Commercial Excellence
Commercial excellence aims to bring a similar scientific approach to the customer side of the business that operational excellence brought to operations. An effective commercial strategy that drives Revenue Growth, margin improvement, and cash flow without adding new products. Most importantly, your competitors may not be able to copy it. Commercial excellence focuses on achieving financial goals without acquiring new customers or changing products. It aims to apply a systematic approach to the customer side of the business. Customer lifetime value (CLV), Customer Retention strategy, pricing management, and service portfolio strategy are essential to top-notch commercial excellence.
Traditional sales approaches rely more on intuition than facts, resulting in lower profitability, higher service costs, and missed opportunities to enhance customer lifetime value and satisfaction. Our proposed innovative approach to close this gap.
Commercial Excellence
Commercial excellence focuses on value creation from the customer’s perspective, using precise metrics tailored to the specific industry, customer verticals, and individual strategic customers. It aims to help companies achieve their financial goals.
Customer Strategy
We assist you with various capabilities, assessing Customer Lifetime Value and Increasing Customer Profitability. Market Segmentation enhances customer loyalty. Sales Strategy evaluates Sales Force Effectiveness and Market Coverage.
Pricing Strategy
We assist you with the Pricing Strategy for differential pricing and optimization, targeted reduction in Cost-to- Serve, and developing a Service Portfolio that delivers assured growth targeting the existing customer base. With our services, you can look forward to a future of growth and success.
Pricing is Revenue and Profit Drive
Price is the most vital profit driver! Implementing appropriate pricing strategies is not just a model or method; it’s a gateway to managers enhancing their profits. Consider this: a mere 1% price rise can generate an impressive 8% increase in operating profits. Conversely, a 1% price decrease can lead to a significant 8% reduction in earnings. This is not a matter of opinion but a proven fact from a McKinsey study of 1,500 companies, giving you the confidence that our strategies work.
Service Strategy
Service Strategy. The study showed that service champions had significantly higher margins (46% compared to 37% for followers) by considering their customers as strategic partners and offering well-defined service offerings. This approach drives sales growth and profits and fosters customer loyalty, paving the way for long- term partnerships.
Business and Executive Coaching and Competence Focus
Business and Executive Coaching and Competence Focus Thoughtful execution and continual improvement are crucial to ensuring sustainable business results. We prioritize our clients by offering complimentary business coaching, tailored competency development, process support, tool support, and mentoring to help them achieve and maintain their desired outcomes.
Objective
What Challenge(s) do Our Clients Face?
Companies offer complex products and services in competitive markets to meet customer needs. Sales and marketing often prioritize volume over profitability as the primary performance metric. Commercial Excellence programs focus on achieving financial goals rather than attracting new customers or changing products. These programs aim to deliver what customers want more efficiently by organizing activities and concentrating on value creation from the customer’s perspective. This involves using precise metrics based on industry, customer verticals, and individual strategic customers.
Executives can consider a series of questions to assess the company’s commercial function.
- How does our commercial excellence compare to our peers? Can we improve revenue, profitability, and efficiency?
- How does commercial function perform in peer comparison and benchmark practices?
- How do your and your customer's perceptions of the company’s performance compare with a detailed assessment?
- Which of the five core topics should we address most urgently?
- Is an incentive system combination of variable compensation and nonmonetary rewards linked to profitability and KPIs?
- Do we have to map the sales competencies to relevant regions and customer types?
- Do we generate significant business from value-added services and installed product base, repair, maintenance, retrofit, and replacement?
- Customer relationship and customer analytics deliver significant results. Do we use a CRM system with clean data and comprehensive information?
What is Our Commercial Excellence Approach?
How Do We Help?
Fintelligence Consultants ensures three strategies drive sustainable business growth and profit.
Customer and Sales Strategy
Customer Lifetime Value (CLV) to achieve consistent growth.
- CLV identifies high-value customers and guides relationship nurturing for long-term growth.
- Achieve profitable growth by targeting new customers and emphasizing high long-term profitability segments.
- Market segmentation enhances loyalty through personalized experiences and a customer- centric approach.
- Sales Strategy to enhance sales force effectiveness is crucial.
Pricing Strategy
Does your Pricing realize the Revenue enhancement and avoid Margin erosion?
- Pocket Price Waterfall detects and avoids revenue leakage and margin erosion and improves your profitability and market share.
- Competitive Pricing helps attract price-sensitive customers and maintain or gain market share.
- Discount Plot Chart visualizes the price/volume ratio.
