How can servitization benefit a business?
Posted January 25th, 2017 by Cambridge Online
Manufacturers such as Rolls Royce and Siemens have been influenced by servitization. As well as selling their manufactured products, they have also begun to sell their services. This helps them to compete in an increasingly tough, global market and to increase revenue streams.
Servitization has gained popularity in response to a growing business environment, where some manufacturers take their operations overseas to cut costs and remain competitive. The manufacturing industry declined by around 15% of total GDP in the EU last year. In order to grow, something needed to change.
Customers rely on service expertise more than ever as products become increasingly complex and equipment is more high-tech. More and more manufacturers are creating service elements by redeveloping their strategy to meet the needs of customers.
By moving to a relationship based model, businesses sustain annual growth by 5-10% and reduce costs by up to 30%.
Increase your offerings
Manufacturers only used to worry about quality of products, as the demand grows for strong service plans and the market has become more complex, customers now expect an entire solution, not just a product.
Greater financial stability
Service contracts guarantee regular recurring revenue and increase chances for loyal customers and upsales.
Stronger customer retention rate
Manufacturers are finding they can keep more customers through servitization because they are the most educated about the product. By tracking and monitoring technicians, supplies, vehicles and systems they hold the key to the data that makes their customers business more efficient.
In conclusion, customers continue to expect additional benefits and long lasting relationships manufacturers take advantage of the opportunity in service to become more financially secure and build stronger customer relationships.
If you’re looking to see how servitization could benefit your business and learn what your next steps should look like, play our game on servitization here. The results will give you a detailed report showing what you need to do to get started on the servitization journey.