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Perils of Self-Commoditizing Technology Sales

Back until late 1990, the salespeople in tech would sell technologies with just one area of value creation, and that was automation, for example, automation of payroll processing. As we entered into 2010, slowly the value of automation faded away.

Commoditized Selling vs niche selling in technology

The current set of buyers, enterprises, and SMBs alike, now believe that automation is a point of parity in any sales proposition. These buyers are currently looking for additional areas of value creation. Buyers today want to solve problems which are beyond the realms of mere automation.

For example, an attendance automation system that is accurate and fraud-free with the help of biometrics or RF. Or marketing automation that is capable of identifying prospect buyer’s preferences.

Technology companies today quickly believe in selling their innovative technologies as commodities to their market — commoditized selling results in the reduced overall value of the sales for buyers as well as sellers. Sales commoditization could be the killer for the culture of a great company. Market seldom does anything to commoditize an offering, but the seller does most of the harm. When the seller thinks of their offering as a commodity, the market simply welcomes their actions.

Identifying the Slippery Slope of Commoditized Selling

  1. Seller assumes that it has a pre-existing demand and well-established market

  2. More players in the market do the same thing with only difference in pricing

  3. Sellers choose spray and pray approach in selling a commoditized offering

  4. Sellers hire more salespeople than needed; Or sign-up resellers or distributors on commissions

  5. Expand into all parts of the globe without due diligence

  6. Sales team lacks entrepreneurial spirit in the sales

  7. Sales function turns into a dumb process solely guided by the manager

  8. Selling is more about numbers and less about value creation for clients

  9. Seller attracts all kinds of salespeople except the top talent

  10. Sales team safeguards their job by keeping the manager happy

In the commoditized mode of selling, the sales function tends to become a rigid, non-innovating, non-challenging, and a process-driven unit. The commoditization of sales makes the sales job repetitive. The top talent in sales is always looking for innovative ways of selling. Repetitive nature of the situation makes it monotonous for them. That marks the beginning of losing the top sales talent from the company. Because the sales team is not expected to use any special selling skills, the sales job becomes less rewarding.

The organizations lose their focus from business development and exploring new markets for the same product. Most often, it is the anxiety of the technology companies and their investors to become bigger quickly drives them into adopting a commoditized selling approach. In some cases, the management members without an adequate understanding of sales function dive into commoditized sales mode.

I often hear investors and leadership saying that they need salespeople to augment the bandwidth of the current sales team. Sales team sticks around in a commoditized sales culture as long as the company has money to pay salaries. Commoditized selling for an innovative tech company could be a downward spiral that gradually starts grabbing talent from other functional areas and eject them.

Niche Based Selling in Technology

The alternative is niche-based selling for tech companies, especially in their first decade. I believe for the technology companies to be hugely successful, they have to invest in one niche of the market at a time and expand into each conclusively.

Niche based sales approach offers higher returns on sales acquisitions over time and keeps you in the market dominance position. The tech company expanding in a niche based sales model tends to invest in continuous innovation around new market solutions, thereby always being in the leading spot.

To grow using niche based sales model, you have to have specialist A+ sales leadership, an entrepreneurial execution team. Chaos is an integral part of moving from invisible to power. Therefore sales innovation supersedes obsession of process adherence in niche-based sales development.

Commoditized selling vs. niche selling is a topic that deserves much more detailing. The issue of sales commoditization is close to my heart. I intend to acquire more insights from the community here. Please mention your views in the comments section.

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