5 Proven Ways Your Commoditized Business Can Add New Value (Starting Today) To survive, your commoditized business needs to find new ways of providing real, reliable value.
Opinions expressed by Entrepreneur contributors are their own.
In the business world, saying that a business is "commoditized" is never a good thing. According to Investopedia, when a business is commoditized its "goods or services [have] become relatively indistinguishable from the same offerings presented by a rival company. Generally speaking, commoditized products within specific categories are so similar to one another that they are only distinguished by the price tags attached to them."
Usually, this occurs as more competitors enter a space that was once fresh and innovative. The products or services you offer may also be seen as more of an "everyday" item rather than a unique must-have.
When this happens, your profit margins are going to fall because you don't have anything that helps you stand out. Fortunately, any business that has fallen into the commoditized rut can escape by finding new ways to add value.
Related: How to Figure Out Your Margins
1. Find a way to upgrade
Start by looking at your products or services themselves. Are they in need of an upgrade? A seemingly minor upgrade to an existing product or service can create instant differentiation that your competitors can't match.
Apple's iPhone is the perfect example of how incremental innovation can turn a product into a must-have. You don't necessarily have to reinvent the wheel. Even finding a single area where you can improve your products or services will help them stand out from competitors.
2. Segment to a more targeted market
Sometimes, the best way to escape commoditization is to niche down even more. For example, rather than focus on the real-estate market as a whole, I've found great success in my own career by focusing on corporate real estate.
Part of niching down means determining customer groups that you do and don't want to serve. Even if you don't have a sub-niche in mind, identifying the types of clients you want to work with can help you determine how you can make your offering more specialized and less generic.
When you focus on the ideal set of customers, you'll find those who best appreciate what you have to offer. A case study from the Transportation Marketing and Sales Association reveals that one truck broker grew revenue by 18 percent as the result of slashing their customer base by 75 percent. The focus on high-value clients resulted in far greater profits than serving a broad market.
3. Bundle ancillary services to offer greater convenience
Convenience has long been top of mind for consumers — but the internet age has made this more pronounced than ever. In fact, a study from the National Retail Federation found that 97 percent of customers have actually "backed out of a purchase because it was inconvenient for them."
Convenience is about more than getting free shipping through Amazon. If you have a commoditized product or service, bundling it with an ancillary service can provide the convenience your customers crave.
For example, many travel companies allow customers to book flights, hotels, rental cars and more all from the same platform. Customers are often willing to pay a premium for the convenience of planning their entire vacation on one site. Providing similar offers for your own commoditized brand will provide a convenience factor that is hard to ignore.
4. Provide real expertise to your customers
For most entrepreneurs, a big part of the reason why you entered your market niche is because it's something that you're extremely passionate or knowledgeable about. Your customers may not share your level of enthusiasm, but chances are, they have questions that you can answer.
When you provide value-driven content — be it in the form of blogs, FAQ pages or simply responding to emails and phone calls — your brand becomes so much more than the product or service you offer. Genuinely helpful content positions you as the go-to resource for information related to your niche.
As a trusted source of industry expertise, customers become more loyal to your brand, even in an increasingly commoditized market.
5. Make it personal
While it may be hard to personalize a pack of tissues, any business has ample room for increasing personalization. After you've onboarded a client, however, personalization can become even more powerful. Among brands that personalize their content, 55 percent report improved customer experience and greater engagement, while 39 percent state that personalization improves their brand perception.
Personalization can go beyond including a client's name in their email or using better targeting for ad placements. For example, grocery store brands that send custom coupons based on a shopper's buying preferences go a long way in ensuring loyalty in what is otherwise a very commoditized industry.
Fight back against commoditization
No brand wants to have their products and services viewed as an interchangeable commodity that is no different from the competition. By leveraging these tips to add true value to your products or services, you can better appeal to your target market — and better meet their needs.
When this happens, you'll stand out in even the most crowded niche, improving your profits and becoming a force to be reckoned with.