• Warren Leppik

Are you headed into the commoditization trap?

I recently listened to The Experience Economy, Updated Edition, by: B. Joseph Pine II, James H. Gilmore. While some may know this book from back in 1999, this version was updated and released in 2012.

The authors share my belief that most companies are doing a poor job of differentiation and are headed into the commoditization trap. And is it any wonder with the majority of marketing messages sounding like this example from another great listen “The Challenger Customer” by: Brent Adamson, Matthew Dixon, Pat Spenner, Nick Toman.

Our company is leading customer focused provider of innovative solutions supported by cutting edge innovations designed to empower organizations with different in-kind sources of broad-based value creation at their most critical moments of need

In our uber competitive world, with so many choices available, when you can’t tell the difference in something, consumers want to pay the least for it. To escape this commoditization, companies will have to go beyond even exceptional service.

The authors describe the following levels of customer value: commodities (stuff), tangible things (goods), activities you execute (services), time that customers spend with you (experiences) and finally, the demonstrated outcome a customer achieves (transformation).

Rather than focusing on what a product or services does, and beyond even the experience customers have while using their goods/services, which can also eventually be commoditized, the focus should be on how customers are transformed. The offering of the future is the changed individual or company. The customer has become the product. The value is the changed customer.

My take away? I would argue that many businesses are already in this space that customers are really after: The ability to transform themselves and become different/better. But their marketing isn’t taking advantage of this. They are focusing on what was done rather than the outcome/result/change as a result of the experience. The example the authors provide is management consulting: people don`t want advisory services or education, they want to grow. They aspire to be a better business and want to engage consultants who can sustain the results they desire.

According to Seth Godin, online advertising is the most ignored form of advertising ever created. When it comes to engaging over-tasked potential customers, uncovering, capturing and sharing stories of customer transformation are worth their weight in gold for avoiding commoditization and driving growth.

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