The US economy is becoming more services-based each day which means that many companies, particularly those in the manufacturing industry, are feeling the pressure to increase speed to market while incorporating more customer engagement at the same time. Products are not just objects of value in their own right these days, buyers now want access to more information and personalized experiences as well. This is why many manufacturers are transitioning from products to services and how all companies are becoming services-based companies. What made these changes happen? The old product-based model where the engineering department develops a product; sales teams deliver it; and service teams repair it—is becoming a thing of the past. Businesses, who are on the cutting-edge of technology, are moving towards a more digitally connected, services-based model that continually measures and monitors customer interactions.
Successful manufacturers are realizing that buyers want to be more involved, expect to give their feedback and have useful input on product design. These customers also want ways to easily monitor the progress of their orders and connect immediately with service teams when something goes wrong. They want to do business with companies that are more proactive than reactive and, who can identify and fix problems long before they happen. John Deere has been on top of this for many years and has always been an innovative leader. Their first product, a polished-steel plow, outperformed every other tool in the business. In the last decade, their R&D department has been shifting towards more software and service offerings which means other companies have to step up and do the same. Their newest generation of corn planters will not only run at twice the speed of previous models but, also has monitors, sensors and software that optimize the planting process.
Other manufacturers have also done this for years and tie-in the purchase of a product with servicing and repair. Look at GM’s successful creation of the OnStar subscription service that gives customers in-vehicle security while also providing a remote diagnostics system. By using software to not only improve their products, these companies use it to bring people, data and technology together. With more integrated products and services, they give their customers comprehensive and total solutions. Back in 2014, IDC Manufacturing Insights, told us that this trend was coming. They said that 40% of the top 100 discrete manufacturers and 20% of the top 100 process manufacturers would provide product as service platforms by 2018! Businesses that don’t embrace this and jump onboard right now, will unfortunately, get left behind. How can you, as a manufacturer, make things happen?
Provide Better Product/Service Value Offerings to Your Customers
A good place to start is by using customized and more advanced technology in your business practices so you can have a sustainable, competitive advantage. Product as a service begins with incorporating sensors into your products so that you have continuous feedback about usage and condition. You can then use this data to deliver proactive and preventive maintenance; which is a game-changer in how you do business. When you offer this as a subscription-based service, customers will no longer have to worry about support, maintenance and repair. This can generate some really lucrative profit margins! Also, who can service your products better than you? By doing this, you are forming longer and deeper relationships with your customers because you now have longer contractual agreements. This gives you a better understanding of their needs and a closer look into the conditions under which your products are operating. Having this type of information is extremely valuable and will lead to better product improvements and redesigns. Please contact us and discuss how you can successfully start cementing your competitive advantage today.
