Owning the Whole Client Experience through Servitization
Gone are the days of clearly segmented links in manufacturing’s logistical chain. The growing push for digital integration in the manufacturing industry has given businesses a wealth of information right at their fingertips, including customer demand and industry shifts. This presents manufacturers an opportunity to provide after-sale services on top of the physical product and make their businesses more attractive to a broader customer base.
Industry experts call this the “servitization” of manufacturing. The term means adding on additional services after selling the finished product in order to retain the customer past the traditional buying cycle and open the business up to different, more predictable cash flows. Services can include repairs to equipment, routine maintenance checks or subscription contracts. The benefits of taking this approach as a manufacturer are many, including:
• A built-in repeat customer base
• Closer ties to customers through more personalized relationship management
• New, stable revenue streams to help protect against market volatility
• Well-rounded, diverse employee skillsets which can increase job satisfaction
• Better predictive data and forecasting for industry trends
Servitization is based around a data-first approach, meaning most firms that implement it have embraced the interconnectivity of the Internet of Things. By utilizing analytics at every step of the production process, a business can develop a robust feedback system that lets them improve every arm of the company, from research to design to production and servicing. How a company translates that data and turns it into actionable goals dictates whether or not a servitization approach will prove fruitful in the disruptive manufacturing landscape.
The relationship with the customer, whether a single person or a business, has grown increasingly complex and customized just in the last few years. It’s up to traditional manufacturing companies to find a way to adjust their approach to continue serving these customers while opening up new revenue streams that can secure some of the predictable revenue they may have lost. How has your firm begun implementing servitization practices in its day-to-day offerings? Share your strategies in the comments section below.