Do you sell coffee? How about wheat or crude oil? No? Then why do people act as if you sell a commodity?
All too often, staffing is viewed by HR and hiring managers as if it is a commodity. Their common argument is that staffing firms all provide the same types of services drawing from the same pool of talent. To compound the problem, the industry has been its own worst enemy—teaching people how to buy based on mark-ups.
But the point of this article is not to gripe. The point of this article is to get you thinking about what you can do to differentiate yourself, and how you can become a market leader.
Commodity pressures are not unique to staffing. They are a natural outcome in any competitive industry. Five or six years ago, I attended a TEC (The Executive Committee) seminar by Sam Bowers, CEO of the Sales Service Institute. Sam taught me that all products and services tend to become commodities over time for the following reasons:
So as an industry matures, commodity pressures are inevitable. Combine these pressures with a slow economy and you have a truly tough environment in which to sell. Which begs the question: what are YOU going to do about it?
Take a Lesson or Two from Capital One
What's in your wallet?
Unless you're completely oblivious to advertising, I'll bet this phrase brings to mind a Capital One credit card (even if you don't hold one of their cards). And if you want a sure-fire solution to succeeding in the current economy—and overcoming commodity pressures—take a few lessons from their marketing strategy.
So Much for the Recession
Since 1995, Capital One's sales have grown at a compound annual rate of 41%—and the bulk of that growth came at the expense of their competitors. Over the same period, Capital One's earnings grew 29% and its average return on equity—an important measure of profitability for financial services companies—was 25%. Not bad for a company that sells commodity products!
But most significantly, from 2001 to 2002, Capital One Financial Services moved up 67 positions on the Fortune 500. So much for the recession!
Lesson 1: Nothing has to be a commodity
With the exception of American Express and to a lesser extent Discover, credit cards are commodities. One Visa card (or MasterCard) is essentially the same as the next. Sure the APR and card features may vary, but who cares? A credit card is a credit card, right?
Not to Capital One. Rather than competing on rate—the commodity player's approach to marketing—they decided to compete on value. Capital One implemented a radical branding strategy to differentiate and stimulate demand—without sacrificing margins.
Lesson 2: A winning brand starts with the customer
What made Capital One's branding strategy work was that it was derived from customer input. Through extensive data collection and analysis, they were able to determine which attributes of credit cards were most important to the consumers they wanted to reach. If you check out Capital One's web site www.capitalone.com, you will find a number of products, each offering features targeted to a different type of credit card user.
But product features aren't the important lesson learned from Capital One's research. The most critical finding was that credit cards users are emotional. Commodity sellers tend to falsely focus on the rational side of decision making, emphasizing product features and price in an attempt to differentiate. And in a purely rational world, this strategy would be effective.
But the world isn't purely rational, and as Capital One learned, sales success goes to the firm that best matches product benefits to the emotional needs of the customer. In the case of credit cards, these benefits include a variety of services and promises that make life easier for the credit card user, such as being able to choose your payment date and a promise of no telemarketing.
Lesson 3: Simplify
We're all too busy, too stressed, and too skeptical to care about or believe much of what most companies say these days (and this comes from a marketing guy). The solution? Simplify your message to one core benefit, and then drive, drive, drive that benefit home.
For Capital One, the core message is "No Hassles." While their credit cards offer all the bells and whistles of other cards and a variety of price points, the entire focus of their promotional plan has been to dramatize the benefits of a "no hassles" credit card.
Whether it's attacking Vikings or marauding pirates, their advertising powerfully illustrates the downside of commodity credit cards while clearly positioning the unique value Capital One offers. By concluding each commercial with the message "What's in your wallet?," they reinforce the perception that all credit cards are not created equal. And effective marketing is all about creating the right perceptions!
Dominate Your Market
Are you ready and willing to become a leader in your market? While the process is more difficult than it sounds, here are the steps that can get you there:
Remember, Haley Marketing can help! Whether you need assistance with direct marketing to get the door open or nurture marketing to keep it open, call on us. We have two new, and very cost effective solutions that can help your business to stand-out, stay top-of-mind, and increase sales.
Just give us a call if you'd like to know more: 1-888-696-2900.