The great escape
Essential strategies to win the battle against commoditization
By Scott Addis, CPCU
Steve McQueen starred in the 1963 movie, “The Great Escape.” This thriller is based on a true story of a mass escape from a World War II German POW camp. “The Great Escape” is about courage, commitment, communication, focus, passion, positive attitude, problem solving, relationships, self-discipline and teamwork.
In 1942, the Germans opened a special stalag, or prisoner of war camp, designed to house their most troublesome inmates, the ones who repeatedly were attempting escape. The Nazis, exasperated at the number of escapes from their prison camps, built a high security “escape-proof” camp about 100 miles southeast of Berlin.
Former POWs acknowledge that it is demoralizing to be taken a prisoner of war. The prisoner is sorely tempted to sit back quietly and cooperate with his captors. But it is the duty of any officer in the time of war, should he or she have the bad fortune to be taken prisoner, to do all in his or her power to escape.
Plan your Great Escape
What does “The Great Escape” have to do with you and your business? Everything. There is an enemy that is eating away at your knowledge, wisdom and professionalism each and every day. This enemy, known as commoditization, reduces your offerings to the lowest common denominator, the competitive bid. A stinking price!
Commoditization occurs when the focus of the consumer’s decision is on the offering rather than the quantifiable difference that you bring to their business. You cannot see commoditization. However, it can be felt in the negative impact on your confidence, reputation, time and money.
After analyzing the results of over 3,000 Beyond Insurance® surveys and having discussions with over 500 insurance agency principals, sales managers, account executives, customer service representatives and producers, Addis Intellectual Capital (AIC) has concluded that commoditization is comprised of three dangerous traps—commodity, perception and anxiety.
The Commodity Trap occurs when the consumer sees little or no distinguishable difference between products, services or resources offered by your agency and competitors. When this happens, price becomes the differentiator. Getting caught in The Commodity Trap is damaging because your value proposition is reduced to a number. It also means that you have dozens, if not hundreds, of competitors who the consumer believes delivers a similar service or product.
The lock and key for The Perception Trap is housed in the consumer’s mind. This trap is based upon the consumer’s past experiences—his or her preconceived ideas of the value of your products and services. The Perception Trap alters what the consumer sees. Their preconceived notion does not allow them to open their eyes to the value of your new offering. When concepts are viewed without understanding, the mind reaches for something that it already recognizes, a baseline of understanding for which opinions are formed.
Anxiety is a reaction to stress. The Anxiety Trap represents a person’s fear of considering alternatives to the status quo. It impedes one’s ability to explore alternative means of delivering a product or service. Moving outside your comfort zone can cause stress which leads to anxiety. The best way to avoid The Anxiety Trap is to play it safe. Unfortunately, this short-term strategy will leave you caught in The Commodity and Perception Traps.
Watch your step!
If you are a member of a firm that is developing value-added services to differentiate yourself from your competitors, you are escaping The Commodity Trap. However, beware of The Perception and Anxiety Traps. They are most dangerous and tricky. Changing the consumer’s perception takes time and energy. Giving a member of your staff the tools, training and confidence to avoid The Anxiety Trap can also be quite a challenge. Be patient. The rewards are plentiful. Following are three strategies to escape The Commodity, Perception and Anxiety Traps:
1. Value proposition. Your value proposition represents the reason why a customer should buy your particular product or service, how it exceeds that of your competition and why it is worthy of the price they must pay. Your value proposition must appeal to your customer’s strongest decision-making drivers. A differentiated value proposition goes beyond functional product or service descriptions to express the results a customer can expect to achieve. The value proposition must not be about you and your firm. Rather, it must be all about the customer. Your ability to articulate how you are uniquely qualified to help the consumer will distinguish you from others in the marketplace.
2. Create a culture of creativity and innovation. The ability to “think outside the box” is best supported in a flexible, open, nurturing environment. Creativity is the act of producing new ideas, approaches or actions while innovation is the process of putting ideas into action. Creativity is always the starting point for innovation. Establishing a culture of creativity and innovation is essential to your Great Escape.
3. Understand the customer. AIC’s research substantiates that consumers are willing to pay a premium, redefine the buyer/seller relationship, erect barriers to the seller’s competitors and establish the seller as a trusted advisor when the seller reveals to the buyer an unrecognized problem and establishes for the buyer an unanticipated solution. Both are accomplished with a thorough understanding of the business.
“The Great Escape” is a story of achievement against impossible odds. And it proves that nothing can stop a group from achieving a goal once they agree to what that goal is. The 76 ragged men of all nationalities who climbed out of those tunnels on that windy March 24, 1944, night challenged the Third Reich and all it stood for. Their amazing escape allows us to understand and appreciate that anything can be accomplished with purpose, passion, positive attitude, creativity and innovation.
Go for it. You have everything to gain—especially your freedom!
Scott Addis is president and CEO of The Addis Group and Addis Intellectual Capital, LLC, a coaching and consulting company whose purpose is to transform the process that insurance agents, brokers and carriers use when working with their clients. Scott is a recognized leader who has been awarded the Inc. Magazine “Entrepreneur of the Year” award as well as the “25 Most Innovative Agents in America.” To learn more about “The Great Escape,” you may contact Scott at email@example.com.