The service champions of the future build on living products to provide living services—this is the main takeaway from this year’s session on The road map to success with living products and services by Accenture.
The session, which was part of the 2021 Field Service Forum, was hosted by Accenture’s principal director, Urban Hofström, who took a deep dive into what it takes to reposition a service business toward smart, connected products. So, let’s explore some of the key considerations that can help industrial businesses succeed with smarter services.
Moving toward connected products as-a-service
The move from devices to services has already happened for many industry players. And although in recent years many have embraced servitization and did their due diligence, most still struggle to secure a successful future and achieve exponential growth.
And that’s because providing products as services is no longer enough. Customers now demand connected products instead of traditional ones. They demand unrivaled connectivity, intelligent and self-healing capabilities, predictive maintenance, and ongoing support for the latest technology.
But for many service providers, meeting these demands requires a shift from traditional products to connected products as-a-service, which is no easy feat. However, without undertaking this major change, it’s rather impossible to secure future success in the service operations landscape and achieve exponential growth.
So, how can businesses move from traditional products to connected products as-a-service? The solution is to start changing at a fundamental level focusing on customer experience and digital technology.
Evolving customer expectations are always driving businesses to innovate and design new business models to satisfy their needs. Likewise, today’s connected B2B customers drive the shift toward connected products by demanding hyper-relevant services.
And digitally native competitors are capturing the hearts, minds, and wallets of these connected consumers through liquid experiences, customer-centricity, new channels, and innovative outcome-based business models—all of which are facilitated by new, disruptive technology that is smart and connected.
Leveraging disruptive technology, businesses can harness the power of data and AI to enable new forms of value creation and meet the high expectations of customers that demand more convenient services, such as online booking, digital invoicing, pick-ups, drop-offs at desired locations, and more.
Likewise, they can also meet the demand for more transparency with detailed reports and flat pricing, which again creates the opportunity to provide new high-margin convenient services. This is significant considering that now, more and more customers value convenience over price.
As products are continuing to become services across industries, and touchpoints are multiplying coordinating digital, social, and traditional channels, there’s an opportunity for in-app purchasing and freemium models, which OEMs (original equipment manufacturers) should consider when reviewing their pricing approach.
They can use this cross-industry shift in pricing to review existing and new services, and consider ways to include accessories within packages that are designed on pay-per-use or freemium models. The transition to such models is facilitated by increasing customer tolerance to cross-sales and suggested services. This increasing tolerance makes it easier for OEMs to deliver new services and aftersales experiences.
OEMs can maximize recurring revenue with connected products as-a-service through outcome-based contracting. Full labor contracts, subscriptions, and agreements, such as pay-per-outcome, pay-per-use, or pay-per-availability, are all great options for unlocking maximum ROI.
Embracing platform economy
Moving toward connected products as-a-service is only the beginning. As this transition toward the servitization of connected products is made, OEMs should consider embracing the platform economy.
At its core, platform economy represents the shift toward digital platform business models that enable businesses and consumers to connect, share product information and other resources, and ultimately sell and purchase connected products with value-added benefits.
And since consumers who have tried omnichannel services during lockdown plan to continue using them, businesses should consider accommodating this new consumer preference to strengthen their relationships with their existing customers and open the door to new buyers.
With omnichannel services on the rise and a new data ecosystem being created, OEMs have the chance to reinvent their business and expand their reach. Their aftermarket teams can greatly contribute to this transformation by repositioning their aftersales services as a way to provide even more service options and insights to their customers by mining and analyzing their customers’ massive data sets.
Being responsive to customer aftersales requests is incredibly important in securing success within the service operations sector. And responsiveness can be improved by creating an ecosystem of smart, connected, self-healing products that support autonomous service delivered through a digital platform.
In recent years, many companies have shifted from products to services with the help of IoT-enabled technology. However, connectivity and servitization is only the first step toward success in a digital-first world.
As the world is recovering from a pandemic where technology and digitalization played a key role in business continuity, more and more B2B customers expect service operations leaders to enable growth and deliver fully digitalized service. Simply put, they expect their service providers to design for superior customer experience and deliver operational efficiency in unprecedented ways.
The idea of providing living products and services is a great solution for businesses struggling to meet evolving customer demands. Living products and services are built on the notion of changing value consumption to drive optimal customer benefits.
To succeed in creating such products and services, service operations leaders have to accelerate the move to service-driven revenues, adopt connected and self-healing products, and leverage service platforms for smart, proactive, and preventive service delivery. Likewise, new business models and the monetization of service platforms to third parties should be key considerations for service leaders looking to maximize their recurring revenue.
Undoubtedly, these trends will continue to grow moving forward. And some businesses are already in the midst of this transformation process, evolving towards next-generation service operations and taking the lead on living service delivery.