The Power of Servitization: What it is and Why
You Should Consider it for Your Business

In the last few years there has been a lot of talk around servitization, what it is and why companies are changing to a servitization business model. Discover what servitization is, and how it can help you power your business forward.

What is Servitization and How Can it Help Your Business?

Servitization is the transformation of a product only based business into a product and service-based business. It is a shift in focus from selling products to selling services along with that product.

Apple is a perfect example of a company who changed their business model to a servitization model. Not only do they sell a product, but they have added service bundles like extended warranties, technical support, and automatic device upgrades.

Benefits of Servitization

Servitization can offer several benefits for businesses, including:

  1. Increased revenue and profit potential. Servitization can help businesses to increase their revenue and profit potential by expanding the scope of their products and services and finding new ways to generate value for customers.
  1. Improved customer satisfaction and loyalty. Servitization can lead to improved customer satisfaction levels as customers are provided with a more personalised service that meets their needs more effectively. In turn, this can lead to increased customer loyalty.
  1. Enhanced competitiveness. Servitization can help businesses to enhance their competitiveness by differentiating their products and services from those of their competitors.
  1. Greater operational efficiency. Servitization can also lead to greater operational efficiency as businesses are able to streamline their operations and make better use of resources.
  1. Training and Upskilling: Ensure your employees are trained and upskilled to provide high-quality services. Servitization may require a shift in the skill sets and mindset of your workforce, emphasizing customer service, problem-solving, and relationship-building capabilities.
  1. Collaboration and Partnerships: Consider partnering with other companies to complement your service offerings. Collaboration can provide access to specialized services, technologies, or expertise that you might not have in-house.

Components of Servitization

To fully understand servitization, it is important to know the components that make up the concept. There are three key components of servitization:

  1. Offering a service instead of a product: This is the most fundamental aspect of servitization. To successfully implement servitization, businesses must first shift their focus from selling products to selling services. This means providing customers with an all-encompassing solution that meets their needs rather than simply offering them a physical product.
  1. Incorporating customer feedback: Another key component of servitization is incorporating customer feedback into the design and delivery of services. This ensures that services are constantly being improved and tailored to meet the needs of customers. You can highlight how these services can enhance their overall customer experience, reduce downtime, increase efficiency, and lower operational costs.
  1. Delivering value beyond the product: The final component of servitization is delivering value beyond the product itself. This can be done by providing additional services such as maintenance, repairs, or even just customer support. By doing this, businesses can create a complete solution for their customers that goes beyond simply selling them a product.

Remember that the successful implementation of servitization requires a long-term commitment, and it may take time to see meaningful results. However, when done effectively, servitization can lead to stronger customer relationships, increased customer loyalty, and a more resilient and competitive business model.

Over the last decade Field Service management software has been pivotal for service companies to maximize their overall efficiency, stay on top of customer satisfaction as well as stay competitive all while improving ROI. If you are currently looking at a servitization business model and need advice on how to implement an FSM solution, please contact us we are happy to help.

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