In today’s fast-changing technological landscape, with disruption evolving as the new constant, the need for the companies to stand out in the competition is not just eminent, but also more than ever before. And to achieve that differentiation in the market, you may need to constantly innovate and initiate various new measures, including the consideration of several revenue models, implementation of inspiring technologies, and deployment of novel strategies that could add value to your products and help you gain customer loyalty.
Let us consider the case of manufacturing companies that have traditionally been following the product sales business model, where the business cycle usually ends with the sale of products to the customers. With digitization reducing the overall production, and sales cycles and technologies like IoT and telematics making it easier to track equipment, manufacturing companies are now moving from the traditional model to the service-based model, also known as equipment-as-a-service (EaaS).
EaaS is a business model that helps manufacturers deliver not just products, but also rental support services, as part of long- or short-term subscription contracts. In this model, the current customers either rent or lease equipment instead of buying it. They can source products directly from the manufacturers, use them as long as they need, and once their requirements are addressed, they can return them to the manufacturers.
The EaaS model is fast gaining popularity. Many big names in the manufacturing industry, such as Xerox, HP, Rolls-Royce, and Philips, have long realized its importance and have been reaping its benefits for considerable time now.
Philips, for instance, offers lighting-as-a-service to their clients. The customers only pay for using the lights, while Philips takes responsibility for all the after-sales services, repairs, and replacements. It’s a win-win situation, as the customers do not need to be concerned with the repair and maintenance hassle, while Philips still gets to own their assets.
Instead of focusing on one-off sales, by turning to the EaaS model, equipment manufacturers can develop innovative strategies to create multiple revenue streams through their services. For instance, let us look at how the German power tool manufacturer, Hilti, uses the EaaS model to its advantage. Hilti offers fleet management services through a usage-based model, which covers use, service, and repair costs against a fixed monthly payment. They help the customer select the right mix of tools to limit redundancy. They also provide upgrades, in which all the tools are replaced with the latest models, helping the clients avoid costly downtime. With this move, Hilti has been able to win customers’ hearts and minds, increase revenue, and achieve differentiation in a highly competitive global market.
Apart from planning and strategizing, here are some crucial steps you need to take before implementing the EaaS model:
To be successful or to get ahead of the competition, you need to develop strategies that focus beyond the sale of your products. You need to work on how you can retain your customers and gain a competitive edge in the market. As the concept of “equipment sharing” benefits all the parties that are involved, EaaS is becoming a critical alternative for equipment manufacturing companies to future-proof their business in a rapidly evolving technology landscape.
Adopting a new business model, such as EaaS, requires specific technical understanding and significant knowledge of the current business landscape. With our deep domain expertise and 17 years of experience in developing solutions for companies in the equipment rental space, we at STAEDEAN are poised to help you embrace the EaaS model and augment and transform your business to new heights.
Our business applications are specifically designed to address the requirements of equipment manufacturing companies. They can help you operate effectively in the EaaS model and lay the foundation for you to establish or enhance relationship with your potential and existing customers.