Thought piece by me originally published at Avaus Marketing Innovations
A lot of companies have been on a journey to change from a transactional business into a service business. Companies previously sold software licenses and now they sell subscription services. Where previously engines were sold, now lifecycle engine services are the buzzword.
The transactional business model works when the clients know their problem and the solution to their problems. This kind of business is easily copied and usually the competition is fierce and based specifically on price. What’s more important, the price/value comparison is extremely easy for the customer.
In the service business, the customers know their problem but not necessarily the solution. The actual value for the service is thus much higher than when the customer was buying a product that acted as the solution. Price comparison is significantly harder and the price is no longer a measurement of quality. A good service company is easily capable of up-selling its offering if it is related to the problem.
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