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How To Become a Commodity

Anthony Iannarino
Post by Anthony Iannarino
April 15, 2010

Yesterday I received a letter from my insurance company informing me that as of May 21, 2010, my backup sewer and drain coverage would be removed from my homeowner’s policy.

During a torrential downpour last year, I was unfortunate enough to have lost power and my sump pump failed to remove the water from underneath the house (none of this will make any sense to you if you live somewhere where it isn’t common to have basements).

My basement flooded, and it required a professional clean up service and the carpet had to be replaced. Some personal possessions were damaged or destroyed, but I didn’t make a claim on any of those. The total bill was $9,970, of which I paid $1,000 as a deductible. That, as it turns out, is enough to cause my insurance company to drop that coverage, despite never having had a prior claim.

My agent, who for months hounded me on the telephone to try to sell me additional insurance packages, is nowhere to be found. No call. No meeting. Poof! He vanished. Apparently he doesn’t frequent this blog.

There are lessons to be learned: The fastest way to be treated like a commodity is to behave like one. My insurance company has chosen to be a commodity. And so has my agent.

1. Failure to Create Meaningful Relationships

I have been with this insurance company since I started driving in 1983. They insure my home, both of my cars, and they provide me a with a liability umbrella policy. They also insure my mother’s house and car, as well as her liability umbrella, my younger sister’s house and car, and my younger brother’s car.

But instead of picking up the phone and calling me to inform me that they were going to drop this particular coverage, I received a form letter from their corporate office. The lack of a telephone call here screams loudly the message: “We don’t care!” Instead of a concern that I have coverage, they care only for their outcome, avoiding another claim.

Instead of using this issue as an opportunity to deepen the relationship (yes, dealing with uncomfortable issues with your customers is how you deepen relationships, especially when you have bad news), they chose to behave as if our long history of doing business together is simply transactional.

Meaningful relationships become meaningful only when there is an issue big enough to provide meaning, namely problems. Instead of capitalizing on this opportunity to communicate, my insurance company has decided to avoid the problem and to hide. And so has my agent. They have determined that what they sell is transactional.

2. Failure to Help Your Customer with Their Biggest Problem

Surprisingly, this insurance company believes that they are entitled to keep my homeowner’s insurance policy, as well as my two cars, and my liability umbrella policy, without helping me with the insurance that I apparently need.

My insurance company is guilty of the one business mistake that may cost you more clients than any other, that is a failure to be resourceful. Instead of calling and suggesting that I either pay more for the insurance (I would), that they increase the deductible on a similar claim should there be one, or that I do something to reduce the likelihood of a similar future claim, like buying a battery powered backup for the sump pump (I did), they determined that there was no way for them to provide me with what I need.

They might have easily requested that I do all three to retain coverage. They might have sold me a separate policy. Or they might have recommended someone who would.

The road to commoditization is paved with companies who want the easy business and who avoid helping their customers with their biggest and most pressing problems. Differentiation is, in part, the ability to help with big problems. It is also resourcefulness.

Know that you are not entitled to keep your client’s easy business without helping on the more challenging business. Not dealing with the big issues opens the door for a more resourceful competitor to take both the easy business and the more challenging business.

What do you do when you have no relationship, when what you buy is an undifferentiated commodity, and when your provider no longer meets your major business need? You shop.


The fastest way to become a commodity is to behave like one. Commoditization is built on undifferentiated service, by failure to create meaningful relationships, and by a failure to solve your client’s biggest most pressing issues.


1. Is it ever okay to simply send a form letter when you are no longer meet a client’s major business need?

2. How could a personal call (or visit!) strengthen a relationship, even when you can’t give the client what they need?

3. All else being equal, how much is the relationship worth when what you sell is a commodity?

4. If you sell a commodity and there is no relationship, what prevents your clients from switching when there is a problem or when a lower price is offered?

5. Why is it the salesperson’s responsibility to generate alternatives that meet the client’s business needs when what they normally sell doesn’t produce the required outcome?

6. How do you avoid commoditization?

Read my interview with Tom Peters (Part One and Part Two).

Read my Blogs.com featured guest post on the Top Ten Sales blogs.

Read my monthly post on Sales Bloggers Union.

Get The Sales Blog iPhone App to read The Sales Blog and Twitter Feed on your iPhone.

Sales 2010
Post by Anthony Iannarino on April 15, 2010

Written and edited by human brains and human hands.

Anthony Iannarino
Anthony Iannarino is a writer, an author of four books on the modern sales approach, an international speaker, and an entrepreneur. Anthony posts here daily.
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