Nearly all products become commoditized at some point. Take running shoes, for example.
There are a few major brands: Adidas, Asics, Brooks, New Balance, Nike and Saucony. Each offers a cushioning shoe, one to control pronation and an ultra-light racing shoe. There is very little difference between brands, which is why the savvy shopper often buys simply based on price.
To combat commoditization in the running shoe business, John Stanton, the founder of Edmonton-based Running Room, has layered on a service to lure people into his stores. Mr. Stanton offers free group runs to anyone - you don't even have to be a customer to join in.
Now, you may ask, "What's the big deal about offering a running group?" Well, if you have ever had to go for a run on a cold, dark February morning, you know the prospect can be made slightly easier knowing you're going to meet a group leader and some fellow masochists at the store.
Mr. Stanton has been careful to make his running groups accessible to all levels. Precisely at 8:30 a.m., his store managers across the country welcome all new runners. Participants are encouraged to stand under a flag that corresponds with the number of kilometres they intend to run, and the manager thereby ensures all runners are matched up with others whose workout goals match their own.
On the surface, this service actually costs Mr. Stanton money. He has to pay his managers to open his stores 90 minutes before paying customers arrive.
But, in fact, adding this service goes a long way to differentiating his stores. It breeds loyalty among his customers who get the equation: support the local store, and it'll be able to continue to provide the valuable extras.
Mr. Stanton combines offerings of free weekly group runs, low-cost running clinics, gate analysis and various other services to make his running shoes seem just a little less commoditized - which has allowed him to preserve his margins and scale up a 90-store chain peddling a product that is basically a commodity.
So if you're selling a product, think less about how to compete on price and more about adding a layer of service on top of your product that gives people a reason -other than price - to buy from you.
Special to The Globe and Mail
John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He is the author of Built To Sell: Creating a Business That Can Thrive Without You, published by Portfolio Penguin.