I had an interesting question the other day in a seminar: "Tom, what should I do to compete when my price is the same as the rest of the competition?"

I pressed further: "What do you mean the prices are the same?"

The seminar attendee responded: "The customer told all of the suppliers (our competitors and us) what they would be willing to pay for our products, and if we wanted to compete for their business, we would have to meet their target pricing. So, again, how do we compete when the prices are equal?"

This is at the heart of most price objections: buyers don't perceive any significant differences between suppliers. The question posed by the seminar attendee reflects a deeper problem that most companies, especially distributors, face: They fail to differentiate their solution from the competitive throng. Having been an industrial distributor in a previous life and having worked for a manufacturer that sold through distributors, I've seen the problem first-hand.

Most distributors sell good stuff and try to leverage factory support as part of their value-added service. In recent years, I've seen a gradual awakening by distributors to take the initiative to differentiate, not relying solely on the manufacturer's resources for differentiation. Those distributors who have worked hard at their level to create differences have fared better than those who remain in a symbiotic relationship with their suppliers.

When the customer says: "This is what we're willing to pay and if you want to sell to us, meet the price," what they are really saying is, "I won't pay a dime more for something because I don't see a dime's worth of difference between the suppliers."

The industry that I came from was a commodity industry. Six distributors in town sold the same exact product, label and lot number. There was no product differentiation. All we could sell was how our company took care of the customer, and how our salespeople could take care of the customer. The only time we really could talk about the product was when it came to application tips. So, how competitive is your company?

The questions your salespeople must be able to answer for the customer are: Why should you do business with our company — beyond whatever product value you offer? And, why should you do business with me personally? In other words: Why this product? Why our company? Why me? The same product, from the same company, from two different salespeople is really two different solutions.

One definition of a commodity is a product or service differentiated only by its price. It's been my experience that many distributors have hidden sources of value that they offer but generally go unrecognized or taken for granted in the marketplace. Conducting an internal value audit and communicating this value to customers is the answer I gave the seminar attendee. You compete on what makes your company special. What makes your company special in the marketplace?