Service Revenue Generation is the new hot topic for management teams and executives in organizations that have historically sold hardware and software. As margins on products continue to decline, these organizations are striving to differentiate themselves from the competition by creating and offering new, exclusive services that, in some way, shape or form, provide additional value to their customers.
You may be wondering, “Haven’t these organizations been providing services since their inception? Don’t the large majority of these companies work directly with their customers to sell, install, configure, train and support them on their purchases?” I humbly submit that, yes, these organizations have indeed been providing services for quite some time, but no, they have not been in the “services business.” Let me explain.
Customer perceptions are changing. Products are being perceived as commodities. Services, however, are perceived to be of more value because they can be tailored specifically for each customer’s unique requirements and objectives. Hardware and Software providers are now creating new business models to capitalize on customer perceptions by selling services. In many cases, these services were historically offered at no charge, but they were offered as “one size fits all”, or as a “tiered option.” Consider for a moment technology support. Some hardware and software providers continue to offer support at no additional charge, but they likely limit the channels their customers can use (email or chat) or the support hours offered. As a customer, if you require real-time, 24x7x365 support from your hardware or software provider, you are likely paying for a higher tier of service (e.g., Platinum Service). This is the basic premise behind the concept of Service Revenue Generation.
This changing customer perception means that hardware and software providers are competing on a new field of play – Service. Organizations that understand this and invest in their service delivery capabilities today will be the organizations that have a competitive advantage in the market of tomorrow.