How the Digital Signage Industry Can Benefit from Servitization
February 1, 2021 by Dave Haynes
Guest Post: Thomas Fraser-Bacon, Allsee Technologies
When a company adopts a servitization model, it’s shifting from a product-based business model to a services-based one.
The term was first coined in the late 1980s to describe how manufacturers needed to offer more than just goods if they were to survive in spite of the manufacturing declines in western countries.
By adopting this kind of strategy, the idea is that manufacturers can provide customers with a full solution made up of both products and advanced services, instead of a standalone product.
This offers a host of benefits, including increasing customer retention to setting yourself apart from competitors.
Why Should Digital Signage Manufacturers Adopt It?
Now you know what servitization is, your next question is probably going to be “what does this mean for me?”
The idea of transforming your whole business model can be daunting, and often, people are happier sticking to the status quo. But if you keep reading, I’ll outline a number of compelling arguments that show why servitization is not only worth exploring, but in most cases is essential for western manufacturers in the long term.
In general, servitization has been proven to boost the resilience and growth of manufacturing businesses.
In fact, a study by The Advanced Services Group found that manufacturers who offer advanced services to customers can generate a sustained annual business growth of 5-10%.
On top of this, according to a study by Barclays Corporate, 60% of businesses saw revenue growth of up to 50% when they added advanced services to their offering.
This is because servitization allows businesses to better meet the demands of their customers, build relationships that aren’t just purely transactional, and give their products a greater perceived value. In turn, this leads to better customer retention and loyalty.
More specifically, when discussing servitization in the context of the digital signage industry, it’s important to consider the many challenges associated with digital signage projects.
End users don’t just need the actual screen itself, they need someone to install and maintain it, as well as someone to create and often manage content, as well as a party to provide content management software. If a manufacturer can offer support with all of these aspects, they immediately gain a competitive advantage by differentiating themselves from the rest of the market.
How Do You Go About Servitization?
One of the most famous case studies to demonstrate servitization done right is Rolls Royce. Rather than selling their aircraft engines as a product, Rolls Royce decided to start leasing them out instead. This meant that customers received a better product, as the engines could be maintained more regularly, while Rolls Royce was able to increase its profit margins.
This example demonstrates how a business can switch to a services-focused approach ,and the benefits that servitization offers.
The servitization journey of each business will be different, but the first step is always assessing where that business currently stands – known as servitization mapping.
Ask yourself what services you currently offer, what services you could offer based on the resources available to you, and most importantly what services your customers would actually need. This provides a starting point from which to further develop your strategy based on your specific business and target audience.
The Servitization Journey
At our company, Allsee, our servitization journey began just over a year ago when we contacted by The Advanced Services Group, an organisation that provides research and training to help manufacturers develop services-led strategies. They have partnered with organisations such as Rolls Royce, Alstom and DHL and worked with over 200 businesses.
After several consultancy sessions and workshops, it became clear that we already offered a host of services which addressed many of our customer’s key needs. We also managed to identify several other advanced services that we weren’t already offering or promoting.
Many of these could be provided by existing partners in the short term, with the view to investing more in our internal resources in the longer term. This would help us take a more traditional approach to servitization, by monetizing these advanced services, which over time would result in a more services-led commercial strategy. We would decide whether or not to continue down this route depending on market feedback.
During the early stages of implementing this plan, the pandemic hit. Like most companies, this meant we needed to reassess our strategy. Instead of investing more in our internal resources to provide new advanced services, we chose to focus on promoting our existing services.
We did this by creating a ‘services spec sheet’ to add to all our product webpages and data sheets, as well as promoting one service per week on social media and creating videos highlighting our offering.
Though our original plans were hampered by the pandemic, we’ve still seen multiple benefits from changing our mindset to a more services-driven approach. We’ve strengthened our relationships with customers, found multiple ways to stand out from our competitors, and most importantly have been able to generate additional revenue.
Overall, servitization has been revolutionary at our company, and it’s clear to us that this new mindset has a huge role in our future success. This is a trend reflected in the secondary sector as a whole, with numerous studies over the past few decades proving that the future of manufacturing will depend heavily on servitization.
- Servitization involves changing your mindset from focusing on purely product sales to focusing on services.
- It can lead to increased growth, revenue, customer retention and competitive advantage.
- There’s no set formula for success; start by taking stock of your current offering and the key pain points of your customers.
- Having a services-led strategy is becoming increasingly essential for manufacturers, especially those outside of Asia.
About The Guest Writer
Thomas Fraser-Bacon is the Marketing Director at Allsee Technologies. For the past decade Thomas has managed and implemented the marketing strategies at Allsee to help them become one of the UK and Europe’s leading digital signage manufacturers. Allsee Technologies were founded in 2007 and have offices, showrooms and warehouse facilities in Birmingham, United Kingdom as well as Oostende, Belgium. Allsee has quickly developed into a market leading digital signage solutions manufacturer with an impressive Blue Chip client portfolio.
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