It’s no secret that businesses of all sizes and types have experienced a lot of disruption recently, and manufacturing organizations are no exception. Supply chain disruptions, labor shortages, and any number of emerging technologies and market trends make manufacturers ever more vulnerable to the volatility and uncertainty of “the new norm.” Companies are working hard to recoup financial losses incurred from the COVID-19 crisis and are looking to the future with an eye to regaining a competitive advantage.
Increasing Revenue with Bundled Services
Some manufacturing companies may go about increasing revenue by doubling up on their marketing efforts to increase the number of products sold – which is perfectly fine. However, there are ways to make more with what you’ve already got. The first step is to create a strategy to start bundling equipment and services together for increased top-line revenue and better bottom-line profit. That is the surest way to enjoy sustainable earnings in the present as well as in the future.
Manufactures Making the Move to Servitization
More and more manufacturing companies that traditionally sold equipment are now selling services as well – a phenomenon sometimes referred to as “servitization.” It makes good business sense; researchers tell us that a 10% increase in servitization results in a 2.6% increase in manufacturing revenue. As a result, expect to see this trend escalate in 2022 and beyond.
The pandemic has acted as a catalyst for manufacturers to shift to bundled sales in order to generate a greater and more meaningful percentage of “no-touch” sales. One good example is John Deere. Since the pandemic, the heavy equipment company has been focused on adding service offerings based on data collection that farmers can use to manage their operations more efficiently and increase crop yields. It’s all about the service, not the equipment, per se. As a result, worldwide net sales revenue increased 16% in 2021.
CPQ Fuels Revenue Growth
How can you do it too? One important tool to consider is XaitCPQ, a cloud-based software that helps manufacturing organizations win more deals at better margins. The system captures all of your complex product and service pricing information and models in one place. This makes it easy for sales teams to quickly and correctly build and price combinations of products and services, and to do so at scale. This ability is especially powerful for large manufacturers with multiple product offerings, multiple service options and programs, and multiple countries involved.
XaitCPQ gives you everything you need at your fingertips to close deals faster, with better collaboration, control, and transparency. This enables your organization to move from an equipment-only mindset to one that encompasses a wider – and higher-margined – scope of bundled equipment and services revenue generation. This has a direct and dramatic impact on the bottom line.
Tapping Untapped Revenue
These ancillary service revenue streams would have been effectively out of reach for companies like John Deere and others without a configure-price-quote solution like CPQ. While many manufacturers may indeed be equipped with advanced CRM systems that manage the sale of equipment, when it comes to bundling in services, most serve the effort with antiquated spreadsheets and manual paper-based processes. Service-based programs are not as easy to configure and measure as hardware and equipment, and the disconnect often slows the pace of the sale and leaves money on the table. Indeed, spreadsheets and late-night scrambling often miss the mark for customers and rarely capture the full revenue potential of the sale.
In the end, automating and easing the bundling process with CPQ invariably leads to best practices that are consistently applied to produce compelling proposals, broader and more profitable deals, and an overall approach that makes it easy for buyers to see the extended value of engaging with your business over time.
It’s time to consider how a CPQ solution like XaitCPQ can enable your sales teams to sell more, and sell in more ways. The system makes it easy to run multiple pricing models at once. With just a few clicks reps are able to configure various scenarios: equipment only, equipment with services, services only, and so forth. What’s more, agents collaborate with other team members and engage resources in real-time around the world. The result is that manufacturing organizations build a more robust and agile proposal process that increases the chance of making the sale, landing it ahead of the competition, and closing the deal with higher revenue than ever before.
Related articles: Using Guided Selling for Products and Services