The Service Design Group has helped mid-market and enterprise B2B companies make servitization, digitalization and as-a-service transformations real since 2011.

Over the years, we’ve observed some issues that impact the level of success firms have when getting started with service transformation efforts. Our advice to those considering a servitization, as-a-service or digital transformation (and who shouldn’t be these days?!) is that you explore the following must know items before you get started.

You must know your permission.

Many firms believe they are the partner of choice but their customers see them as just another vendor.

The first item you must know for successful service, digital or as-a-service transformation is who you are in your customers’ eyes and where your brand sits in your market. Customer perception + market perception = “your permission” and significantly informs your path forward. Knowing your permission requires an honest assessment and an ability to suspend what your firm might claim in public (e.g. your website, marketing messages, etc.).

The simplest way to establish customer perception is to ask: are we a vendor or a partner? Many firms believe they are the partner of choice but their customers see them as just another vendor. If your customer relationships revolve primarily around procurement cycles and/or your contract negotiations ultimately focus on price, then your customer perception = vendor.

In order to establish brand position you must be able to answer: What is our brand?

Many firms have built visual brands that symbolize innovation, but markets and customers typically assess brands on pricing levels (over-priced or bottom-feeder) and operational effectiveness (easy vs. hard to work with and transparent vs. complex). Of particular interest in B2B environments, is how visible your brand is to the end-use customer. If you’ve operated for years and years behind a channel partner, your brand might be unknown or invisible. If your brand position is challenged in any of these ways, then your brand position = weak.

If you find yourself in a customer position of “vendor” and/or a brand position of “weak” it’s OK! Most of the time, if a firm is honest with itself, this will be the case. The important thing is knowing your permission (e.g. vendor + weak) before you get started! If permission isn’t known or clear – or your firm is unwilling to view itself in these terms – the path forward will be challenging.

You must know your current capabilities.

Before you get started with servitization… take true stock of your actual capabilities

The second item you must know for successful service, digital or as-a-service transformation is the definitive set of current capabilities you have in-house to do something of value for your customers outside of delivering and supporting your product. This may sound obvious and simple, but it is not! Many firms, prior to embarking on a servitization, digitalization or as-a-service transformation are quite confused about their current capabilities outside of product sales and support.

In our experience, there are two root causes of this confusion. The first is years and years of mistaking brand promises (e.g. we will stand by our product) for service levels (e.g. we will fix any issue within 24 hours or your money back) which creates false internal beliefs that brand promises are services. The second is years and years of not understanding or being able to measure and capture the value of activities performed on behalf of your customers. Add these two root causes together and you can see how so many firms lose sight of actual capabilities and end up believing they can do something they can’t: e.g. we have people who do on site technical support equates to “we sell next day support” or “we could deliver uptime as a service!”

Before you get started with servitization, digitalization or as-a-service transformation, take true stock of your actual capabilities. For each capability, perceived service, or actual service, be rigorous about documenting the scale and scope of the capabilities (e.g. is it something you did once in the past for a special customer or something you do routinely for all customers?). This is why The Service Design Group offers our customers The Service Landscape™ – a service design workshop, experience and tool that places focus on defining the range of services currently available to an organization’s customers. The main point is you must know what you really can and cannot deliver to customers. If you over (or under) credit yourself relative to your in-house capabilities early in the servitization, digitalization or as-a-service journey, the path forward will be challenging.

You must know your customers’ care abouts.

There’s a big difference between what you think your customers want to buy from you and what your customers care about relative to improving their business outcomes.

The third item you must know for successful service, digital or as-a-service transformation is your customers’ true care abouts! This one seems obvious, but it’s so often missed and overlooked. There’s a big difference between what you think your customers want to buy from you and what your customers care about relative to improving their business outcomes. If you don’t have direct contact with your customers and a solid understanding of their voice, their needs, their pain points, and where they need solutions, then stop and find accurate ways of capturing your customer’s voices before continuing your servitization, digitalization or as-a-service transformation. If you have already started capturing customer data but find that all of your ideas relate to ways to improve your current products or to increase your sales and wallet share, it could be a signal that you have not accurately captured your customers’ real care abouts. It would be prudent to stop and assess if you truly have programs in place that allow accurate customer voice to enter your organization. If you do not, the path forward will be challenging.

A solid start.

To create a solid start with servitization, digitalization or as-a-service transformation, we recommend tackling these three topics in earnest. Make sure you understand and know your permission, your capabilities, and your customers’ care abouts.

For each, make sure you are being honest with yourself. Starting off on the wrong foot in any of these areas will add risk to your servitization, digitalization and as-a-service goals that you can and should avoid in the beginning. While speaking the truth on some of these topics may not be popular in the beginning, it’s much better than having them revealed or exposed after you get started.