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.
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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.
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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.
