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Finger to the point

Marketing in the new service economy

SaaS, Software as a Service, was one of the first steps towards the service economy. Now we see other industries and products taking the same path. Caterpillar asks their customers how much earth they need to move – not how many machines they want to buy.

Same thing with Rolls-Royce – they ask their customers how many hours they will fly, not how many jet engines they want to buy. This road towards a service economy, where we pay by the usage and not for the ownership is growing at ballistic speed. Why pay for the ownership of a car, when you can pay for the transportation?

IoT, Internet of Things, is one of the technology enablers to the service economy. Without connected products and devices you can’t deliver SLA’s or even measure the usage. But IoT will also be important from another perspective. All these connected products and devices will continuously improve the way they deliver value. Both by learning about their environment and usage as well as delivering continuous upgrades with new features and improved functionality.

Together, the service economy and the IoT are fueling each other to create a perfect storm.

One part of this perfect storm is that the customer expectations will shift, from buying a product to subscribing to a service. A service that continuously will become better and better. Customers are moving from a product experience to a subscription experience.

Service economy will obviously drive a fundamental change in business models and the way we manage the companies. An important change is that the customers are no longer profitable from day one, when they sign the deal, but will become profitable over time.

Marketing is one area that will be impacted by these changes. When customers are paying for the usage, with a subscription model, the old school of marketing is no longer relevant. The classic sales and marketing funnel is becoming outdated. The deal is not closed when the customer buys the product, as it used to be. Instead there is a new long term customer relationship that starts. And the customer will not be profitable unless they are happy with the service that they subscribe to.

From a marketing perspective, this is a fundamental shift. Rather than being the engine that creates new leads for the sales teams, marketing communication is evolving into an engine to manage the entire customer journey. From the first contact to the continuous subscription experience.

To manage this long term customer communication, with the focus to generate a positive user experience rather than ”selling a cool product”, marketeers will need a new way of working and a new generation of supporting tools. The marketing teams must be far more agile than the traditional 12 months marketing plan. The marketing communications must be tightly connected to the agile and incremental development, since the customers are expecting the products that they use, to become better and smarter.

It seems like an oxymoron, but to become agile, you need structure and all the information at your fingertips. To make continuous changes, you have to understand the impact of them.

The need for a new generation of marketing tools has never been more obvious than now.

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Comments (1)

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    Raye Wu

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    Interesting topic,thanks for sharing.

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