As many market-places commoditise selling organisations attempt to move up their value chain to escape the deathly grip of diminishing competitive advantage.
Two common (and often interconnected) approaches to this problem are; adding services to an organisation’s offer and selling solutions.
The Move To Services
This has several advantages:
- Stand alone services tend to deliver higher margins.
- They help to sophisticate the offer, wrapping services around products can help ‘harden off’ prices.
- They create another route to market, opening up new revenue opportunities.
- They can extend and deepen the customer relationship beyond simple product usage to a more collaborative approach.
- They offer an effective platform for cross selling other services.
However, there are challenges in developing a services offering:
- Distinctive service development requires real thought leadership, which requires an insightful, possibly visionary, perspective.
- Service delivery is about end-to-end process excellence, not about functions and power based hierarchies.
- Services need to be performance managed just like products, including; objectives, success/failure criteria, measurements and best practice development.
- Paid for services that are now ‘special’ degrade to become the inclusive norm. New services need to feed in at the top of the service hierarchy.
Solutions, Solutions, Solutions
Everybody seems to be selling them , nowadays it doesn’t seem enough to sell a product or service, it has to be part of a solution. This doesn’t necessarily mean that more solutions are being bought. Many customers simply look past these superficial ‘solutions’ to what the product/service will do for them and make their own mind.
What is a real solution? Something that is an aggregated set of components (that cannot be disaggregated), tailored to a particular requirement that is a sold for a total (non-divisible) price. Because the offer is built and sold in this way is achieves a double benefit. For the customer it is unique to them, for the seller the components are be infinitely reconfigurable creating a scalable offer that can be sold uniquely many times over. When organisations really sell solutions they are creating real competitive advantage.