How Service Creates Value

Service creates a variety of intangible and material values ​​– for the customer and the service provider alike.

But what are these values? ‘Value based pricing’ or ‘value in use’ are the current key terms here. Here, the service controller helps to balance values ​​and goals No ship can safely enter port without a pilot. And what applies to shipping is not so different in the service business. Here, the pilot is the service controller. Piloting would also fit well to describe key topics such as key figures, productivity data and value based pricing. After all, a service controller is not a railway conductor working to find fare dodgers.

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Service Controlling

On the contrary: the service controller is helpful, a partner to create transparency in cost accounting. Since only if the ratio of benefits and cost-generating factors is balanced, the bottom line for the company will be positive.

Value-based Pricing

An important factor in this calculation is the pricing of the service. For this purpose, service controlling provides valuable, cost-oriented figures. If a company systematically aligns these prices with the customer's benefit, this strategy is called Value-Based Pricing. An essential factor: possible savings on the customer side.

Entrepreneurs who focus on service are in the lead in the long run. Why? Well, selling a product is more like a one time hit. Service, on the other hand, can be a constant revenue. Because: long after the washing machine, the smartphone or the printer are sold, the customer uses services. And not just once – often for years.

Benefit: High Margins

Service beyond warranty and repair has long-term potential to increase sales and profits for suppliers and service providers. Often, margins created by a wide service range by far outrun the margin generated by product sales. No wonder then that value in use, the value arising from use, is gaining importance in the value added process and is consequently changing business models.

Knowing Tomorrow's Needs

What is good for the customer is also good for the service provider: because it generates profits. A win-win situation. But to create a win-win, the service provider must always be one step ahead of the customer. Today, the service provider must already know what customers will need and wish for tomorrow and the day after.

The smart ones listen well to their service employees. As they are closest to the customers and therefore know their wishes best.

Creating New Values

New service services can be developed to create new values based on the experience of the service employees. Ideally, service employees therefore contribute systematically to this process and add value. They analyze customer processes and actively recognize the needs of the customer. When service recognizes and fulfills these needs, new values ​​are created for the customer: internal processes are simplified and accelerated; efficiency increases and costs are reduced.

If service employees internally share their findings from close customer contact with the right colleagues in the company, they are an essential, dynamic part of value creation ‑ for both sides.


Stabilized After-sales

Especially if sales decline in the short or even the long run, the after-sales business can be an important stability factor. Often, service accounts for more than half of the profit. It can thus be a particularly effective tool for good long-term profits and stable corporate success.

Kangaroos Leap Further

If the customer orientation of the service provider goes beyond customer expectations, we at the ISS speak of a ‘kangaroo leap’. The reason: kangaroos leap further.

The ‘kangaroo leap’ is a core element in a modern service culture. Of course, this means you have to know your customer. However, an excellent service provider even knows the needs, wishes and challenges of the customer's customer.

It's a long way from product to service. But it is also one with excellent prospects.