Servitization is the shift from traditional manufacturing of goods to providing services alongside or in place of those goods. This enables manufacturers to increase customer loyalty and differentiate themselves from competitors, as well as open up new revenue streams and increase profitability.
Servitization also allows manufacturers to better understand customer needs and requirements, allowing for more efficient production processes and better customer satisfaction. In addition, it can lead to more
sustainable business models by shifting the focus away from product-oriented practices.
Creating a more
sustainable business can also be a powerful tool to reduce waste. This shift in focus helps companies to reduce their environmental impact and create more value for their customers, as well as to create a more sustainable business that can outlast its competition.
Organizations must shift their focus from selling products to providing services as well. By taking this approach, companies can create a unique competitive advantage, allowing them to stand out from their competitors.
For example, Amazon has shifted its focus from selling products to providing services like Amazon Prime, which allows customers to have their orders delivered in one or two days. This servitization approach has allowed the companies to provide greater convenience to its customers while reducing their environmental impact. Services like Amazon Prime also help to reduce packaging waste and the company can also save money by shipping fewer products.
Let us look at how Servitization can help manufacturers increase customer loyalty, improve service quality, and reduce operating costs in manufacturing.
Creates New Revenue pool
Traditionally, products have been provided as goods, but now they are being provided as services. As a result of this shift, manufacturers
are able to leverage their existing resources and create new revenue streams, while also providing a better experience for their customers. Servitization provides manufacturers with a competitive advantage in the market.
Michael Ouissi, Group Chief Operating Officer at IFS, explains in the article ‘At your service manufacturing embracing Servitization’ - how manufacturing is embracing the global shift towards servitization that smart manufacturers no longer consider maintenance and servicing as a 'necessary evil', but rather an opportunity to enhance customer relationships and generate revenue. Servitization also allows manufacturers to be more agile and responsive to changing customer needs. It also allows manufacturers to shift the focus from product ownership to product usage, allowing them to maximize the value of their products. Moreover, servitization can help manufacturers to reduce costs, increase efficiency and drive innovation. For instance, using servitization, a manufacturer of medical equipment can offer a subscription model that provides customers with access to the latest equipment, as well as regular maintenance, support and training.
Customized Services
After sales services enables manufacturers to monetize their products on an ongoing basis. It also allows them to capture more data, which can be used to improve product design, customer experience, and service delivery. This data can also be used to create more personalized customer experiences and develop new services tailored to customer needs. Ultimately, this approach can lead to increased customer loyalty, customer satisfaction, and increased profitability for the manufacturer. This data-driven approach can give manufacturers a competitive edge, while also providing customers with an improved experience that will keep them coming back. For instance, a customer looking for a car could be provided with some personalized recommendations based on driving patterns and preferences that are gleaned from a manufacturer's data.
Streamlined Production
Manufacturers can use data to develop predictive analytics to analyze customer behavior and identify opportunities for improvement. Furthermore, AI- automation can help manufacturers streamline their processes and reduce costs. Manufacturers can also use data to improve product quality and customer service. AI can also be used to provide real-time feedback on production performance, allowing manufacturers to make quick adjustments and optimize their production lines. For instance, AI-driven automation can be used to monitor and analyze the output of a production line, allowing manufacturers to detect and address quality issues in real-time.
Thus, the benefits of servitization have also been recognized by other companies, leading them to adopt this approach in increasing numbers. These companies have seen improved customer satisfaction and higher profits as a result. As servitization continues to gain traction, it is likely to become a key factor in the success of many businesses. In addition, servitization can help companies reduce operational costs and improve efficiency, both of which can contribute to increased profitability. By offering services that complement their products, companies can better differentiate themselves from their competitors, giving them an edge in the market. This can lead to increased customer satisfaction and retention, which boosts the company's bottom line.In turn, this can lead to greater customer satisfaction and higher levels of customer loyalty.
