With commoditisation and decreasing growth rates on product sales, the Service business is now seen as the new area for revenue and profit growth for manufacturing companies. However, recognising the need for a new business model and actually implementing the change are two different matters. So, the question is how can you best deliver on these expectations and turn services into an area of sustainable growth and profits?
Today many manufacturing companies tend to take an approach to services from a perspective that is similar to how they create value with their products. They see services as a unit of output, so the value is created by the company and then transferred to a customer. In this situation services are just a means to an end (e.g. fixing the machine when it breaks down so the customer can get back to using the machine). Although services are not simple to deliver, the value perceived by the customer on simple product-related services is limited. Just like with products this results in commoditisation of product-related services causing declining revenues and margins. Again, companies find themselves in a situation where competition and differentiation are mainly based on price and features.
So, back to the question of how can you turn services into an area of sustainable growth and profit? The answer is Service Thinking.
In this article we zoom into what service thinking is and how you can apply it.