I have found myself in discussions about this several times in the last few weeks…. I have actually had this discussion with Home Services Contractors as well as other high level industry gurus, it just seems to come around again and again like a revolutionary term that people just can’t seem to wrap their minds around.
The term is Commodity…. Let’s ask some questions and understand that if you are in a Service business you will eventually have to ask and answer these questions yourself. These is no hiding from this question, there is no avoiding this question, and if it goes unanswered it will be a rope around the neck of your company and slowly strangle the life out of it. What is a Commodity? What is the purpose of a Commodity? Why are Commodities important? Why would you want to shift your thinking away from Commodities? What is the change you are trying to make in your customer base?
So to me, a commodity is anything that can be reduced to a standard price. People use commodities as a way to make sense of an item that is being sold. The human brain is an amazing tool and makes sense of the world and the prices of things by categorizing and creating pricing for things in your own mind. For example a cup of coffee is a commodity and has it’s own space in your brain. How much does your brain say a cup of coffee should cost? Did you think maybe a dollar or two? If so then you would be dead on in most cases, a cup of coffee costs a dollar. So how does Starbucks sell coffee for $10 a cup? Think about that for one minute if you raised your prices 1000% could you get away with it. How would you justify it? Starbucks justifies it by re-framing what they sell. Instead of selling a cup of coffee they sell a cup of Almond milk Honey Flat White with Starbucks Blonde Espresso. They remove what my friend Quinn Conyers (She is one of the top trainers of public speaking in the industry.) calls Discount language and inserted Luxury language and in doing so, they built value. By building that value they removed the commodity. Now lets re-frame it again to insert that commodity and watch the price drop. How much would you pay for Strong coffee with a lot of Almond milk in it? Did you come up with a price in your mind and did the price drop? There we are back to the commodity, using discount language and the price dropped with it.
In the home services industry leaders like Rodney and Matt Koop (The New Flat Rate), and Joe Crisara (Service MVP) have long seen the advantages of doing away with commodities. They instead create solutions through a practice known as verbal packaging. The Koop’s take the discount language of the commodity, and re-frame it into a lucrative service and remove all the commodity parts from the repair or sale and instead sell a solution to a problem. Joe Crisara does something very similar in the sales world but adds a different dimension by personalizing the solution to a specific customer and his or her family as a way to make the sale really create an emotional attachment.
All of these methods have been around for as long as I can remember, but the service industries have yet to catch on. So to a large extent the ideas and methodologies have yet to catch on and contractors tend to view these ideologies as too foreign to implement. Most of their refusal to change is based on their own biased view of commodities. They refuse to see the value inherent in their own technicians (or as Mike Aguilara from C.E.O. Warrior calls them Service Experts… again using luxury language.) and instead place a bulk of the value on the parts. The customer translates that to mean that we don’t need to value the technician and instead we only need to value the parts. So the question becomes: Who has the cheapest parts? Even right now after reading this entire explanation there is a large contingent of people scratching their heads trying to figure out my point so here it is: STOP SELLING COMMODITIES
Start selling services, solutions, and specialty items. Do away with discount language and start speaking in luxury language. If you do you will find that your customers will view your services as worth a lot more. This will create a change in your customer that will lead more valuable customers to beat a path to your door and create a method for your technicians, experts, or even as Starbucks calls them Baristas, to get what they are worth.
And that’s how a Service Ninja does it!!!
The term is Commodity…. Let’s ask some questions and understand that if you are in a Service business you will eventually have to ask and answer these questions yourself. These is no hiding from this question, there is no avoiding this question, and if it goes unanswered it will be a rope around the neck of your company and slowly strangle the life out of it. What is a Commodity? What is the purpose of a Commodity? Why are Commodities important? Why would you want to shift your thinking away from Commodities? What is the change you are trying to make in your customer base?
So to me, a commodity is anything that can be reduced to a standard price. People use commodities as a way to make sense of an item that is being sold. The human brain is an amazing tool and makes sense of the world and the prices of things by categorizing and creating pricing for things in your own mind. For example a cup of coffee is a commodity and has it’s own space in your brain. How much does your brain say a cup of coffee should cost? Did you think maybe a dollar or two? If so then you would be dead on in most cases, a cup of coffee costs a dollar. So how does Starbucks sell coffee for $10 a cup? Think about that for one minute if you raised your prices 1000% could you get away with it. How would you justify it? Starbucks justifies it by re-framing what they sell. Instead of selling a cup of coffee they sell a cup of Almond milk Honey Flat White with Starbucks Blonde Espresso. They remove what my friend Quinn Conyers (She is one of the top trainers of public speaking in the industry.) calls Discount language and inserted Luxury language and in doing so, they built value. By building that value they removed the commodity. Now lets re-frame it again to insert that commodity and watch the price drop. How much would you pay for Strong coffee with a lot of Almond milk in it? Did you come up with a price in your mind and did the price drop? There we are back to the commodity, using discount language and the price dropped with it.
In the home services industry leaders like Rodney and Matt Koop (The New Flat Rate), and Joe Crisara (Service MVP) have long seen the advantages of doing away with commodities. They instead create solutions through a practice known as verbal packaging. The Koop’s take the discount language of the commodity, and re-frame it into a lucrative service and remove all the commodity parts from the repair or sale and instead sell a solution to a problem. Joe Crisara does something very similar in the sales world but adds a different dimension by personalizing the solution to a specific customer and his or her family as a way to make the sale really create an emotional attachment.
All of these methods have been around for as long as I can remember, but the service industries have yet to catch on. So to a large extent the ideas and methodologies have yet to catch on and contractors tend to view these ideologies as too foreign to implement. Most of their refusal to change is based on their own biased view of commodities. They refuse to see the value inherent in their own technicians (or as Mike Aguilara from C.E.O. Warrior calls them Service Experts… again using luxury language.) and instead place a bulk of the value on the parts. The customer translates that to mean that we don’t need to value the technician and instead we only need to value the parts. So the question becomes: Who has the cheapest parts? Even right now after reading this entire explanation there is a large contingent of people scratching their heads trying to figure out my point so here it is: STOP SELLING COMMODITIES
Start selling services, solutions, and specialty items. Do away with discount language and start speaking in luxury language. If you do you will find that your customers will view your services as worth a lot more. This will create a change in your customer that will lead more valuable customers to beat a path to your door and create a method for your technicians, experts, or even as Starbucks calls them Baristas, to get what they are worth.
And that’s how a Service Ninja does it!!!
