Selling a product or a service becomes very challenging when the forces of commoditization are at play. It essentially boils down to cost play and the ones with a lower cost most likely will win the race. I would like to take the IT services industry as an example.

1. Many in this space have been opportunists and they went with the tail wind that existed in the space

2. Not many have really looked at differentiating themselves and they have been everything to everyone all along. In fact, a majority of them don’t even have a positioning statement on their offerings. “I am not bothered and I am going out of business” approach will get you out of business faster than you think

3. Differentiation in IT services space is not about differentiation in positioning; in fact, it has to be differentiation in offerings. It has to be a niche where there is a lot of value addition that the customer can look forward to in associating with you

4. Mature markets that you sell into can further be segmented. Ensure that it is not a price-sensitive segment and position your offerings for that segment through building of IP specific to that segment. I’d rather go with a service provider who understands my space and also bring in value with pre-built components and help me reach the market faster. After all, convenience beats cost

5. But then, you also ought to look at survival in a commoditized market where your margins are drastically down. Some activities that can be thought of are:

• Figure out the profitability at the customer level and take a call as to who you want to have as a customer and who you want to let go. Always, there is an option of re-negotiating the prices with them and try this option before letting them go.
• Innovate on the pricing models and make it tied closely to the revenue and pain structure of the organization that you are looking at servicing
• Incentivize your sales force on margins and not on revenues; this will move your sales force from being scale-based to class-based

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