The Commodity Buyer
The commodity buyer is the complete opposite of the checklist consumer. There are actually two types of commodity buyers. They are typically defined by size.
Commodity buyer 1 is a mid-sized or larger firm with specific business requirements that need to be met. The requirements are typically documented but may not be fully understood by the product evaluators. This however is irrelevant because the commodity buyer is not going to spend too much time evaluating CRM solutions, or comparing features and functions like the checklist consumer does.
Trusts the Top Rated CRM is the Best CRM
Commodity buyers are highly influenced by brand recognition and have already made a decision to select one of the top two industry leaders, convinced that they have chosen the best solution available and one that will serve their business well.
Are you confident the #1 CRM is the best CRM for your business?
This is not to say that they do not do some evaluation of the features, functions and services provided. They do, but the failure of this approach is that choosing a solution based on brand recognition alone does not guarantee success.
Where the Commodity Buyer’s Process Falls Short
Choosing a solution based on brand recognition alone does not guarantee success.
The number of failed implementations and utilization rates associated with industry leading CRM products is in-line with all other service providers in the sector. What this illustrates once again is that it’s not about the consumer’s lack of commitment to success or industry leading products that are too hard to use. The commodity buying approach, not unlike the checklist approach, fails to take into consideration the same core elements that have led to the disappointment consumers continue to have in this industry.
Issues with the commodity buying approach include:
- Rules out other good offerings – Commodity buyers make their decision based on brand recognition ruling out other offerings that may potentially be a better fit.
- Higher upfront cost – Commodity buyers traditionally pay more for industry leading products, but suffer equally from failed implementations and low utilization rates.
- Unbudgeted additional costs – Industry leading products are often generic in functionality and cost a great deal of money to customize for specific business purposes. Support services are also much more costly from industry leaders than vertically based or pure play CRM providers.
The Commodity Buyer for Small Business
There is a second type of commodity buyer and that’s the small business consumer or commodity buyer 2. These smaller businesses are traditionally using an older contact manager or an Excel spreadsheet to run their business. Management may be getting some pressure from the staff to better manage customer data.
Thinks Free is Better than Cheap
The commodity buyer 2 is very price sensitive. They are willing to consider a CRM solution, but they are not going to pay much for one. Their requirements are quite basic and there are dozens of basic low cost CRM systems available that can most likely meet their needs. As such, while they are willing to pay a small monthly fee for a solution, they tend to favor the plethora of free ones that are available today. You have to admit, it’s hard to argue against free.
Does your business have the time to try a free CRM solution?
Has High Expectations of Low Cost CRM
Commodity buyer 2 suffers more from unmet expectations than failed implementations. These free or low cost offerings by design are quite basic with little to no implementation effort and don’t offer much with regard to system administration or customization. What occurs most often with their use is simply disappointment. The users quickly discover that the product is limited in many aspects such as functionality. Perhaps the number of contacts or sales opportunities you can enter are limited as well. Upgrading to a more advanced version may be possible at a higher monthly fee, but sometimes what you are using is all that is available. Typically, the buyer simply discontinues the service or switches to an alternative.
Where the Small Business Commodity Buyer’s Process Falls Short
The problem with this approach is as follows:
- Narrow focus on price – The small business commodity buyer’s decision process is driven almost entirely on price, and does not give enough consideration to other selection criteria that are just as important to making the right decision for a small business. These may include functionality, data storage limitations, data security, and support services.
- Trial and error – The small business commodity buyer very rarely has documented requirements, and as such does not know the right questions to ask. But because the majority of the offerings in this industry segment are either free or a few dollars a month, they are not concerned overall. They can discontinue their use at any time.
This commodity buying approach can result in time wasted and failure to improve internal business processes.
The Secret to CRM Customer Success
In this series of articles we have taken a look at two different approaches to the CRM evaluation process – that of the checklist consumer and the commodity buyer. Because so many companies fall into one of these categories you can begin to appreciate why the CRM software sector has continued to suffer for so long. But there are companies that have been highly successful with CRM software and can point to improvements in multiple areas. Many have successfully integrated their front office and back office business processes, resulting in their business becoming a more efficient sales and service organization.
So what have they done differently? Well let’s take look. Continue reading the next article in this series: “CRM Buying Secrets of the Experienced Consumer“
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