Gaining an Edge Through Servitisation

Today, service has become the biggest differentiator for manufacturers as they look to build a clear competitive edge over their rivals. Increasingly, manufacturers are moving to a model of competing through the delivery of advanced services. The aim: getting closer to the customer; important because servitisation can provide a great opportunity to drive through new revenue streams.

Achieve healthier margins with Servitisation

Servitisation can be a significant financial enabler; helping manufacturers achieve healthy margins by developing long-term relationships with customers that enhance loyalty, reduce churn, and yield incremental sources of revenue. It’s a big shift in mindset, and some companies may not be ready yet to make that leap. 

Phil Wood, group IT director of Rotork, states: “It’s gone from a case of – here’s the product, here’s the warranty, thanks a lot, to more of a focus on the customer needing the manufacturer to provide detailed information on how the product was made; its service record and whether it could be quickly repaired if something were to go wrong with it. That puts huge demands on manufacturers internally and they need to ensure that they have the right tools and solutions in place to sift through all the data they have and extract the intelligence from it.”

Big data is another active driver of servitisation. Its growth and accessibility has led many businesses to collect more data, but the key is what you do with it. 

Unified data streams

“One of the biggest challenges organisations face is that they often have huge volumes of data at their disposal but, it’s rarely served up to them in a way that is easily digestible,” says Jamie Hall, UK Lead - Manufacturing, Distribution & Retail, Microsoft. “A raft of different customers may have bought one of your products, for example. Big data, when implemented and applied properly could potentially reveal that a large proportion of these are only using 50% of the functionality, for example, giving the manufacturer the option to remove some of the unwanted functionality.”

For manufacturers, it may well be about using enhanced insight to redesign the product or even introduce a new product to fit demand over a different customer demographic.  Here, questions are likely to arise around how manufacturers can enhance products to meet customer needs better alongside ensuring that they consistently buy into the concept over a longer period. 

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