In 2016, just one day of downtime due to a failed piece of equipment caused an industry-leading airline to take a massive, unexpected financial hit. This loss proves that major airlines have a lot at stake when designing and managing critical infrastructure – something more and more manufacturers are facing in large part to customers’ evolving expectations.
The shift to an always-on world is not only the perfect opportunity for companies to optimize outdated service parts pricing approaches, improving the customer experience and profit margins, but to welcome a transition from the selling of products to the selling of service – also known as servitization. But, ultimately, this shift focused on maximized product uptime, the preemptive repairing of equipment before it ever fails – affects all industries.
Servitization is a fundamental change in how manufacturers should approach customers, and as more companies evolve to service models that focus on maximized product uptime, they’re wondering how to adapt their business processes to meet these new needs, walking the line between being smart and savvy in their pricing techniques. That’s why we created our newest Syncron original Orange Paper, “Pricing for Product Uptime: Navigating the Most Disruptive Change in Pricing History.”
When it comes to pricing, does product uptime really impact decision making?
The short answer? Yes. Think of it this way: when trying to take full advantage of your Paid Time Off, getting where you’re going as efficiently as possible is crucial. What if you knew that a particular airline marketed their predictive maintenance processes as part of their operations? Would you be willing to pay extra for your seat to ensure you arrive at an exact time? How much more?
Airlines, in particular, are interested in predicting mechanical failures in advance so that they can reduce flight delays or cancellations. Many are putting technology into place that will enable them to predict the probability of aircrafts being delayed (or canceled) in the future based on relevant data sources, such as maintenance history and flight route information.
Servitization is completely reinventing business models, and with increasingly complex, high tech equipment, customers rely on companies for service expertise now more than ever. And, to make servitization a reality, other major technology trends, including the Internet of Things (IoT), Artificial Intelligence (AI) and machine learning are serving as some of the supportive pillars of product uptime and its impact on these new service models.
For example, a machine-learning solution based on historical data and applied in real time predicts the type of mechanical issue that will result in a delay or cancellation of a flight within the next 24 hours, allowing the airlines to take maintenance actions while the aircrafts are being serviced, thus preventing possible delays or cancellations.
This is just one use case that pricing teams can use to their advantage to maximize both customer satisfaction, as well as profit margin. But, as organizations look upon changes like servitization, and the emergence of new technology, pricing teams in particular need to remember one thing: product uptime absolutely impacts decision making – and it could be the linchpin for organization-wide financial performance.
Companies that see servitization as an opportunity to leverage advanced after-sales service solutions will be well equipped to succeed in this new way of doing business. Download your complimentary copy of our new Orange Paper today, and start putting your pricing strategies into action right away.