What You Can Measure, You Can Manage. A few thoughts on building a better business
Selling Value, Not Price
An article looks at differentiating when you are selling a commodity
“Are you selling a commodity... yet? A recent Inc. Magazine asks this question and describes what a book binding company did to differentiate itself from its competitors while steering customer focus away from price.
Booklet Binding Inc. of Broadview, Illinois offered high quality and great service, but so did everyone else. How then should they distinguish themselves from their competitors? They'd focused on price in the past, but shrinking margins forced them to look at other options.
Tom Patrevito and John Kosowski, the company's owners, hired sales trainer Mark Landiak to look at their sales process. Landiak determined that the Book Binding had in fact reached “commoditization,” the signs of which were:
- Customers start keeping their distance.
- Customers unbundle your services.
- Salespeople have to battle constant price objections.
To combat this phenomenon, Landiak taught the salespeople to focus on something other than the product's traditional characteristics. “The surest grip any company can have on its customers may originate outside the specific products or services it touts.”
By concentrating on their expertise and the company's ability to solve a customer's problems, the salespeople didn't have to cut the price or meet a competitor's bid. They added value by selling themselves rather than their product. “The value added is not in the product
anymore; it's in the relationship between the sales rep and the customer.”
To increase the salesforce’s expertise, Landiak used a series of 20 weekly meetings to focus on sales skills and on different binding techniques and topic areas. Each salesperson mastered a particular topic area in the book-binding business, and then delivered a two-hour presentation, including handouts, to fellow sales reps and in-house experts. Patrevito knew that “the best way to learn is to teach someone else.”
The process was so successful that Booklet Binding's customers now ask sales reps to make presentations to their employees and to help with proposals to their clients. “That's the best,” one sales rep said proudly, “when your customer thinks enough of you to share his customer with you.”
As Michael Treacy and Red Wiersema said in their best-selling 1995 book The Discipline of Market Leaders, “By relentlessly driving themselves to deliver extraordinary levels of distinctive value to carefully select customer groups...market leaders have made it impossible for other companies to compete on the old terms.”
Booklet Binding has found a way “to offer customers a consistent reason to buy from this business in an economy in which no tangible advantage can last.”
“The surest grip any company can have on its customers may originate outside the specific products or service it touts.”
Booklet Binding has found a way “to offer customer a consistent reason to buy from this business in an economy in which no tangible advantage can last.”
