Some just sell products and services
In the book, The Experience Economy, the authors give a strong justification for their explanation of what happens when someone does business with a company. They state: "If you charge for stuff, you are in the commodity business. If you charge for the activities you execute, then you are in the service business. If you charge for the demonstrated outcome the customer achieves, then and only then are you in the transformation business."
The authors go on to explain that if after doing business with you, the customer acts different, you have caused a transformation to occur. And by doing so, there is no way for what you do to become a commodity.
If you are in the commodity business, you are like the grocery store selling a gallon of milk - any gallon will do and any store will do. The same can be true for the person working in any business. The customer calls or walks in and asks for a particular item. The salesperson gets the item, shows it to the customer, quotes a price and then rings up the sale for the customer.
We will all agree that the grocery or the store in this example have both become nothing more than a commodity. The customer asks what the price is, and probably decides to make the purchase based on price to a large degree.
Looking at the definition from The Experience Economy, many businesses are a step or two above commodity. However, even a service business can be reduced to becoming a price item. Have you ever responded to a service special at a local garage? You ask for a lube, oil and filter replacement service.
"How much is this going to cost me?"
See, this potential customer has reduced your service to a commodity. And then when you have to get into negotiating a price, you can already feel your profit margin beginning to erode.
What can you do, and how do you do something to elevate this transaction to becoming a transformation? The process begins by your taking the time to ask questions of the customer. Ask for more information about what they want the product or service to provide them with, and the sale begins to move from a commodity.
What else can we do to go from being the commodity business to the transformation business? Using our first example business, perhaps as you service the customer’s car, you comment about their vehicle being an older classic Camaro. You could introduce this customer to the local car club or get him copies of articles showing Camaros that look great.
We then have the opportunity to transform that customer from simply being the owner of a classic car to helping the owner make the car a more important part of their life. Your job is to get the customer to continue, and grow his love affair with the car of his dreams. We have to transform that customer into a car enthusiast.
But why would you want to go to all that trouble? The first reason is that the alternative is the customer may begin to park the Camaro more and more often, opting to drive the family car or his SUV. You may do work on those vehicles, but you are definitely leaving the opportunity for more business parked in the customer’s garage.
Simply stated, it is easier to keep in contact with this customer and help him to enjoy the vehicle as compared to continuing to advertise to look for the next person who has decided to bring their vehicles to your service center.
That long term customer, who returns time and again to have something else done to the car of his dreams will spend much more money (and money that is much more profitable for you) as they continue their love affair with that car. He will associate with other car enthusiasts as they encourage each other to enjoy their vehicles. And because you have transformed him, you have created something new. You have provided something that goes far beyond a commodity, a service, or anything else that can be measured in dollars and cents.
Does this require a different way of thinking? Absolutely! But, you say you don't have time to do these types of things. If so, you can continue to have customers driving up wanting to know what your price is to ....
And when you look at reports from our industry telling you how much money some shops are making, you will understand that those owners are not running a service, but are in the transformation business.
Transformed customers are more loyal. They spend more money and they tell more people about their experience with the service center that caused the transformation. This is definitely a lot easier than spending a lot of money to advertise for customers that are simply commodity customers. It does not matter what products you sell or the services you provide; the sequence works for the business that knows how to help people become transformed.