Three Steps to Driving Services Revenue with XaitCPQ

The manufacturing industry faces many challenges today. A skilled labor shortage, supply chain instability, and inventory management issues have manufacturers rethinking their revenue growth. But with every challenge, there are opportunities to innovate. Markets are becoming increasingly competitive, and more and more manufacturers are venturing into the services field — a space that was traditionally reserved for specialist service providers.

The trend toward servitization makes sense because it can deliver a greater experience for customers and greater growth for manufacturers. Indeed, adding supplementary services to manufactured products is a trend that is taking over the sector. CEOs see it as essential to maintain their growth plans. In fact, according to a recent McKinsey report, service and support have become so important that 66% of manufacturers say that services growth now plays a strategic role in their business as a revenue generator. It makes sense; as compared to new product sales margins of about 10%, aftermarket service margins average around 25%.

Catch the Next Wave of Growth

Consider how service-as-a-product can help you catch the next wave of growth. Rolls Royce pioneered the idea in 1962 when they offered ‘power-by-the-hour’ for jet engine maintenance management. Today, manufacturers across all disciplines are driving revenue by servitizing their products as well. For example, Philips provides lighting-as-a-service to Amsterdam Airport Schiphol. The arrangement means that Schiphol pays for the light it uses, while Philips remains the owner of all fixtures and installations. Philips experienced a 10% jump in operational profitability as a result.

Powering Services Revenue

How can you drive revenue with a similar approach? One way is by using XaitCPQ, a cloud-based software that helps organizations construct and close more profitable service deals. The best-of-breed configure-price-quote system captures all your complex product and service pricing information and models in one place. From there, it makes it easy for sales teams to present any combination of equipment and service offerings quickly and correctly, and to do so at scale. The capabilities built into XaitCPQ are especially powerful for large manufacturers with multiple product offerings, multiple service options and programs, and multiple countries involved.

Three Steps to Boost Services Revenue

Now you can provide your sales teams with the process capabilities they need to increase services revenue and gain a competitive edge. Here are three best practices enabled by XaitCPQ.

• Respond more quickly – Studies show that if you are the first vendor to respond you are more likely to land the deal. The great majority (between 50% - 80%) of customers will buy from the company that responds to their inquiry first. Since XaitCPQ gives your sales teams everything they need at their fingertips they can respond more quickly and completely. And since selling services is often more subjective and variable than selling a straight-up equipment deal, having a CPQ solution gives sales reps an edge in speed and responsiveness that is simply not possible using antiquated spreadsheets and manual work-a-rounds.
  
  
• Respond more accurately – In addition to speed, accuracy counts. If your sales teams need to start from scratch with every service proposal, it’s much more likely that the proposals themselves will have errors or discrepancies. The inevitable rework slows response and lowers the likelihood of landing the deal. One study by the RAIN group found that top performers outpace their competition by 33%. XaitCPQ enables an advantage because sales teams find it’s easy to automate and streamline actions in real-time; quickly and accurately pricing any combination of interdependent products and services.
  
  
• Respond more profitably – Enabling sales teams to compose, propose, and close more deals at a higher margin has a direct and dramatic impact on the bottom line. Indeed, improving your win rate by just 12% can increase your revenue by 55%. Winning profitably with a services-focused approach would have been effectively out of reach for companies like Philips and others without a configure-price-quote solution like XaitCPQ. The tools and approach let manufacturing organizations move from an equipment-only mindset to one that encompasses a wider scope of bundled equipment and services revenue generation.

Moving Forward

It’s time to consider how XaitCPQ can drive increased revenue. With just a few clicks the system makes it easy to run multiple pricing models at once and configure various service scenarios as team members engage and collaborate in real-time around the world. The result is you can close more deals with higher margins than ever before. These best practices lead to first-to-respond proposals, broader and more profitable proposals, and an overall approach that enables your sales teams to sell more, and sell more profitably.