‘The shift to outcome-based selling and Product-As-A-Service’ thought leadership blog copywriting, IFS. Outcome-based selling demands an entirely new mindset. One of a three-part thought leadership series, this blog shares insights briefed by the Global Industry Director for Manufacturing.
- COPY: Ian Castle, Freelance Copywriter
- CLIENT: IFS
Manufacturing thought leadership blog copy sample, IFS (US English)
[Excerpt]:
RE-INVENTING SALES REVENUES
It’s a sobering fact that the future for manufacturers over the next two to three decades lies in selling consumption of outcome-based services, not sales and ownership of manufactured goods. Manufacturing cannot compete on quality and cost any longer. It’s time to find higher value, and more difficult-to-replicate products and services.
The New World Order will increasingly see organizations creating revenue streams that are based on services as well as products. This shift – Servitization – is a natural response to increased competition, fluctuating demand and rising market costs, and in some cases sustainability pressures/drivers When manufacturers start selling outcomes, it allows organizations to differentiate and move away from commoditized saturated product sectors. By evolving from product-related services to customer-business related services, a servitization model offers B2B manufacturers the potential to grow recurring and sustainable revenue streams.
In the automotive sector, manufacturers like Mercedes-Benz, BMW, Fiat and Volvo all offer car-as-a-service subscriptions, with the option for customers to change models over time when they wish. Phillips no longer sells lightbulbs to Schiphol airport in Amsterdam – it sells light. The airport pays for the light it uses, whilst Phillips remains responsible for fixtures, installations and performance. Consumer product manufacturers like HP are moving from selling ink consumables to selling subscriptions for instant ink, with printer usage remotely monitored to ensure timely delivery. Leading consumer coffee machine manufacturers are now offering coffee-as-a-service – a monthly subscription covers both the machine and the coffee consumables.
The economics are compelling. A study by Aston Business School found a 5 to 10% increase in growth rates and 25 to 30% reduction in costs for companies adopting a servitization model for their business.