New business possibilities

Servitization: When the product becomes a service

Proximity to customers: Knowledge of customer needs and wishes, long-term, deep and multifaceted customer relationships. Customer journeys with open exchange. For manufacturers, the only way to achieve this is to change their perspective. From product orientation to service thinking.

Apr 13 2021

What are products for? 

Furniture manufacturers know their products and have ideas for their respective application and use. Marketing strategies are based on this and the distribution channels are aligned. Product features and functionality are emphasised - in the sales consultation. Traditionally, customer contact has often been exclusively in the hands of retailers. And the customer journey also ends here, perhaps with a little after-sales support. 

But what purpose do the products really serve for the customers? Do they live minimalist lives, should the sofa take centre stage in the living room and could perhaps be bigger or different to meet this demand? Or do they love variety and are more likely to seek options for appropriate design via modular construction methods? What other options could be offered with this knowledge around the products?  

Questions that SCHÖNER WOHNEN also addresses in the current issue in the article on designer Astrid Wallström. "Do I like to entertain friends or do I prefer to lie on the sofa alone? Is a large wardrobe important to me or do I need space for books?" The point is to identify needs. This can only be done if there is a willingness to change. To take the customer's point of view in order to understand the importance of one's own products - through a change of perspective.

The magazine SCHÖNER WOHNEN has addressed questions about the purpose of individual pieces of furniture. © Canva

Mindshift - The need for a paradigm shift  

Servitisation is this process and describes the way from the focus on the pure product and production - to the requirements, needs and wishes of the customers. Putting service thinking at the centre of the company is an elementary requirement of the service industry. In the last 20 years, however, this has increasingly influenced and been implemented in manufacturing industries as well, above all in the automotive and mechanical engineering sectors. 

Rolls Royce, Heidelberger Druckmaschinen and Trumpf are corresponding examples of successful implementation. An exemplary presentation and summary of the development is provided by Timothy Baines and Howard Lightfoot in "Made to Serve" or Tien Tzou in "The ABO Age". Well worth reading. But servitisation also offers new innovative approaches for the furniture industry to position itself successfully for the future and to strengthen and develop customer relationships. The advantage lies above all in the fact that services are less easily exchangeable than products. 

In addition, customer proximity becomes more intensive due to the many contacts associated with the provision of services. How does this work? Maybe not necessarily a Digital Twin... but digitalisation is the prerequisite. The furniture industry is currently experiencing how necessary and important digital alignments are for the continuation and successful development of customer relationships. It is essential for the development and implementation of service concepts. Where the journey is heading is already being shown by various providers in the industry.

Mycs and foxxbee are positioning themselves as digital furnishing consultants with furniture offers tailored to individual customer needs, home24 offers shopping via app and integrates the colour preferences of the prospective customer. IKEA and Villeroy & Boch are already taking a digitalisation step further by including augmented reality options in the design of furnishing areas. 

These examples show the variety of possibilities for more intensive customer contacts and new touchpoints for customer journeys. The direction is right. However, even these service offerings remain limited, as the focus is on product sales at the end. For a real implementation of servitisation, the business model needs to change.

 Digitisation is the prerequisite for servitisation. © Canva

The business model makes the difference  

To establish themselves as service providers, companies have to rethink and reorganise their business model. Only the focus on service + benefit of the product enables all opportunities for lived customer proximity. The next step is from product sales to hybrid business models based on sales and rental. Customer offers via subscription, for example, only make sense via usage options through renting/leasing up to "Product as a Service".  

Don't think in terms of products, but create the benefits of the products as temporary overall experiences. A common journey is created. Getting to know each other, understanding their needs and later even anticipating their wishes. Not possible? Miele is demonstrating it in a current project aimed at developing and operationalising a pay-per-use business model for commercial dishwashers. 

Miele is currently developing a pay-per-use business model for commercial dishwashers. © Canva

In the future, such business developments will be decisive for customer developments, because the focus is on the customer's requirements, needs and pain. The change of the business model is accompanied by an examination and possibly also a redefinition of the UPS of the companies. Our topic will be published here soon.

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