Define the sale of a solution as a buyer who does all efforts to rationalize the offer as a commodity and a rep, who does all efforts to promote it as a speciality. It would reflect the desire of a buyer to get the solution at the lowest price and the drive of the rep to sell it at the highest.

A second look at the commodity definition: customers ‘decide’ whether a product is a commodity or not. Therefore, independent of how unique the product is, ultimately it comes down to the ability of sales people to persuade customers to view it as a specialty that makes the difference.

This might not always be easy. Many solutions are neither a commodity nor a specialty. For example: a silicon switch in an extreme flat package could be a near-specialty for a mobile phone maker whilst, in case there are pin and function compatible equivalents available, be a commodity for an LCD TV maker.

There are various ways to work around this example, but little mistakes anywhere in the execution undermine the ‘specialty sale’ and ‘force’ it into a ‘commodity sale’. Add to that the speed in which information travels through the buyer’s community and small mistakes at one customer could spoil the promotion of the solution as a specialty at the other.  

On average, semiconductor companies have 100’s of products serving a broad market and do some effort to equip their frontline with a range of approaches suitable for specific solutions and situations.  For example: (note the list is not complete and serves only as an illustration)

1. The commodity sale: uses market price, volume, supply and demand possibly supported with lifetime, quality and reliability claims.
2. The specialty sale: uses unique functions and features, and present that as value for the customer.
3. The solution sale:  combines all possible products and services of the company with a focus on the application of the customer.
4. The insurance sale: (e.g. surge or ESD protection) uses the perceived value of the risk it covers, the damage it can prevent, the chance that it will happen and fear of the customer of the consequences.
5. The ecosystem sale: involves a large group of decision makers throughout the value chain. Approach is to influence the chain to create a ‘speciality situation’.

Except for the commodity sale, each of the above approaches tries to create a specialty situation using specific but different arguments. With 100’s of products, it is not difficult to imagine that a sales person selects the wrong approach, or that he defaults an approach comfortable to him. 

In front of a well-informed and highly experienced buyer, choosing the wrong approach, mixing or switching approaches is an open invitation for him to pursue and force the commodity sale.

Undeniable, customers have more mature and professionalized purchasing processes than ever before (see why B2B sales are getting more difficult) involving sales people later in the process. This presses sales people to be better prepared, equipped and controversially spend more time on individual opportunities than before.

Virtually every sales leader has recognized this and has worked on initiatives to avoid commoditization. For example, organizing teams according to application area, sales process, business unit of even product line, with the idea to create focus in the front line, minimize the ambiguity, select and train the right talents and get more experts in front of the customer.

Other solutions tried to differentiate the go-to-markets, reposition the company or the products, introduce new technologies or pursue active M&A strategies, aimed at creating a ‘specialty position’, which would help sales to maintain or increase value. Yet and despite these initiatives, most companies were not able to avoid the commoditization of their product portfolio. 

Some will point at the volatility of the semiconductor market whilst others will argue counterfeit products or lower cost alternatives from Asia based competitors. Equally though, it stands to reason that insufficient effort was spend to appropriately equip the front-line to face increasingly better-informed and better-prepared buyers. Just count the times you hear ‘price’ in your organization.

The situation is of course not as black and white as depicted here. Information does not travel that fast nor is every buyer able to take advantage of the situation. Yet, the above reasoning triggers a few thoughts. 

So how many times did you hear ‘price’ this week? Investing in sales training, a culture of sales coaching and ensuring sufficient support and tools to better equip your frontline is not a bad decision.