![]() Until now, the focus of digital business transformations was to create efficiencies and improve operations to save money. Digital technologies and data become the cornerstone of this long-term relationship. Using value-based service options, it’s a win-win for both with continued touch points. In this scenario, you and the customer have aligned your interests. The service package could include digital solutions and data-driven uptime/performance guarantees, consumables and spare parts. ![]() Solve a challenge bigger than giving them a technical solution.įor example, after determining unplanned downtime is a problem, an equipment manufacturer might decide to give its customers special service packages. You will only be able to monetize digital services successfully, in my experience, if you align goals and incentives with your customers. Improve customer relationships and intimacy. However, in general, these financial models are one proven way to monetize digital capabilities with your products/services while managing risks and creating resilient revenue streams.ģ. I go deeper into this concept in my article on how equipment-as-a-service (EaaS) enables business outcomes. Here you can capture more regular, predictable revenue and monetize throughout the lifetime of the customer relationship. Whereas, if you’re operating in a servitization or pay-per-use model and bundling services and maintenance, what you’re selling is operating expenses (OPEX). Selling a product outright as a capital expenditure (CAPEX) is a one-time influx of revenue. Adopt new financial models, like recurring (pay-per-use) revenues. Of course, you can vertically integrate without technology, but unlocking value pools while vertically integrating usually needs technologies like IIoT, big data and artificial intelligence (AI) to provide a prescriptive and structured strategy.Ģ. This enables value pools like minimizing downtime, reducing supply chain inefficiencies and maybe even “pay-per-use” revenue models. The key is to create value, for example, by taking on risks associated with the repair and operations while providing this capacity with “peace of mind” for your customers. One example is if you’re an equipment manufacturer - you offer the capacity to build/move/produce things. Data-driven insights can help not only integrate vertically but also unlock value in the process. Vertically integrated offerings take away your customers’ pain points. Find a clear path toward vertical value integration. In my opinion, monetizing digital capabilities alone is not holistic.īelow are three practical tips on creating a monetization strategy.ġ. The answer is yes if it enables you to align interests with your customers, establish new product offerings and recover more after-market business. So, you might be wondering if monetizing your value is worth it. Having a sound monetization strategy is the first, most crucial element, but it’s hard work and takes a coordinated effort among leadership to get it right. Therefore, it must remain a CEO-driven agenda.Īdvantages For Your Business And Customers Although leaders from all departments should be involved, this is a fundamental change in how you do business. This includes senior management from operations and marketing to human resources and sales. Simply put, technology is critical, but only as one of the enablers to a bigger business objective.įrom there, you can build out your implementation teams, bring in expert partners and gain internal alignment from every unit within your organization. You’ll uncover the prerequisites in terms of the technology architecture needed. Begin by identifying the value that solving a pain point will create, and which value pools your solution will unlock. You need to slow down and bake your strategy and business objectives before you implement technology. I find that most companies make two mistakes: First, they equate digital to technology capabilities only second, they try and monetize digital solutions by themselves. You need to start the process with a business lens. It’s not as simple as investing in sensors, retrofitting machines or installing software. In my experience, as a part of the executive team for the last six years at a growing industrial internet of things (IIoT) company, it’s because people tend to get stuck on the technology.
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