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Why is it important to monetise services

by | Apr 26, 2018 | Monetising Service

Value propositions in manufacturing are becoming more data-driven and more service-oriented. It is critical to capture to generate new revenue streams.
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It’s a great time to be in Manufacturing. A lot is going on in the manufacturing sectors.

On the one hand, many manufacturers experience pressure on growth, revenue and margins. Their products and services are being commoditised. Competition from lower cost alternatives are arising. On the other hand, there are huge opportunities with new technologies, value propositions and business models.

One of the important trends is that value proposition and offerings become more data-driven and more service oriented. Services are becoming more pro-active, predictive and performance-based. Advanced services are extending beyond maintenance and availability of the equipment and towards customers’ overall value creation process. Potentially the products will even be offered as a service in the near future.

However, many manufacturers are product-driven businesses which do not fully appreciate the value service has for their customers and own business.

Monetising Services -DilemmaOne scenario: In the continuous battle to win the (products and/or consumables) business of clients and to justify higher prices, many manufacturers have been adding a lot of services free of charge. For example, pre-sales consultancy, application support, extended warranty, discounted maintenance contracts, training of the users.
As a result, the overall costs to sell products have been increasing, while the prices and market-share may have been declining. This is not a sustainable approach any more.

Another scenario: Due to new (data) technology and customer expectations, business models and core business will shift. Manufacturers will develop and grow service and data capabilities with new, expanding teams. Cost-level and structure will change.
Without additional revenue-streams it will become impossible to continue this shift.

How to Monetise Services in order to Grow in a Disruptive World?

The capability to monetising service is mission-critical for sustainable performance and existence of manufacturing:

We hear and read many aspects and strategies around monetising services and data. In our experience, we have seen 3 critical steps which make the difference between success and failure:

  • Solve bigger customer problems:
  • Articulate the value
  • Build internal momentum for monetisation

These aspects are critical to get other aspects, like sales and business models will follow. We will further discuss these three steps in following articles.

The Benefit of monetising services

Manufacturers which are better in solving bigger customer problems, better articulating the value for customers and staff and have higher momentum for change and monetisation see that they generate more new revenue streams and differentiate more – in the eyes of their customers – from their competitors. They perform better and have more resources to keep innovating their business and hence grow in our disruptive world.

 

Essence

Great offerings and solutions won’t sell themselves.

It’s the various colleagues together that drive the value perception and sell the solutions, because they are eager and passionate to perform, learn, develop and make new things happen. Without encountering unnecessary obstacles which reduce confidence and maintain internal conflicts of interest.

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Why is it important to monetise services

Value propositions in manufacturing are becoming more data-driven and more service-oriented. It is critical to capture to generate new revenue streams.

Solve Bigger Customer Problems

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Articulate the Value You Offer

Too often we see that (new) services, solutions or features are promoted without connecting the dots to their bigger problems.

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Guest Blog: Driving Revenue Growth without Losing Sight of Customers

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Remove Obstacles for Clients to use your New Offerings

If obstacles to adopt your the new solutions are high for your clients, they may not use them or delay it. The result is limited commercial success.

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moreMomentum is an international advisory and training firm. We specialise in working with manufacturers who are looking for quicker and more radical business innovation to thrive in today’s disruptive world.

Our mission is to enable manufacturers to strengthen their position as the backbone of our economy.