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Why the growing service sector will affect everyone.

  • by Kevin Geraghty
  • 09 Nov, 2017

70% of CFO's say more than 50% of their revenue comes from services.

70% of CFO’s say more than 50% of their revenue now comes from services.  (CFO Magazine)

This trend is not new, but it is accelerating. It is affecting almost every business sector – and it is transforming each one that it touches. Markets are being disrupted, and organizations are finding that they must manage increasingly complex and dynamic business models.

Where this transformation is occurring, sales opportunities are no longer viewed as one time, large ticket sales.

Organizations are increasingly combining one or more products with services to provide tailored solutions. Such tailored solutions may be either project or service centric – but the common theme is that each will be designed to provide a continuous revenue stream for the lifetime of a customer.

The implications of this for supplier organizations are very significant indeed.

Professional services, subscription-based services, service-level agreements, managed services and usage-based contracts are often tailored to meet unique customer requirements. This has introduced a need to collaborate across teams within a business and often with external suppliers before a sale can be made.

Pricing is no longer restricted to large one-time payments, that may be discounted. Instead new and creative plans offer lower entry points with continuous and predictable revenue streams. This encourages a longer term perspective to customer retention through enhanced service and engagement.

Customers are now increasingly familiar with, and accepting of commercial packages such as rental models. For suppliers this can increase the initial cost of a sale, and can impact cash flow. But a failure to move with the market can lock an organization out of a sale for many years.

With new pricing plans and service agreements comes new contractual obligations. In addition to the initial creation of a contract, organisations must now ensure renewals are secured and also accommodate mid-term changes seamlessly. Flexibility is demanded by customers if they are to remain when the contract is ready for renewal.

Organizations need tools that help them profitably deliver on the promise of continual revenue business models.

Cloud based Configure Price Quote (CPQ) applications such as BlueprintCPQ are at the forefront of this revolution. They enable the creativity and flexibility that is demanded by dynamic and complex situations. They make it easy for customers to buy.

What Next?
If you, or your organization would like to discuss or explore any of the points above, please do get in touch with us by entering your name and email address in the form on this page or by calling +44 (0)1242 233 700.

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