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.