- Price = Value tool for setting prices based on the customer’s perceived product/ service value.
- Differential pricing boosts sales, revenue, customer loyalty, and a business’s perceived value.
Service Strategy
Installed Base Selling
- In B2B relationships, focusing on selling to existing customers is crucial for sustained profitable growth, regardless of company size, industry, or competition.
- Product or service replacements help consolidate market share, fend off competition, and ensure customer satisfaction and growth.
- A significant source of repeat business and predictability.
Servitization involves adding services to manufactured products to increase margins and extend the product lifecycle. These include after-sales services, R&D support from partners, and offering solutions to customers through service provision.
What are the Benefits of Commercial Excellence Services?
Increase Customer Profitability
- Identification of unprofitable customers leading to changes in service levels/ product mix modifications and termination of unprofitable customers
- By calculating CLV for each customer, marketers can target campaigns, identify at-risk customers, and boost profitability.
Sales Strategy
- Analyzing cost-to-serve models informs the go-to-market strategy, driving EBITDA growth and fostering collaboration.
- Long-term visibility delivers robust sales forecasts depending upon the revenue cycle.
- Eliminates unproductive time, optimizes processes, and improves collaboration for enhanced customer service.
- Inaccurate forecasts result in higher inventory costs with an unsatisfied customer
Sales Force Effectiveness
- Equip the sales team with targeting and mapping to facilitate more face-to-face customer meetings.
- Strengthening capabilities across the organization
Optimize Pricing
Price optimization uses market intelligence and competitive strategy to adjust prices for different products and customer segments, maintaining profit margins and creating long-term value.
After Sales Service Portfolio
Installed base selling is the fastest route to revenue growth, profit development, and customer retention.
Servitization integrates services with product offerings for competitive value propositions.
Why Choose Us?
Strategic planning and business plan execution are cross-functional jobs. Sales and Marketing functions require financial support through tools for various calculations. The assumptions involved in various strategy building must be evaluated carefully for their impact on profit and loss accounts. Moreover, since the finance function could better understand and handle the data, sales and customer analytics competency strengthened the commercial strategy.
Cross-Functional Catalyst Approach
Pricing Expert
We offer a sustainable approach by analyzing and developing various tools to implement an effective pricing strategy. Our role is to provide tools and guide you through the process, ensuring you have the knowledge and resources to make informed pricing decisions.
Business Partner Approach
Service Portfolio Expert
What is Customer Strategy?
A customer strategy is a plan for delivering unique value and experience to a specific group of customers over the next three to five years. The business environment is rapidly changing, and adoption is the best strategy. The strategy must outline the unique value and experience the organization will provide its customers over the next three to five years, underscoring its critical role in the business’s success.
Customer strategy enables sustainable business growth in the medium term.
Customer and Sales Strategy
- Sales Strategy to enhance sales force effectiveness is crucial.
- Cost-to-Serve model improves customer retention.
- Sales Force Effectiveness prioritizes cross-selling and upselling to existing clients over acquiring new customers.
- Acquisition: Attracting new customers and fostering loyalty.
- Expansion: Categorizing customers to increase sales and engagement.
- Retention: Strengthening loyalty and reducing customer churn.
Market Segmentation
- Segmentation divides a broad market into smaller segments of individuals with similar needs.
- Targeting involves creating and tailoring marketing strategies for these segments.
- Positioning establishes an image of the product in consumers’ minds after the target market is selected.
- Differentiation is a vital component of positioning.
- Enhancing loyalty through personalized experiences and a customer-centric approach.
Customer Lifetime Value
Customer Lifetime Value (CLV) to achieve consistent growth.
- CLV identifies high-value customers and guides relationship nurturing for long-term growth.
- Achieve profitable growth by targeting new customers and emphasizing high long-term profitability segments.
- Cross-selling and up-selling aim to increase customer engagement and spending by offering the right products at the right time.
- Product-centric firms take longer to react to changes in customer preferences, while customer-centric firms detect changes more quickly.
Customer Lifetime Value Approach (CLV)
The CLV approach dictates that a firm’s profits are the sum of each customer’s overall value, ensuring the firm’s agility in detecting and responding to customer and market changes.
The difference between a product-centric firm and a customer-centric firm can be seen when considering changes in customer needs and desires. In a product- centric firm, changes in customer preferences may take longer to impact profitability measures. In contrast, changes are detected more quickly in a customer-centric firm, allowing for a more straightforward diagnosis of the causes.
