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Characteristics of Commoditization

Most successful B2B companies started by focusing in a specific product or service line. As the “S-curve” of that product/service matures, new models or at least new features and functions are released.  However, each new release provides smaller and shorter S-cycles.  Companies experiencing this commoditization cycle also experience many of the following tell tale signs that they must take action to arrest the cycle as soon as possible:

  • Growth Stalled – Difficult to project revenue accurately or virtually flat growth for multiple periods.

  • Margin Pressure – Lower margins across the board. 

  • Selling to Purchasing – Little access to executive buyers and stuck in comparison loops against competitors.

  • Lack of Intimacy with Key Customers – Top executives of key accounts don’t know you or value the relationship. 

  • Loss of Market Share – Losing market share to lower cost providers.

  • Greater Price Pressures – Deal conversations focused increasingly on meeting the prices of competitors.

  • New Models not Selling Well – New features/functions or models not really needed by the market, and therefore, not driving new sales.