The business landscape is always changing, from continuous advancements in technology to shifts in customer expectation. But it’s not just about keeping up with the latest industry trends or offering the most innovative products. Equipment rental firms should also prioritise maximising the value they can offer to customers which may not always be through product offerings.
Take servitisation, for example. Servitisation can help customer value shift from gaining profits through physical products to profits from new services. Subscriptions are a main focus.
There are three levels of services you can offer:
- Goods and spare parts (base services)
- Repairs, maintenance, training, support desks and condition monitoring (intermediate services)
- Outcome contracts and customer support agreements (advanced services)
Photo by Alexander Isreb from Pexels
What are the benefits of servitisation?
For your equipment rental business, you may reap the following benefits:
- Opens a new revenue stream - servitisation is yet another solution you can add to your arsenal. And that means potentially more revenue and growth
- It can also be constant or recurring - servitisation doesn’t have to be a one-time offering. It can be something you offer on a long-term (or even permanent) basis
- Differentiate your business from competitors - you don’t have to compete on price alone. Servitisation can give your rental business a competitive advantage as customers are more likely to choose to work with a company that offers products for rental/leasing and additional services to complement what they’ve already bought/are interested in
- Strengthen customer relationships - linked to the above, servitisation can help you better align with modern customer expectations and offer more value out of their contracts
And your customers could benefit from:
- Access to better quality/more premium products - servitisation can improve the quality of your products (e.g. staying ahead of maintenance schedules maximises asset usage and performance)
- More sustainable products - linked to the above, regular maintenance and proactive repairs help your products stay in better condition. This can increase their lifetime and performance, which promotes dematerialisation and sustainability
- A more convenient experience - perhaps machinery is booked in for maintenance without the customer needing to organise it or replacement parts ordered in before the asset breaks. How about access to a range of services to complement a particular asset? These can all improve the customer experience and strengthen that relationship
- No need for the initial investment - servitisation can eliminate large upfront costs and move business models from CAPEX to OPEX
- More flexibility - perfect for products that are intended for temporary use or may not be used frequently. Servitisation can allow customers more flexibility
How to move towards a service-focused model
Here are some tips to help you shift your business towards a more service-focused model:
- Analyse your customer’s activities. What takes up a lot of time but lacks the revenue? You could offer consultancy as a service or particular maintenance contracts to create a regular income stream
- Ask your customers what products they’re using and what problems they typically encounter. Offer preventative maintenance to mitigate these
- Do you know exactly what your customers are buying? Behind every product, there’s a customer demand that you can fulfil
- Modern technology like IoT and business intelligence can help you gather real-time data so you can make more accurate predictions about nearly anything
Servitisation can keep your equipment rental business competitive
Fuelled by changing customer expectations, the rental sector should expect to see higher equipment turnover rates. That means your asset management process should be able to support this. It also means you should be offering more flexibility surrounding usage and subscription-based contracts.
And this is what servitisation can provide.
Though, of course, this isn’t the only thing you can do to keep your rental business ahead of competitors. In our guide to innovation in the rental sector, we cover the latest trends (technology and changes in attitude), how to identify new opportunities for growth and more.
Find out more by downloading the guide via the button below.