CLV Accounts for Varying Profits Across Customers Did you know companies make 150% of their profits from just 30% of their customers? It’s like the 80/20 rule, but even more fascinating!
Why is Customer Lifetime Value critical?
Current Customer Value
- Evaluating the value of a customer’s current products
- Considering probability-weighted premiums, claims, lapses, surrenders, expenses, and commissions
Short-Term Future Customer Value
- Assessing the value of a customer’s future products over the short term (approximately one year)
- Influenced by short-term customer behavior, including propensity to upsell and cross-sell
Long-term Future Customer Value
- Projecting the value of a customer’s future products over a longer horizon (up to 10 years)
- Accounted for by a customer’s long-term expected behavior and anticipated life situations
Sale Force Effectiveness
The five key selling components are targeting deployment, execution, engagement, and enablement. An initial analysis and diagnostic can help identify areas with the most significant improvement potential.
Sales Force Effectiveness is about making the sales team equipped with targeting and competency mapping, enabling more face-to-face meetings with customers, driving an optimized compensation plan, and delivering timely compensation.
Pricing Strategy
A differentiation strategy, a powerful tool in the business arsenal, allows companies to offer unique solutions and gain a competitive edge. The differential pricing strategy, a vital component of this approach, involves charging different prices to customers or segments based on their varying value perceptions, price sensitivities, and product requirements. This strategy enables the seller to capture more value from customers willing to pay more, increasing market share and volume from more price- sensitive customers. By implementing this strategy, you can see a significant boost in your revenue and market share, instilling confidence in its effectiveness.
How Can a Fintelligence Consultant Assist You?
Fintelligence Consultants offers a sustainable approach by analyzing and developing various tools for businesses to implement an effective pricing strategy. Our role is to provide tools and guide you through the process, ensuring you have the knowledge and resources to make informed pricing decisions.
Tools
- The pocket price waterfall helps identify revenue leakage and margin erosion.
- The discount plot chart helps measure how price affects demand.
- Value pricing sets prices based on the customer’s perceived product or service value.
- Competitive pricing helps attract price-sensitive customers and maintain market share.
There can be several elements to deliver. Each assignment may differ in size and
complexity.
- Monitoring various data sources to gain insights into pricing and market trends
- Analyzing competitor pricing and market trends
- Presenting pricing analysis findings
- Recommending pricing strategies aligned with market trends
- Forecasting revenue and market share
- Collaborating with sales and marketing
We recommend pricing software linked to your ERP.
How Does a Pricing Strategy Help Business?
Does Your Pricing Realize the Revenue Enhancement and Avoid Margin Erosion?
- Pocket Price Waterfall detects and avoids revenue leakage and margin erosion and improves your profitability and market share.
- Competitive Pricing helps attract price-sensitive customers and maintain or gain market share.
- Discount Plot Chart visualizes the price/volume ratio.
- Price = Value tool for setting prices based on the customer’s perceived product or service value.
Cost-to-serve is an Effective Tool for Margin Improvement and Customer Retention.
- A comprehensive cost-to-serve analysis reveals that actual profitability is consistently lower than the gross margin suggests.
- Cost-to-serve has significantly increased as companies differentiate themselves by offering customized, bundled service packages and unique solutions.
- The cost-to-serve model helps us understand the actual cost of delivering a product or service to a customer and improve performance across the supply chain.
How Does Differential Pricing Improve Revenue and Margin?
- Differential pricing involves setting prices for the same product based on customer demand to optimize revenue.
- Differential pricing boosts sales, revenue, customer loyalty, and a business’s perceived value.
- Customer experience can also be enhanced by offering tailored discounts to meet specific needs and more effectively target different customer segments, leading to customer retention.
After Sales Service Portfolio/ Service Strategy
The service business presents a golden opportunity for significant growth and stability. By prioritizing quality service, companies can increase their product lifetime value and retain customers, stabilize revenue, and boost profitability. The shift towards value-added services and new monetization models further underlines the immense potential of the service business. Numerous case studies demonstrate the successful implementation of service strategies, inspiring confidence in the potential of this approach.
Is Service business essential to manufacturing companies?
- Identify customers who could buy consumables and after-sales service
- Identify customers who required a high level of servicing in the warranty period
- Lifetime value mechanism by bundling, unbundling, and locking in customer
How does service strategy ensure consistent revenue growth?
- Installed base selling is a strategic methodology that enhances revenue growth, profit development, and customer retention by optimizing the potential of your existing customer base. This can directly and indirectly impact your company’s top and bottom lines.
