As a CPA business consultant, almost any business risks becoming a commodity. Now, when you think of commodity, you may think of oil, gold, or pork bellies. However, when we prepare business and/or strategic plans as CPA business consultants, we brand a company’s product (or service) as a commodity if they can be distinguished by price only. In other words, if your competitor can steal your customers by lowering the price of their service/product, then you are a commodity.
In reading A Smart Guide to Using Daily Deals by Denise Lee Yohn, I found her well-meaning advice missing the target. Ms Yohn states the following when a business offers a deal:
- Design promotions to make your brand meaningful.
- Differentiate your brand through creative promotions.
- Promote value beyond a specific product or offering
- Use deals as the first step to customer relationships
This advice is relatively good. As CPA business consultants, we like to project profits in our business plans based on such aggressive marketing strategies. However, one sentence in the article says a lot. “But if designed incorrectly, daily deals and other price-centered promotions can hurt your brand more than help it.”
The author described what we call a “red ocean” according to the Blue Ocean Strategy. In other words, when you differentiate your brand based on price, you are in an ocean with sharks.
The article is correct in that you can “train” your customers to buy from you based on price. In fact, it touches on Blue Ocean Strategy attributes without embracing them when the article states that customers do not look at price alone. They look at their specific needs, guarantees, free service, and quality. However, two of these still have to do with the money that will leave the customer’s pocket.
The main secret is to focus on the industry. What is the customer not getting that they need? What is the customer getting (and paying for) that can be eliminated.
Take this article for example. As CPA business consultants, we distribute this article in attempt to meet the needs of the business reader. Second, we are not a commodity because we don’t charge for the article, so price is irrelevant. Lastly, we display our expertise in the field we are writing about. Our business consulting fees may be cheaper or a little more expensive, but that is not a concern if we have displayed our value to the reader whose needs we may satisfy. In other words, if there was an additional cost to our service, we would argue that it would be greatly negated by the huge increase in value of what we are advising.
The Yohn article professes some sound advice, but as CPA business consultants, we see businesses a living creatures that can take on a life of their own, if you unleash them.