Marketing Your Service

If you are marketing your service business to corporates or in the B2B (Business-to-Business) sector then the following post is very important for you.

“This essay is a joint effort by IMD’s Business Marketing team to offer ideas about how firms can effectively manage these pressing issues – ways to make these trends work for you, rather than against you. Below, we relate the trends to the real-world approaches managers are using to succeed in the complex B2B marketplace, looking at four different areas: innovation, distribution, customer data, and strategy.

1) Innovation: From products to services

Nimble challengers, particularly from emerging countries, are showing manufacturers how easy it is to commoditise even sophisticated products. However, services, with the expertise of the team as the differentiator, are often harder to copy, and easier to innovate. Which explains why many product producers have been able to do well augmenting their business with a service component. Service revenue might consist of replacement or spare parts, service contracts to regularly maintain equipment or products, or consulting on how to best use products.

The experience of three global Finnish companies in similar types of industries shows the importance of services to total corporate sales.

Kone Elevator has been able to ramp up its services business, so that it they now comprise 60 percent of revenue. Equally interestingly, Wartsila, a global leader in diesel engines for ships and power stations, has increased its service business to 50 percent over an 8-year period. A third company, Metso, which is active in the paper and mining industry, has been able to maintain profitability by lifting its sales of services to 40 percent of the total.

Although none of these firms publicly divulge the profitability of their service units, services are generally thought to produce better margins than new product businesses, and thus are an important factor in sales revenue, growth, and overall profitability. Each firm managed to remain competitive in industries that have seen fierce competition develop recently.

Building a service mindset

Are there any particular managerial lessons to be learned from those companies?

Comparing the efforts of the leaders with the laggards indicates that leaders engage in a much more deliberate effort to build their service business. They have a senior executive in charge of the service business, who has equal stature with the rest of the product business units. These firms combine the service activities of many business units to build genuine service platforms for maximum impact. They take a broad view of “service”, moving from aftermarket spare parts, to full lifecycle management of the customer’s equipment. They offer many types of service and develop separate service brands. They create service technologies and processes, and even service competitive equipment. And, last but not least, they have aggressive M&A track records, integrating smaller service-only businesses into their overall effort. Many B2B companies will need to emulate the service leaders’ concepts and strategies if they want to keep up with the best in their industries.”

You may read the article here or download the pdf file here.

You can see that the trend of product producer changing to provide more value added service provider. So, if you are already a service provider, what does this means to you? Is this trend going to be a threat or opportunities for your service business?

From what I see, it will have more opportunities for us, the service business owner, because we are the expert in providing our niche service and this will give us the opportunities to work with the big product companies to provide service for their clients. You must start looking at our target market and what kind of product do they buy so that you can know which product companies that you can tied up with and then think innovatively to create a service that you can help the product company promote their product to their clients and at the same time provide value to their clients too.

Even though, this is not an online marketing strategies but I strongly believe that this new trend will give us the service business owner a great opportunities to market our service to more people. Tell me what do you think about this new trend. By the way, I highly recommend you to read the whole articles because there are more about the B2B business trends in the article.

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