8/19/18 Do not be a commodity. Why some home inspectors are and why some are not.
"Ideas are commodity. Execution of them is not."
—Michael Dell
As the reach of business grows and the technological advances within industries rapidly increases, it becomes more and more important to avoid the trap of becoming or positioning your business as a commodity.
In business, there are basically two different motives of competition. Price or Service. When you sell a product that competes on price, you often eliminate services in order to accommodate a more simplistic model. When you sell a product that competes on service, you can command a higher price, but it is up to you to tell your buyer why your product is superior to the competition. This is called marketing.
For example, take two different types of cars. One is a Nissan Versa and the other is a Mercedes AMG GTR. Both vehicles will get you from point a to point b, they have a seat belt, there is some storage, and there is a radio with a blue tooth connection. The Nissan can be purchased for $12k and the Mercedes can be purchased for $120k. So, why does the Mercedes command a price 10x that of the versa to perform the exact same task? The answer is service coupled with marketing.
Purchasing a Mercedes AMG GTR is an experience, while purchasing the Versa fills a need. For example. you can choose your color with either vehicle. The Versa is available in Gun Metallic, while the same color in the Mercedes is Selenite Grey Metallic. I don't even know what it means, but I want it. The transmission for the Versa is a 5-speed manual and for the Mercedes a 7-speed AMG SPEEDSHIFT DCT dual-clutch transaxle. Whatever that is, you have to have it. The Mercedes boasts a 0 to 60 mph in 3 seconds, the Nissan Versa, a couple of days.
Which vehicle is going to make you feel smarter, better looking, funnier, and allow you to convince yourself that you made the best purchasing decision? Clearly the Mercedes. Mercedes gives you every reason to want to pay more to perform the same task of getting from point a to point b.
As the speed and reach of technology increases, for most - it is becoming more and more challenging to compete on volume and price. The leaders in those industries are dominant, well funded and aggressive. Think Amazon for product sales, Walmart for discount retail, Home Depot for home products, Walgreens for drugstores, etc.
Personally, in our industry, I believe that the low cost leader for real estate has yet to be determined. There are several players that are jockeying for position and are starting to grab real estate market share. There are the obvious dominants like Zillow and Redfin. Then there are some newer players like Offer Pad and Open Door that are making an impact into the market. It sometimes feels like the sharks are circling, and we aren't even realtors. But in the world of low cost competition where the service provided is a commodity, the competition is fierce, the customer is not loyal, and the model is replaceable. Competing on price is a one-trick pony.
So, look for ways to build your business like Mercedes. Provide value to your clients by listening to their unique needs and acting in their best interests. Create such unique client gifts that they will brag to their friends about the opportunity to work with you. Provide contacts of service providers that do the best job not the cheapest. Make their lives easier. Build your knowledge and skills so that you can provide the best solutions. Provide intangibles that the low-cost providers could not possibly match.
If business was always about saving money, then everyone would want the Versa. But let's be honest, no one wants the commodity (aka the Versa & I owned one).
- Sean Garvey
Dwell Inspect Arizona
(480) 867 4599