It’s conceivable for custom products to be viewed as commodities, if the customer thinks that any of a number of companies could produce the custom products meeting the same specs, with comparable service levels. In a true commodity market, basic sales process metrics should serve as a measure of price competitiveness. This could be DPM or DPMO (# of times you didn’t get the sale vs opportunities). Personally, I like a yield metric (Conversion Rate = % of opportunities converted into sales).
However, I would be very cautious about accepting the view that the product is viewed as a commodity product. See below for more. If your perception is wrong, sales process metrics probably won’t be an adequate measure of price competitiveness.
Is it possible that the customer seems to view the product as a commodity when they really just don’t know how to measure the value of the product and/or the cost of doing business with different suppliers? If they don’t measure the value and cost, they can’t justify paying more than the low-cost price. This is where “salesmanship” comes in – creating a perception of value, whether or not the perception is based on measureable criteria that can be applied to other suppliers’ products. One way to create the perception of value is to give the customer the tools to actually measure the value of your products/service levels with those of your competitors.
A customer who truly views a product as a commodity buys based on cost. Hopefully, they factor in their associated transactional costs. This customer doesn’t care about custom manufactured features. Is it possible that company x really has about different customers – those who view the product as a commodity, and those who value different features and are therefore willing to pay more? If this is the case, segment the customers. For those who are willing to pay for features, focus on the value and price of the key features to the customer. For the commodity customers, just look at base price.
If all of the customers truly view the product itself as a commodity, look beyond the product price to the customer’s transactional costs. Compare the cost of doing business with company x with the cost of doing business with other companies in the marketplace. Is company x easy to work with? Does company x understand the customer’s business and work proactively to add more value? Can company x capture custom requirements quickly and easily, turning them into finished product with a short lead time? Is billing electronic and accurate? Or, does company x create work and delays for the customer? These factors can be measured and compared in terms of bottom line $$ and/or quality of life for the customer.
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