The Transition from Products to Services: How All Companies Are Becoming Services Companies

In the words of Maya Angelou, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” In an age where selling experiences is gold, companies, particularly those in the manufacturing industry, are feeling the pressure to create not just a quality product, but a quality experience to go with it. Customers are craving the next thing to enhance their lives. Products are not just objects of value in their own right, they are merely a piece of the package. Customers want more information, more connection, and a more personalized experience with that product. This is why many manufacturers are transitioning some focus from products to services. In fact, businesses who are on the cutting-edge of technology are getting away from the product-based model where an engineering department develops a product, sales team delivers the product and service teams repair. Now these companies are moving toward a more digitally connected, services-based model that continually measures and monitors customer interaction.

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. An example is their newest generation of corn planters, which not only runs at twice the speed of previous models, but also has monitors, sensors and software that optimizes the planting process, allowing the operator to be better informed in real time and adjust settings as needed.

In addition to information, the onset of services connected to goods allows for tie-in purchases and subscriptions for customers to have the best experience with their product. For example, GM’s creation of the OnStar subscription service gives vehicle owners in-vehicle security while also providing a remote diagnostics system. By using software these companies not only improve their product, but also use data and technology to connect the customer to the company. The customers are valued and the companies are able to use the feedback to continuously make improvements to better serve customers.  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.

Using customized and more advanced technology in your business practices will help you have a sustainable, competitive advantage.  One example might include the ability to obtain continuous feedback with sensors built into the product itself, allowing current conditions and maintenance needs. This could be a subscription service, such as On-Star, to allow for an additional revenue stream. It could be developing an app or interactive website for customers to gain additional information about the use of the product or enhance its use, for example a guitar manufacturer that has an app where you can download lessons or music, find a music store, connect to the manufacturer with feedback and even connect customers to each other furthering the human element and experience.

The transition to a services-based company allows the value of products to be elevated. Being attentive to customer needs allows better quality products to be created and maintained more easily. The ability for the customer to be informed, connected and engaged helps them have a product experience. This helps your company create and retain a competitive advantage and creates a brand loyal customer. If you are interested in learning more about how you can better your customers’ experience with a services-based enhancement, Unstoppable Software can help with all of your technology and software needs to make it happen.  Please contact us to discuss how you can successfully start cementing your competitive advantage today!

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