Differentiating Your Business in a Commodity Market: CEO Perspective

By Steven Freidkin | January 29, 2018
Steven Freidkin is the founder and CEO of Ntiva, Inc., a Managed IT Services company that provides a full suite of technology services to businesses across the U.S., including IT consulting, cybersecurity services, cloud hosting and more.

How do you go from interchangeable to invaluable - when everyone else offers the same thing that you do?

Yesterday, you were coveted. Today, you’re commoditized. Like death and taxes, commoditization is a given for almost every business at some point.

From over supply to changing tastes to new technologies, there are many reasons for a business to become marginalized and commoditized.

If your clients perceive that there is little or no difference between what you and your competitors offer, price becomes the only differentiator and it is a race to the bottom.

There are thousands of examples, but let’s use just two for discussion purposes:

  • Burger mania. Although technically White Castle was the first fast food burger chain, it was quickly outpaced by McDonalds. Today there any number of burger chains vying for your business at rock bottom prices.
  • Web woes. Being a web designer and developer in the 90s was a great place to be. By the early 2000s the competition was heating up. Today, any high school kid can get a basic website up in under an hour using free tools.

But here’s the kicker. From commoditization can come opportunity.

  • Picture a McDonalds burger. Is that your ideal burger? No. It’s fast and cheap, but that’s it. I don’t know about your town, but in DC it’s easy to drop $17 to $25 on a burger and fries in a high end restaurant. One could argue that the fast food industry created an enormous demand for the real thing – and people will pay, for a better burger and a better experience.
  • Check out a free website builder. The good news is vendors such as Squarespace and Wix have put websites in reach of almost anyone. But to do that they have to offer baseline functionality, with very little flexibility or scalability. Good for very small businesses with simple needs. Bad for businesses who want a high functioning web site.

Successful web agencies know how to differentiate themselves from the low cost options with ancillary yet crucial services.

There are plenty of ways to gain share and grow in a commodity business:

  • Provide better customer service
  • Provide more attractive delivery or distribution
  • Offer creative or more flexible packaging and pricing
  • Offer free or low cost ancillary services – or something that no one else does
  • Wildly differentiated marketing (as long as you deliver on what you promise)

We speak from experience.

MSPs (Managed IT Service Providers) who provide IT services and support are dealing with an increasingly crowded market. In any major metro area there’s an MSP of sorts practically every block.

At first glance, they all look the same. But many of these MSPs are very small, and many have only been in business a short time. Both of these factors make it very difficult to execute the MSP business model cleanly.

Others may be large, but are stuck in their old ways, using the same tools, the same processes. They have no differentiation, so they end up differentiating on price.

But price does not keep a customer in this business – or any business – where the customer experience is literally everything. 

Ultimately, this will lead to consolidation in the industry, where the company that provides the greatest customer experience will win the market share.

Ntiva sees this as an opportunity for IT services in DC.

Which MSPs will survive?

Not the ones that offer what everybody else does, which is essentially break/fix and keeping the lights on. As the IT ecosystem becomes more complex, and businesses become more and more reliant on technology to compete, successful MSPs will play a much different role.

Many of the traditional IT services, such as remote management and monitoring (RMM) are becoming automated. And automating as many base services as possible is key. This frees up valuable technicians to become more consultative, allowing them up to help clients use new technology in better ways.

From cloud computing to mobility to cybersecurity, they are a myriad of ways that a good MSP can help businesses of all types grow and prosper. This requires the breadth and depth of a rock star team of techs with superior customer service skills, which is our sole focus at Ntiva.

As we’ve said in the past, “Clients come to us to keep their tech up and running, but they stay with us because we help their business grow.”

How will you differentiate your business? Let us know!

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Tags: Managed IT, Business Telephony, Compliance