Good Sign
Blog

How to Close “Buyer – Seller Perception Gap” in Monetizing Pay per Use and Outcome

Posted by Taija Engman
Jun 7, 2017 2:41:04 PM

“Customer expectations have been permanently upgraded”, stated Henrik Ehrnrooth, President & CEO of KONE Corporation in his opening key note at the Manufacturing Performance Days 2017 summit last week.

He voiced that companies can no longer sell what they have; they must sell what the customers wish for: “Our customers want to buy outcomes, not product features.”

Towards Outcome Economy

Over 800 industry decision makers and experts shared the topic “Towards Outcome Economy” at the Manufacturing Performance Days. Spotlight was on the new business models, earning logic and customer value creation.

Many industries are affected by digital disruption. Along with the adoption of IoT, even the most successful traditional industrial manufacturers selling physical investment products are transforming into usage-based and outcome-based service businesses.

Buyer Seller Perception Gap

So the era of standard service packages is over. Customers are no longer willing to accept a “least unsuitable package” but wish to pay per-use or pay-per-outcome. This change affects all structures in service companies.

Good Sign’s lead consultant in industrial internet and digitalization, Janne Kivilaakso, gave a presentation on “Monetizing Customer Value" at the Manufacturing Performance Days. He stated that new service business models are also creating a “Buyer - Seller Perception Gap”. Buyers are expecting that a new way to buy means lower prices. Sellers are expecting to charge more with a new way to sell. Therefore, the price expectation may grow far apart. 

Good_sign_buyer_seller_perception_gap.png

 

When service providers move into outcome based business they must understand that in the outcome economy customer defines the value. The value is different from customer to customer depending on what the customer’s use for the service is and what the customer’s own value creation is. The value reflects the customer’s justification on the spend.

There may be several ways to close the gap and reach agreement on service content and value. The service provider can:

  • Maintain long customer relationships where customer specific high quality services create cumulative value understanding
  • Provide unmatched value with the ability to build proof into sales and/or charging models
  • Radically cut costs of service providing, when the seller’s margin can grow even if the sales price is not higher

This calls for end-to-end digitalization!

A Paradigm Shift in System Capabilities

Service business dynamics are different from product business.

A paradigm shift in business model requires also a paradigm shift in processes and systems:

  • A shift “from product sales to service providing
  • A shift “from relatively fixed and packaged services to usage and outcome-based services
  • A shift “from service providers to service ecosystems

New dynamic service structures and customer specific sales combinations and dynamic pricing models are not existent in the traditional systems for ERP and pricing and billing.

Speed, flexibility and transparency will be embedded in the business models and business systems.

Our Customers are Showing the New Way

Forerunner Service Providers and Ecosystems are launching new strategic service models and experimenting new pricing and value sharing models. If you would like to read some latest interesting examples, do take look at what we at Good Sign Solutions have enabled for our customers.

Would you like to discuss your new business model needs? Analyse how your customer contracts can drive customer satisfaction? Just leave you contact information or book an e-meeting! 

How is digitalization changing your business? Let us show you.

CEO of Good Sign, Taija blogs on digitalization bringing growth and efficiency by building on new business opportunities and customer value.

<< BACK TO BLOG FEED

Professionals Behind The Blog

Taija Engman

Taija Engman

Taija´s blogs focus on topics where digitalization brings growth building on new business opportunities and customer value, as well as digitalization bringing savings that effect the bottom line.

Petri Takala

Petri Takala

Petri writes about creating new opportunities and solving everyday problems through Service Digitalization. Petri has a special interest on anything that moves: Automotive, Intelligent Traffic and Logistics.

Franz Reuchlein

Franz Reuchlein (USA)

In his blogs, Franz is excited to research and reveal ideas about creating meaningful information in the digital economy, the convergence of the internets and improved business monetization.

   
Jeroen Pijpers

Mervi Vikki-Aaltonen

Mervi’s blogs focus on topics of service management, billing & automation and digitalization. She is especially excited to explain the growing need of monetizing service management by digitalization.

Janne_kivilaakso-833894-edited.jpg

Janne Kivilaakso

Janne writes about industrial Internet, business process automation and Business IT. Janne is enthusiastic about enabling new business models and improving efficiency via intelligent automation.

Minna Dahlström

Minna writes about business transformation and corporate challenges on the road of digitalization. Minna is a finance professional and senior executive inspired by how intelligent automation can tackle the roadblocks of strategy implementation.  

 

 

 

Most Recent Posts

Interested? Subscribe to our BLOG

Choose A Topic