Wednesday, June 18, 2008

How Product Companies can Sell Services MORE Profitably

How to Sell Services MORE Profitably.
By: Reinartz, Werner, Ulaga, Wolfgang,
Harvard Business Review,
May2008, Vol. 86, Issue 5

Some interesting points

For every success story of a product company that sold valued added services profitably, at least five cautionary tales remind us that manufacturing companies will most likely struggle to turn a profit from their service businesses.

Over the past three years we have investigated how manufacturers in business markets can develop profitable services. We conducted in-depth studies of 20 industrial companies operating in a broad variety of product markets. We went on to have discussions with more than 500 B2B managers in a series of executive workshops; these complemented the insights from our interviews.

The Path to Profits in Industrial Services

1 Recognize That You Are Already a Service Company

2 Industrialize the Back Office

3 Create a Service-Savvy Sales Force

If companies are to move away from straightforward product-related services into more complex customer solutions, managers must take a new look at sales management strategies. Services require longer sales cycles, and the sales process is often more complex and strategic, meaning that decisions are made high up in the customer's hierarchy.

4 Focus on Customers' Processes

Werner Reinartz ( is a professor of marketing at the University of Cologne in Germany and an associate professor of marketing at Insead in Fontainebleau, France. Wolfgang Ulaga ( is an associate professor of marketing at HEC School of Management in Jouy-en-Josas, France.

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