When you have to make a decision about your business, whether big or small, where do you start? What mindset fuels the backbone of your reasoning?
Here’s another question about how you approach decisions: do you think in terms of what you sell (what we’ll call a "commodity mindset”) or in terms of what people really buy (what we’ll call a "product mindset”)?
If you choose the wrong mindset, you could be unknowingly making some decisions that lose you customers or hold you back from a lot of growth.
Before we find out how, let's answer one important question.
What’s the difference between product and a commodity?
Take a minute and think about your favorite coffee shop. When you pop into the shop, what is the item you are physically paying for?
It’s coffee (or your caffeinated drink of choice), right? Well, this is the commodity. It’s the physical, tangible object you exchange money for and walk away with. (Just as a side note, this doesn’t always have to be quite so literal. For example, if you’re a SaaS company, the software you sell is the commodity even if people don’t literally have it in their hands.)
But now think about why you really go into that coffee shop, and think about why it’s your favorite.
Usually, it’s not just because the coffee is so great (although that certainly helps). Walking into a coffee shop gives us more than just a cup of coffee. It gives us a comfortable environment, a place we can feel relaxed in, a meeting point to socialize with friends or a prime space to get some work done.
These things (the real reasons you go into that coffee shop every Monday morning) are what I call the business’s products. In simple terms, the commodity is the thing you buy and the product is what you actually get.
In a coffee shop business, the commodity is the coffee and the product is the cozy environment. In the perfume business, the commodity is a bottle of scented liquid and the product is a feeling of luxury or a desire to be attractive. In the accounting business, the commodity is getting your numbers and money in order and the product is peace of mind.
What does this have to do with your decision-making mindset?
Let’s talk coffee shops again. Think of a big coffee chain. Now, think back to seven or eight years ago when a group of people sat in the company’s headquarters and deliberated over this big question: Should we offer free Wi-Fi in our shops?
Today, this might seem like a no-brainer question. But, back then, something like this wasn’t a simple decision. The cost of Wi-Fi can really add up, and if you were a coffee shop that had many branches, this could mean a significant investment.
If there was someone sitting in that meeting who looked at their business with a commodity mindset, their answer would have been a resounding “no.” They’d be looking at their product’s commodity — coffee — and basing their decision purely through that lens. In their eyes, people came to their business for coffee — Wi-Fi would just be an unnecessary expense.
But if there was someone sitting in that meeting who looked at their business with a product mindset, they’d have a very different answer. They’d see their business as more than just coffee. They’d look to see why people buy their commodity and make their decision based on that.
Once they saw that what they were really selling were the environment and experience, it would be obvious that Wi-Fi was definitely something worth investing in. (And I think we’ll be forever grateful that they figured this out.)
This mindset also comes into play with small decisions. When you step inside a coffee shop, take a look at things like the furniture (comfortable and welcoming), the lighting (subdued) and the music (soothing). Would any company have ever considered those details if they only ever thought about their commodity?
On the face, it might look like all of these benefits and add-ons are just extra costs that businesses should avoid. Certainly, not every add-on you think up is a worthwhile investment. But, by considering what it is your customers are really paying for, you’ll quickly be able to filter out what investments will pay you back with happy customers later and what is just not worth the extra time or money.
If you’re having trouble figuring this out for your own business, the best thing you can do is put yourself in your customer’s shoes to figure out what you’re really selling. I myself use this very technique when I make decisions that could affect my clients. For example, when I first began my coaching business, I had to determine how long my calls with clients would be.
Initially (when I was looking at things from a commodity mindset), I considered making all client calls one hour. It seemed to make sense at first, because then clients could know exactly what they were getting for their money. But then I thought about it some more and looked at things from a product mindset. It wasn’t coaching minutes or one-hour calls that I was selling.
I had to stop and ask myself why do people really sign up for coaching? Why are they hoping to get from it? And my answers were freedom, more time, less business stress and better strategies.
So, I settled on leaving the length of my client calls open-ended. Some days they are just 15 minutes, and other days they are 90 minutes. Since the goal isn’t strictly to have a one-hour conversation but to actually have clients grow and learn, the calls are as long as they need to be.
The next time you need to make a new business decision that affects your customers, reach for that product mindset. In fact, don't wait for that next decision — find something about your business that’s irritating you right now, and try it out.
