As manufacturing costs continue to rise in developed countries, the lure of lower cost manufacturing environments grows. If this risk is ignored the impact will be the continued migration of manufacturing operations to these lower cost destinations.
However, rather than only looking at ways to reduce manufacturing costs, companies should also be looking at ways to add value to their customer relationships and to grow new revenue streams. In the case of many companies, this can be achieved by adding services to the products that they already supply to customers.
When you sell a product to a customer the result may be a one-off transaction or there may be some repeat business. Unless the product you are selling has high turnover there may be very little opportunity to fully develop and exploit your relationship with the customer. However if you can move that relationship forward into one where you are providing services to the customer, in addition to your original product, then you are laying the foundation for a long and profitable relationship with them.
There are some fundamental elements to consider before you decide to sell services to your customers. These need to be carefully considered as you design your service offering. The key elements are :
Over the coming weeks I will discuss each of these in detail, however each element is important in ensuring the success of the service business that you want to grow.
As a manufacturing company makes the transition into selling both products and services, one new aspect that they will need to consider is the interference of the customer in the service delivery. This is something new for traditional manufacturing companies as usually they get to deliver the finished product (and as a result have full quality control over it), however when delivering services the customer is involved with, and interferes in, every step of the delivery. To ensure that the quality of the service is not compromised, it is essential to take a structured approach to designing and implementing the service. This discussion will assist in that process.