- Industry 4.0 presents a transformative opportunity for industrial companies to create and deliver value by integrating services with product offerings servitization. This is not just a shift in business strategy but a journey towards a new paradigm.
- Product-as-a-Service (PaaS), also known as Servitization, is the shift in focus of industrial machinery and equipment manufacturers from selling physical equipment to offering value-added services based on their equipment’s core capabilities.
How Can a Fintelligence Consultant Assist You?
With the assistance of Fintelligence consultants, you can effectively evaluate your organization’s capabilities and exploit this competency-based opportunity.
- Service operations are similar to factory operations: developing service-level competency, managing parts inventory and distribution, selling hourly services, and deploying service personnel based on customer demand.
- Installed base selling (Existing customers) involves three key things: protect, expand, and hunt to achieve steady, profitable growth more effectively.
- Prioritize service to meet customers’ needs, including routine inspections, preventive maintenance, reactive maintenance and repairs, spare parts coverage, and service levels.
- Servitization in Industry 4.0 promises to enhance manufacturers’ competitiveness and deliver growth, profitability, and stable revenues. IoT further fueled this trend, and many large companies are acquiring engineering services firms to consolidate their product and service portfolios.
- Service portfolios demand significant digital infrastructure, data analysis and monitoring, dashboard visualization, and automatic decision enablement. How to build a Service Portfolio?
How to Build a Service Portfolio?
Installed Base Selling
- In B2B relationships, focusing on selling to existing customers is crucial for sustained profitable growth, regardless of company size, industry, or competition.
- Organizing business processes to maximize sales to the existing customer base is essential. Managing timely product or service replacements helps consolidate market share, fend off competition, and ensure customer satisfaction and business continuity.
- A significant source of repeat business and predictability for a company.
Servitization
- Servitization, adding services to manufactured products, is a strategy for increasing financial margins and prolonging the product lifecycle.
- This includes after-sales services for equipment recovery, continuous support, and guaranteeing uptime.
- Development and outsourcing partners support fast R&D operations and address needs like reduced capital employed.
- The goal is to offer solutions to customers by providing access to resources through service provision.
Product as a Service Model
- Focusing on providing value-added services instead of just selling physical equipment.
- A new business model called Product-as-a-Service (PaaS), or Servitization derivative, is emerging.
- In this model, manufacturers receive compensation for providing their customers with output- or outcome-based service packages.
- PaaS models are expected to generate EBIT margins 3-7 times higher than those from new equipment sales and provide a steady revenue stream even during economic crises or downsizing.
Sales and Customer Analytics
What are the Key Performance Indicators (KPIs) in Sales and Customer Analytics?
Sales and Customer analytics are not just tools but the key to unlocking your business’s potential. They empower you to elevate your performance by increasing sales to existing customers, fostering loyalty, and gaining a deeper understanding of customer needs. They also enable the acquisition of new customers, enhance customer satisfaction, and improve overall profitability. Furthermore, they facilitate the delivery of enhanced value to customers and the reduction of costs associated with customer acquisition and service.
Predictability Analytics (P&L)
- Predictive Sales Analytics
- Customer Profitability Analytics
- Product Profitability Analytics
- Value Driver Analytics
Market Analytics
- Unmet Need Analytics
- Market Size Analytics
- Demand Forecasting
- Market Trend Analytics
- Non-customer Analytics
- Competitor Analytics
- Pricing Analytics
- Marketing Channel Analytics
Customer Analytics
- Customer Satisfaction Analytics
- Customer Lifetime Value Analytics
- Customer Segmentation Analytics
- Sales Channel Analytics
- Customer Engagement Analytics
- Customer Churn Analytics
- Customer Acquisition Analytics
Coaching and Competence Focus
We have developed a module that considers business needs and executive working styles.
- We begin with Fundamental training with a practical approach to Sales Target, Forecasting, and sales and Customer analytics. These tools help us practically understand market segmentation, customer lifetime value, pricing, and discount trends, as well as installed base data to estimate customer potential for service businesses.
- We added the necessary competency-building workshop, which included Segmentation, Sales efficiency, Customer churn analysis, transactional pricing, and value pricing.
- We offer tools to use, improve, and use for regular analysis and insights. Many times, different companies have specific requirements. We can guide your team in developing those tools. Tools built in Excel are an excellent beginning. Once the understanding and processes reach proficiency levels, automation and software systems can enhance their value.
- During the assignment, we encourage your team to take some initiatives and projects under our supervision. That will be an excellent chance to showcase and apply their recently enhanced competence to the company's requirements. We review their performance and guide them toward continuous improvement.
