Normal view MARC view

How to sell services more profitably

Author: Reinartz, Werner J. ; Ulaga, WolfgangINSEAD Area: MarketingIn: Harvard Business Review, vol. 86, no. 5, May 2008 Language: EnglishDescription: p. 90-96.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: Executives in manufacturing companies often ask themselves "Why aren't we better at developing profitable services and customer solutions in addition to our traditional product business?" After all, there is no shortage of sound advice on why companies should move downstream from products to services in business markets, and services are regularly portrayed as the cure for many corporate ailments: they help shield the company from revenue variations in the product business, they are supposed to lock in existing customers and capture greater shares of a customer's purchasing volumes. Services allow vendors to differentiate from the competition, and, finally, services margins are supposedly higher than product margins. As a consequence, the managerial literature is replete with the usual suspects of corporate names, such as GE Plastics or IBM Global Services, illustrating the shift from a product- to a service-focused logic in many industrial markets. In our research we found an apparent disconnect between the unequivocal call to move into the service space and the sobering reality of many companies struggling to make it work. For example, we found a number of venerable companies failing to see their service efforts bear fruit. All of them are multi-billion-euro enterprises, all are leaders in their respective industries, all have the necessary resources to make a significant commitment to services, all of them do engage in the service arena, and yet in all of these companies managers said that they were struggling to replicate anything that was close to the poster child stories. Yet, at the same time we also found companies that had patiently built up profitable service businesses over time. In this article we investigate how manufacturers can systematically go about unlocking the service treasure chest. Specifically, we put forward both a roadmap and a set of guidelines that allow manufacturers to better manage and harvest profitable revenues from their service strategies.
Tags: No tags from this library for this title. Log in to add tags.
Item type Current location Call number Status Date due Barcode Item holds
INSEAD Article Europe Campus
Available
Total holds: 0

Ask Qualtrics

Executives in manufacturing companies often ask themselves "Why aren't we better at developing profitable services and customer solutions in addition to our traditional product business?" After all, there is no shortage of sound advice on why companies should move downstream from products to services in business markets, and services are regularly portrayed as the cure for many corporate ailments: they help shield the company from revenue variations in the product business, they are supposed to lock in existing customers and capture greater shares of a customer's purchasing volumes. Services allow vendors to differentiate from the competition, and, finally, services margins are supposedly higher than product margins. As a consequence, the managerial literature is replete with the usual suspects of corporate names, such as GE Plastics or IBM Global Services, illustrating the shift from a product- to a service-focused logic in many industrial markets. In our research we found an apparent disconnect between the unequivocal call to move into the service space and the sobering reality of many companies struggling to make it work. For example, we found a number of venerable companies failing to see their service efforts bear fruit. All of them are multi-billion-euro enterprises, all are leaders in their respective industries, all have the necessary resources to make a significant commitment to services, all of them do engage in the service arena, and yet in all of these companies managers said that they were struggling to replicate anything that was close to the poster child stories. Yet, at the same time we also found companies that had patiently built up profitable service businesses over time. In this article we investigate how manufacturers can systematically go about unlocking the service treasure chest. Specifically, we put forward both a roadmap and a set of guidelines that allow manufacturers to better manage and harvest profitable revenues from their service strategies.

There are no comments for this item.

Log in to your account to post a comment.
Koha 18.11 - INSEAD Catalogue
Home | Contact Us | What's Koha?