Connected products are massively changing the classic business models of manufacturers. So far, products have been sold off and passed into the ownership of the buyer. This ended both the transaction and the customer relationship. However, digital products create a permanet link to the customer and thus a long-term relationship. This enables manufacturers to offer additional services tailored to product usage. In addition, product ownership is becoming less and less important for many customers. This is why more and more companies are beginning to offer their own products as a service. Netflix, Car2Go or Dropbox are just a few well-known examples. This new development is called “Everything as a Service” or “XaaS”.
The way to become a XaaS Company
Digital products only offer real added value if they are equipped with services that are relevant to the customer. For example, many connected car providers offer services in the areas of traffic safety, cost efficiency or connected infotainment. It is important for every driver to be warned in dangerous traffic situations, to save fuel costs or to have personalized messages read aloud. Most of these services require payment. Many of them require recurring payments or, in other words, a subscription. With such offers, companies already have one foot in the Subscription Economy.
Two stages of becoming a Service Provider
Source: iq! Management Consulting