From good friend and excellent speaker Joe Calloway’s new book: From Chapter 4: The Commodity Trap:
About ten miles south of Louisville, Kentucky on Interstate 65, there is what I consider to be the greatest billboard in the world. It’s a billboard that is obviously meant to entertain as well as advertise, and its message was composed with someone’s tongue placed firmly in cheek. There are no photographs or pictures, only six wonderful words spelled out in giant, garish, day-glo colored letters. It says, simply: “Tattoo Charley’s Done While You Wait”. The billboard barely registered in my mind until about five miles further along the road when I suddenly thought “Well of COURSE it’s done while you wait! It’s a TATTOO parlor! It HAS to be done while you wait! ALL tattoo parlors do it while you wait!” And that, of course, is the joke that Tattoo Charlie is sharing with the world. He’s saying “Do business with us because we do exactly the same thing as our competition.”
Sad But True
The most basic competitive question is this: “Why should I do business with you?” Most companies answer that most competitive question in a most noncompetitive way. The sad truth of the matter is that most companies go to the market with pretty much the same message as Tattoo Charley. The difference is that Tattoo Charley means it as a joke. Everyone else is serious. What they’re doing, without realizing it, is saying to the world “Do business with us, because we’re pretty much the same as our competition, but we’re really good at it.” Not much differentiation there.
The marketplace has become “commoditized”. Customers see parity everywhere. They look at you or me or any other business out there and they believe that they can get pretty much the same thing, just as good, for a similar or lower price, from the competition. And the fact is that they’re exactly right. We are all commodities. We’re all like a pound of nails. There’s no difference in any of us except for price. No difference, that is, until we do something to change the customer’s perception of us.
The great challenge for any business today is to transcend commodity. If customers see you as offering basically the same product and service as your competitors then the only way you can compete is with price. So either you choose to play the “we’re the cheapest”, low margin, lowest price game, or you change the game. To avoid the price war trap you must change the customer’s basis of comparison. You must, in fact, transcend commodity and, if you’re really good, defy comparison. We’ve all heard the old saying that someone is trying to “compare apples and oranges”. Well that’s exactly what you want to create with your business. You want to be an apple – and have all of your competitors be seen as oranges. You transcend commodity by creating a difference with customers through their experience of what it’s like to do business with you. It’s very rarely done with product or technology alone. It’s almost always most effectively done with people. The price of entry into the game of business today is that you must have a quality product and offer good service at a competitive price. That’s just the beginning. Then the real competition starts.