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How to sell services more profitably
Werner Reinartz1, Wolfgang Ulaga
1University of Cologne, Germany. werner.reinartz@uni-koeln.de
Harvard Business Review
|June 12, 2008
Summary
Manufacturing companies can succeed with value-added services by recognizing existing service capabilities, industrializing operations, training sales teams, and focusing on customer processes. This strategy helps differentiate products and foster customer loyalty.
Area of Science:
- Business Strategy
- Service Management
- Manufacturing Operations
Background:
- Commoditization of products forces manufacturers to seek differentiation through value-added services.
- Many companies struggle to successfully implement service strategies, leading to profitability issues.
Purpose of the Study:
- To identify key factors distinguishing successful service strategies from unsuccessful ones in manufacturing firms.
- To outline a framework for developing profitable service capabilities.
Main Methods:
- In-depth case studies of 18 leading companies across diverse product markets.
- Analysis of successful and unsuccessful service capability development efforts.
Main Results:
- Four critical steps for developing profitable service capabilities were identified.
- Success hinges on recognizing existing service potential, optimizing back-office operations, adapting sales forces, and aligning with customer processes.
Conclusions:
- Successfully integrating services requires a strategic shift in organizational mindset and operations.
- Focusing on customer needs and processes, supported by internal capabilities, drives service success and customer retention.
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