How to Customize Even a “Commodity” Product

Be honest now: Is your product truly unique? Or do your customers think of it really as more of a commodity, similar to the kinds of products they can get from competitors in your category?

Many executives feel that the relentless pressure of competition has so hammered down their product pricing, and so standardized their configurations and offerings, that they are locked into a more and more commodity-like positioning. Whether you manufacture something physical or deliver a service, or both, when you have smart, aggressive competitors constantly trying to duplicate or surpass your offering it’s easy to feel as if you’ve been “commoditized,” at least in the minds of your customers.

But to cement the kind of loyalty you want from your customers, you need to be able to differentiate yourself with each individual customer in some way. Some type of customized treatment is essential to building a long-lasting relationship. If you can get a customer to specify how they want to be treated and then treat them that way, you’ll pre-dispose customers to remain loyal, simply because they’ll find it more convenient to buy from you again rather than going to the trouble of re-specifying the same details to your competitors.

But what details are we talking about? If you sell a commodity product, then how can you treat different customers differently?

Actually, there are many customization options beyond the physical product itself, and many ways you can change how you behave toward an individual customer, other than customizing a physical product. A non-exhaustive list would include:

• Configuration of the product or services surrounding it,
• Bundling of multiple products or services,
• Packaging,
• Delivery and logistics,
• Ancillary services (repair, calibration, finance, and so forth),
• Training,
• Service enhancements,
• Invoicing, and
• Payment terms.

The key is to visualize your “product” in its broadest possible sense—not simply as a physical object or standard service, but as something that meets a particular customer’s need, or solves the customer’s problem. As one widely cited Harvard Business Review article from 2005 suggested, for instance, you should try to think of your product as being “hired” by a customer to do a “job.” And this is where differentiating customers by their needs will pay off for the relationship marketer. Meeting the customer’s need means that you are doing the job the customer has in mind for your product, and this “product-as-service” idea can be thought of in terms of three successively complex levels in the set of needs a customer is trying to meet:

First, there is the core product itself. We're talking about its physical nature, if it is an actual product, or its component services and executional elements, if the core product is actually a service. To customize your core product you should consider customizing its

• Product configuration,
• Features or capabilities,
• Fit and size,
• Color, design, style, or
• Timing and frequency.

Second, we have the product-service bundle, which includes all the services and features that surround your core product. To customize your product-service bundle, think about all the different ways there are to deliver

• Invoicing, billing, and cost control (that is, helping the customer manage or control costs),
• Additional services,
• Packaging and palletization of the products,
• Promotion and marketing communication, or
• Help lines and product support.

And finally, there is the enhanced needs set, a term I use to mean those product or service features that could meet related customer needs, thus enhancing or expanding your customer’s originally conceived “job” for the product. A few things you could do to customize the enhanced need set would include

• Offering related products or services,
• Forming strategic alliances with other firms serving the interests of the same customers, or
• Providing the customer with opportunities to collaborate in product or service design.