9 May 2017

Servitisation - a way forward to combat eroding margins and differentiate yourselves

A few businesses recently have been adopting this in their business model offering. It has been seen in data led marketing communication environments where, print service providers share the rewards and risks associated with a campaigns success and overall ROI. This is commonplace in the world of advertising and marketing where success is measured on ROI.

Companies such as Rolls Royce, JCB and Xerox have adopted servitisation, developing services and solutions beyond their traditional product offering. Transitioning from making the product to selling the capability of the product is a difficult journey and we have seen it as companies have transformed themselves into solutions companies or seek to do so.

At a basic level servitisation goes beyond production into offering additional services, this could be useful analytics, trade and buying patterns highlighted in a useful graphic or a full upstream service taking on board additional services as a bundle and one source.

At its highest and most effective level, companies are entering into contracts with their customers, sharing risks and reward and revenue to a greater extent and a symbiotic closer relationship.

At this level they gain a full understanding of what their customers want to achieve and sell them the capability which enables them to achieve this. As a sector we have some great tools, the right knowledge and initiatives open to us to achieve this.

Many businesses want this type of relationship but have internal blocks in the way, not least the right people and skills, but collaboration with other businesses and the right people can unblock many of the barriers.

Selling this new relationship will be difficult but some potential customers will get it and want it and only by communicating to them directly your vision will you get immediate feedback. Go for the emerging and growing businesses who understand such collaborations and or the mid-market sized businesses who want to compete with the bigger companies and have less baggage and bureaucracy.

You are selling you can improve revenues by xx! you are selling you can increase profitability by xx! you are selling you can improve efficiency by xx!

The sector has the right technology to facilitate this and you have the vision and the energy to drive it forward, the BPIF have the services to support you throughout this change period.