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Service with a smile
For a manufacturer, selling services alongside physical products can be an untapped opportunity, says Rue Dilhe, of Exel Computer Systems.
There's a new buzzword sweeping manufacturing industry – servitization. It's an ugly word, to be sure, but to a growing number of manufacturers, the profits and sales revenues that it brings in its wake are more than adequate compensation.
Nor is this hyperbole, stresses Rue Dilhe, managing director of mid-market ERP vendor Exel Computer Systems – those profits and additional sales are, he insists, very real.
"'Servitization' might not always be the word that people use to us, but more and more of our customers are asking how we can support them in their push to add services to their product offering," he says. "Field service maintenance, installation, design, refurbishment – for a manufacturer, there are a lot of opportunities to offer services alongside physical products. And often, the profit margins are much higher."
And Exel's customers aren't alone in seeing that opportunity. As a recent study from Aston Business School – Servitization Impact Study: How UK-based manufacturing organisations are transforming themselves to compete through services – points out, those companies that have already pushed to add services to their sales offering are realising an additional business growth of 5-10% a year.
Better still, customers buying from a servitized manufacturer tend to view the combined physical product and service offering as a package, helping to foster a sense of 'stickiness' when the time comes to replace or upgrade the original product. Instead of viewing the physical product as a commodity, to be bought as such, they look for a continuation of the overall package.
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