On October 9, 2022
The Commoditization of Professional Services
For years, consultants have argued that their services are unique and cannot be standardized. However, in a globally interconnected economy, where information is readily available, and businesses are becoming more homogenized, professional services are increasingly being commoditized.
This article examines the commoditization of professional services, its implications for businesses and consultants, and how the trend can be embraced. It argues that the commoditization of professional services is a result of the globalization of the economy and the rise of the internet and social media. It also discusses how businesses can differentiate themselves in a commoditized market, and how consultants can add value in a commoditized world.
Has Consulting Been Commoditized?
To put it simply, yes. The commoditization of professional services is a result of the globalization of the economy and the rise of the internet and social media. Businesses are becoming more homogenized, and information is readily available. As a result, professional services are increasingly being commoditized.
The commoditization of professional services has implications for businesses and consultants. Businesses need to differentiate themselves in a commoditized market, and consultants need to add value in a commoditized world.
What exactly is commoditization?
Commoditization is the process by which a good or service loses its uniqueness and becomes a commodity. A commodity is a good or service that is interchangeable with other goods or services of the same type. Commoditization occurs when there is increased competition and homogeneity in the market.
We see typically see commoditization in traditional industries, such as manufacturing. For example, the commoditization of the automobile industry has led to cars that are increasingly similar in design and function. This has made it difficult for businesses to differentiate themselves. Concepts such as brand loyalty and customer loyalty are becoming less important as consumers can easily switch to a competitor.
The commoditization of professional services is a relatively new phenomenon. Professional services providers, such as Managed Service Providers, tax consultants, and marketing agencies, have long argued that their services are unique and cannot be standardized. However, the reality is that they all tend to have the same underlying tools, business processes, and methodologies. Although the order of execution of these tools, processes, and methodologies may differ, the end result is often the same.
The Standardization of Brand Personalities
Another significant contributor to the commoditization of professional services is the standardization of brand personalities. In the past, businesses could differentiate themselves by having a unique brand personality. However, with the rise of social media, businesses are now pressured to have a standardized brand personality that is consistent across all platforms.
The boring, one-dimensional brand personalities that are the result of this standardization are not only unappealing to consumers, but they are also difficult for businesses to maintain. As a result, many businesses are resorting to using celebrities or influencers to represent their brand. However, this is not a sustainable solution, as it is expensive and often leads to negative publicity when the celebrities or influencers make mistakes.
Facing The Facts: Avoiding Denial in the Commoditization of Your Professional Service
The commoditization of professional services is a reality that businesses and consultants must face. Denial will only lead to lost market share and opportunities.
Businesses need to embrace commoditization and focus on differentiation. In both B2B and B2B sales, consumers and decision makers have more information and options available to them than ever before. A failure to provide the relevant information in an immediate form will result in lost business.
Ask yourself: if my customer had a credit card and could purchase my service online, would they? The answer is almost universally yes.
Decision makers want an easy purchase. They want to know that they are getting the best value for their money. They also want to be able to compare your service to others in the market. By embracing commoditizing your service, you are able to provide this information in an easily digestible form.
Why The Commoditization of Professional Services Is a Good Thing
The commoditization of professional services is often incorrectly seen as a negative development. However, there are very positive aspects to it.
First, commoditization can lead to increased competition, which is good for businesses and consumers. When there are more businesses competing in the market, businesses are forced to innovate and offer better value. This benefits consumers as they have more choice and can find the service that best suits their needs. Content business owners tend to hate commoditization.
Second, commoditization can lead to lower prices. When there is more competition, businesses are under pressure to lower their prices. This benefits consumers as they can purchase the same service at a lower price. Keep in mind who pays your bills – it’s these very consumers.
Third, commoditization can lead to improved quality. When businesses are competing for customers, they have an incentive to improve the quality of their services. This benefits consumers as they can purchase a higher quality service.
Fourth, commoditization can lead to increased transparency. When businesses are competing for customers, they have an incentive to be more transparent about their pricing, terms, and conditions. This benefits consumers as they can make informed decisions about which service to purchase.
How To Differentiate Your Business in a Commoditized Market
Differentiation is key in a commoditized market. Businesses need to find ways to stand out from the competition.
One way to differentiate your business is to focus on customer service. When customers are able to receive a high level of customer service, they are more likely to be loyal to your business.
Another way to differentiate your business is to focus on quality. When customers are able to purchase a high-quality service, they are more likely to be loyal to your business.
Finally, another way to differentiate your business is to focus on value. When customers are able to purchase a service at a lower price, they are more likely to be loyal to your business.