy aging. I have a vision of the New World. But I still think there is something more. Or maybe I want to put something in a more actionable movement. . .

I hope you start thinking about these things, too, about your own life. I mean, if you don’t want to live as a manager or their herds. If you want to stop “sheepwalking” (this is the term Seth Godin uses. I call the same mentality “slave mentality” I guess I may be a bit harsh. . .)

We have the power to create our lives and this world. The most important question is: WHAT do you want to create? What do you want to change?

Here is Seth Godin talking at TED about tribes (HT: Marelisa Fabrega):

It’s 18 minute video, but trust me, it’s worth it, and you’ll have some good laughs, too.

Are you leading a tribe? Are you a member of tribes? I’d love to hear from you — please leave a comment.

Inside Out Approach To Entrepreneurship, Part 4, Learn Marketing

Learn marketing or go bust

This is yet another thing I did wrong when I first started as a new entrepreneur, so learn from my mistakes. I didn’t fully understand the importance of marketing. I had the typical employee mindset – I thought if I offer excellent service, somehow the clients would show up, and I’d make money. Wrong. (Image by Patrick J Lynch)

Right now, there are tons of professionals who can offer outstanding services and yet have so few clients. Many are forced to go back to regular employment out of financial needs. I was pretty close to the low point. Gee, just remembering how I was feeling with that dim outlook makes me cringe.

If you can, start learning about marketing ASAP while you still have employment. It will save you a lot of heartache.

Get Clients Now! — marketing coach in a book

For me, there were two things that helped me to get clients. One, I hired Naomi Dunford and got her personalized advice. It was well worth the money. Two, I read several books on marketing, including Get Clients Now!

This book is like a marketing coach in a book. After briefly explaining the marketing theory, it shows the various approaches from which you are to choose and make your own specific action plan for the next 30 days. It is so practical. Many books talk about marketing ideas that sound nice, but after reading those books, I found myself saying to myself, “Okay . . . so what do I do?” With Get Clients Now! you are writing down your action plan by the time you are one-third way of the book.

It even shows the relative effectiveness of each marketing approach (Let me tell you, advertisement is low in the ranking) so you get to make informed choices. Then you make a checklist, and work on the plan day in day out. The book comes with daily encouragement, the author talking to you from the page as your marketing coach.

It’s important to choose the approach that utilizes your strengths. I like writing, so I blog and network through this platform, but there are other ways. For example, a friend of mine has made a strong connection with the local alternative health center, where people who are more open to spiritual healing gather. If you are like hands-on face-to-face communication, this kind of approach is great.

Regarding the 30 day plan I made according to the Get Clients Now!, I haven’t completed it honestly. It was so effective that I got plenty of clients somewhere in week 3 and forgot about filling the checklist. Now I know clients come in waves, so there may be times in the future when I need to do more marketing – but then I know what to do. I go back to this book, make a new plan, and work on it.

Marketing is about communicating your love for the work you do

Here is the surprising part: I now love marketing. I used to hate the idea of marketing and sales, to talk people into buying my service. I felt shallow when I had to do it. It didn’t fit into my philosophy of “Live and Let Live” And I usually didn’t make the sale, so that added to my negative feeling and hesitation about marketing.

I have a different idea about marketing now. Marketing is about introducing and educating people about the thing I love so much. I love it, I firmly believe it has lots of value, so I want to talk about it. Just like I want to talk about the great movie I saw. I don’t care all that much if my “marketing” results in immediate sales. If it does, it’s great, and I know my service has more value than the money my clients pay, so I feel good. If it doesn’t, I still feel good because I know I gave them valuable info.

Ironically, it seems to me that the less I care about the immediate results of my marketing, the more sales I make. By far, the best marketing gig I’ve done so far for my Akashic Record Reading was the interview Hunter Nuttall facilitated. I worked on that interview over the long Labor Day Weekend without expecting sales at all. I did the interview because Hunter is my friend, he had my reading and had lots of great questions that I found interesting too. It’s an interview, so there is really no sales talk. But the readers picked our enthusiasm, they asked many thought-provoking questions in the comments, and a good number of them contacted me directly ^_^ (And I’m sure the posts were great traffic attractor for Hunter, too. It was a win-win-win for Hunter, readers, and me. Now send a few more interviews like this my way, and I’ll be rich ^_^)

So again, it’s critical to choose your business niche based on what you love, as we discussed in part 1 of this Inside Out Approach To Entrepreneurship series. Your love and passion will show when you talk to people, and therefore it will affect your sales. And when you love what you do, you almost owe to deliver it to the appropriate audience. How can you possibly keep that goodie to yourself? Love is better shared, we all know that.

Do you like marketing? Do you have great marketing ideas? (I’m still learning, so I’m all ears if you do!)

Further reading: Learning to Love Networking Learn three practical techniques to make your great first move in networking that is critical in any marketing. Or read on to Part 5 of this series.

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