- We wish to take key personnel mentoring. We hope what we deliver to clients will be sustainable in the medium to long term. Many times, mentoring key personnel helps keep that momentum. We identify them as super users. Super users are responsible for mastering specific skill sets and internally training others. This is the benchmark method where the company can internalize the competence building without frequently hiring an external advisor.
How Do We Serve Our Clients?
Frequently Asked Questions
Customer StrategyCustomer strategy is more crucial than ever for a company’s success. Traditional customer targeting is needed in today’s rapidly evolving market. A successful customer strategy must articulate the unique value and experience your organization will deliver to customers over the next three to five years. This encompasses the necessary offerings, channels, operating models, and capabilities. Mastery of customer strategy is essential, as the entire business model must align to efficiently and effectively surpass the competition in meeting customer needs.
Discover the key elements of an impactful customer strategy. Who are your customers? What unique value do you offer them? How can you effectively engage with them? What strategies can you use to deliver value and create a positive impact for them? How do you measure and maximize customer value? What are the best methods for retaining and satisfying your customers? Lastly, how can you successfully win back lost customers?
- Customer lifetime value (CLV) guides the achievement of consistent growth. Customer Lifetime Value (CLV) measures the net profit estimation attributed to a customer’s future relationship. The CLV tool identifies high-value customers and guides efforts to nurture those relationships for long-term growth.
- To achieve profitable growth, it is essential to target new customers and emphasize segments that offer high long-term profitability. This can be done through cross-selling and up-selling, which aim to increase customer engagement and spending by providing the right products at the right time.
- It’s worth noting that product-centric firms tend to react slower to changes in customer preferences, unlike customer-centric firms, which can detect changes more quickly.
Customer Lifetime Value (CLV) is crucial for achieving consistent business growth. It helps identify high-value customers and guides nurturing relationships for long-term growth. A company can achieve profitable growth by targeting new customers and emphasizing high long- term profitability segments. Additionally, cross-selling and up-selling strategies can increase customer engagement and spending by offering the right products at the right time. It’s important to note that product-centric firms may take longer to react to changes in customer preferences, while customer-centric firms can detect these changes more quickly.
Customer churn is the ratio of lost customers compared to the total number of customers over a period. This metric is typically tracked monthly and reported at the end of the month. Analyzing customer loss is crucial for businesses to understand and prevent customer churn. By reaching out to lost customers, companies can uncover reasons for their departure and take proactive measures to improve overall customer satisfaction and retention. It’s essential to address issues promptly to prevent continued customer attrition. A comprehensive approach to customer relationship management is also necessary, focusing on lost customers and other critical customer behaviors and company actions that impact sales and profits.
Customer churn is the percentage of lost customers compared to the total number of customers over a period. Analyzing customer loss is crucial for businesses to understand and prevent customer churn. By reaching out to lost customers, companies can uncover reasons for their departure and take proactive measures to improve overall customer satisfaction and retention. It’s essential to address issues promptly to prevent continued customer attrition.
Frequently Asked Questions
Pricing Strategy- Cost-plus pricing: It is simple and ensures that the seller covers its costs and makes a profit, but it does not consider the customer’s perceived value or the competitive landscape.
- Competitive pricing: This strategy involves setting a price based on competitors’ charges to the customer for similar products or services. It helps attract price-sensitive customers and maintain or gain market share, but it can also lead to price wars and erode profit margins.
- Price skimming: Setting a high price for a new or innovative product or service and gradually lowering it as the market evolves and more competitors enter.
- Penetration pricing: This strategy involves setting a low price for a new or existing product or service and then raising it later once the customer base is established.
- Value-based pricing: This strategy involves setting a price based on how much the customer values the product or service rather than how much it costs to produce or deliver it.
Price is the most vital profit driver! Implementing appropriate pricing strategies is not just a model or method; it’s a gateway to managers enhancing their profits. Consider this: a mere 1% price rise can generate an impressive 8% increase in operating profits. Conversely, a 1% price decrease can lead to a significant 8% reduction in earnings. This is not a matter of opinion but a proven fact from a McKinsey study of 1,500 companies. The potential for increased profits is not just a possibility. It’s a reality within your grasp.
Customer willingness to pay is the critical factor in pricing, and their perception of the value delivered is crucial. Since customers vary in willingness to pay, it’s essential to consider their differences.
