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Combating Commoditization Doesn’t Have to Be a Battle

How to Turn This Professional Services’ Nightmare into Your Competitive Advantage

Alpha’s Story

When the economy took its downward dive, Alpha, Inc., a professional services firm with a strong brand and reputation, responded swiftly to customer needs by finding ways to cut costs and deliver services faster.

Although the firm’s brand was not originally built on price or speed, it wasn’t long before customers began to think of Alpha as a commodity, rather than as a partner.

Alpha had lost its differentiation and so had many of its competitors. Customers began making decisions based on price alone, which impacted everyone’s profitability.

Beta’s Story

Beta, Inc., is a professional services firm with a strong brand and reputation, too. Yet it responded to changes in the marketplace quite differently. Instead of cutting costs, Beta stepped back and looked more deeply at its customers’ needs, as well as potential niche markets, and began to innovate both how it delivered services and the service mix it offered.

Beta found ways to cut costs without cutting into profitability, and did not have to rely on a price message because customers saw the value of doing business with the firm.

While competitors scrambled to adapt to the new environment, Beta held fast to what had made it strong and continued building on its competitive differentiators.

Additionally, Beta was not reluctant to talk publically about the changes it was making, and regularly shared its innovative thinking and practices with its target audiences and competitors on its blog, social media channels and through email marketing. Soon, Beta became known as a thought leader in its category and was asked to speak at industry conferences and provide commentary in the media.

Moving from Alpha to Beta

Many professional services companies have been worried about commoditization for some time.

Alpha responded to economic uncertainty based on assumptions about what customers wanted and, while this type of response might work short-term, it will, and has, deteriorated brand equity (and quickly). Beta was also apprehensive, but used that as a motivator to get creative and assert an even strong market position.

While it may seem obvious to take Beta’s approach, the reality is that most companies don’t.

Customers who consistently give preference to the lowest bidder make it seem like there’s no choice. And no time. After all, what’s going to happen to profits while you focus on investing time and money in differentiating your brand?

It seems crystal clear what customers want, and seems so easy to give it to them, that most companies rationalize their decision as logical, believing it’s only temporary. This is, however, a risky assumption to make. Because once you began to compete on price and speed, it’s extremely difficult to regain perceived differentiation – and if there’s not a strong, differentiated brand in the first place, the firm has even less chance of recovering from its decision.

It has to compete on price. It has to be a commodity.

So, how do you move from Alpha to Beta?

How do you get your customers to stop seeing your firm as a commodity and start seeing and choosing the value you bring – even over price?

Here are three trend-based recommendations for combating commoditization that will prevent brand deterioration and position your firm for success in the new marketing environment.

Three Trend-Based Strategies for Combating Commoditization

Trend: Digging Deeper for Survival
Recommendation: Get Nosy About What Your Customers Need

Your customers want to hear from you more often than you think. In fact, they count on you to help them stay educated about what’s happening in their industry and to help them find innovative solutions to their toughest challenges. One of the biggest customer complaints we hear when conducting customer satisfaction and perception surveys is that service providers don’t take the time to deeply understand a day in their customer’s life.

Scheduling time to meet with your customers and prospects and learn more about their daily challenges is incredibly helpful for idea generation, as well as for building the relationship. Additionally, using every point of contact to share insights from past projects, emerging trends and new solutions, positions the professional services firm as a true partner who is critical the customer’s success.

If you only use in-between-project contact for updating your customers about what’s happening at your company – or if you only see your customers during pitch time – you can’t truly get to know them, and knowing them better than your competitors do is a significant advantage when pitch time comes around.

Trend: Ditching One-Size-Fits-All
Recommendation: Examine Niche Needs

What customer niches might exist within your larger target audience? What would your bottom line look like if you focused on addressing niche needs? How would you need to change your branding and marketing to reflect your understanding of these audiences?

Niche services can add value while positioning your brand as an industry innovator and leader. Exploring potential niches is the first step in finding new, potentially profitable opportunities that enable you to make the shift to specialization without losing your footing as a general expert in your field.

Trend: Engaging through Thought Leadership
Recommendation: Create Quality Content that Creates Connection

Sharing your firm’s thinking, being a resource and connecting on a level that demonstrates you know how to make your customers’ lives easier, enables your company to play an essential role in the overall success of those you wish to reach.

But here’s a catch – it takes time. You might spend months on content marketing before you actually engage your audience in real conversations that generate leads. So, the trick is not to give up too soon and also to experiment with different content types, formats and distribution channels.

Finally, make sure you have a path for your audience to follow that allows you to nurture the relationship.

The Bottom Line on Combating Commoditization

The commoditization challenge is one of the biggest obstacles that professional services firms have faced in recent years, but in many ways it’s not entirely new.

After all, finding truly relevant points of difference that trump price and speed has always been the ultimate goal in professional services marketing, and many customers have long been signaling that they do, in fact, want more than a “good deal.”

Specifically, professional services customers are looking for providers who are curious, who dig deeper and who, as a result, are able to meet their unique needs beyond simply helping them save money.

It’s those professional services firms that are able to recognize this opportunity that will overcome their commodity status and claim the role of a valued partner.

The question is, will you be one of them?