Differential pricing involves offering different prices and products to fulfill and meet the needs of various customer segments or based on situational factors such as timing, demand, and competition. By recognizing that different customer groups have unique needs and preferences, companies can tailor their prices and product features to cater to those specific customers and communicate the benefits effectively.
Value-based pricing is essential because customers will only accept a price increase if it aligns with the value they receive. This strategy focuses on setting a price based on how much the customer values the product or service rather than just considering production or delivery costs.
Frequently Asked Questions
After Sales Service Portfolio/ Service Portfolio StrategyAfter-sales service involves operations similar to those in a factory. It includes developing service-level expertise, managing parts inventory and distribution, selling hourly services, and deploying service personnel based on customer demand.
Selling to an existing customer base involves more effectively protecting, expanding, and hunting for steady, profitable growth. Prioritize service to meet customers’ needs, including routine inspections, preventive maintenance, reactive maintenance and repairs, spare parts coverage, and service levels.
Fintelligence consultants can help you assess your organization’s capabilities and exploit these competency-based opportunities. Service portfolios require significant digital infrastructure, data analysis and monitoring, dashboard visualization, and automated decision-making capabilities.
The After-Sales Service Portfolio includes components such as Installed Base Selling, Servitization, and the Product-as-a-Service Model. Installed Base Selling focuses on selling to existing customers to sustain profitable growth. Servitization involves adding services to manufactured products, while the Product-as-a-Service Model focuses on providing value-added services instead of just selling physical equipment.
After Sales Service Portfolio includes the following key components:
- Installed Base Selling: In B2B relationships, focusing on selling to existing customers is crucial for sustained profitable growth, regardless of company size, industry, or competition. Organizing business processes to maximize sales to the existing customer base is essential. Managing timely product or service replacements helps consolidate market share, fend off competition, and ensure customer satisfaction and business continuity. This is a significant source of repeat business and predictability for a company.
- Servitization involves adding services to manufactured products, including after-sales services for equipment recovery, continuous support, and guaranteed uptime. The goal is to offer customers solutions by providing access to resources through service provision throughout the entire product lifecycle.
- Product as a Service Model: This model focuses on providing value-added services instead of just selling physical equipment. A new business model called Product-as-a-Service (PaaS), or Servitization derivative, is emerging. In this model, manufacturers receive compensation for providing their customers with output—or outcome-based service packages.
The After-Sales Service Portfolio is crucial to a company’s overall business strategy. Prioritizing quality service can increase product lifetime value, customer retention, revenue stability, and profitability. Companies that excel in service view their customers as strategic partners and offer well-defined service offerings with clear value propositions, resulting in solid sales growth and above-average margins. A well-designed service business drives revenue growth, profits, customer loyalty, and long-term partnerships.
The After Sales Service Portfolio is crucial in aligning with a company’s overall business strategy. The service business can significantly contribute to growth and stability by prioritizing quality service. This can lead to an increase in the lifetime value of products, customer retention, revenue stability, and overall profitability. The shift towards value- added services and new monetization models further emphasizes the potential of the service business. Companies that excel in service view their customers as strategic partners and offer well-defined service offerings with clear value propositions, ultimately enhancing customer business performance. This approach often results in solid service sales growth and above-average margins, even in labor-intensive service businesses such as maintenance and repair. A well-designed service business drives revenue growth and profits, nurtures customer loyalty, and can serve as the basis for a long-term partnership throughout the product life cycle.
The After Sales Service Portfolio typically includes the following services, covering the entire product life cycle:
- Installed Base Selling: Providing spare parts for wear and tear, consumables, and services
- Repair and Maintenance: Offering repair parts, workshop labor, and preventive maintenance
- Equipment Refurbishment and Replacement: Addressing the replacement of equipment to prevent competitors from stealing the installed base
- Service Hour Selling: Providing off-site and on-site services based on customer demand
- Auditing and Calibration Services
- Performance Agreements: Bundling with a new product sale
- Servitization with Value-added Services
- Product as a Service Business Model: Offering recurring business throughout the product life cycle
Product-focused companies are turning to service strategies for three main reasons in B2B services:
- Outsourcing trends – Businesses prioritize core functions and outsource nonstrategic processes as technology advances.
- Saturation of installed base—Equipment manufacturers struggle to expand their installed base, leading them to develop growth services.
- Commoditization in product markets—Due to increasing price competition in product markets, manufacturers are using services to differentiate themselves.
- Providing good service can have multiple benefits for a company. It can increase product lifetime value, retain customers, build brand loyalty, stabilize revenue against economic shocks, and ultimately increase profits.
