Is service design the future for product brands?
As consumers continue to seek experiences over ownership, innovative brands are seeking opportunities to create repeat revenue and design out waste.?
Could Product as a Service (PaaS) hold the key to unlocking greater profit and transitioning to the circular economy?
Earlier this year, we announced our new partnership with #ServiceDesign experts Livework studio. Combining nearly 40 years of experience, we’re committed to helping ambitious brands take advantage of Product as a Service.
In this piece, Rodd & Livework explore the potential of PaaS in driving better outcomes for people, planet and profit. Plus, a closer look at consumer product brands that have successfully made the shift to servitisation.?
Hopefully, it will help you on your journey and inspire you to explore the potential of this emerging model.
The move from ownership to usership
Permanent ownership is fast becoming a thing of the past.
Today’s consumers are all too happy to replace what they can with rentals and subscriptions, trading ownership for flexibility, sustainability, convenience and great customer experience.?
Why the shift?
Cost of ownership has played a role, but so too has the unstoppable rise of the sharing economy and subscription services like Netflix , Spotify and DollarShaveClub.
In the last 7.5 years, the subscription economy has grown more than 350%, with data from McKinsey revealing the average US home has between 10 and 21 subscriptions.?
In 2023, online retail is booming, whilst bricks and mortar is in freefall.
Forget just selling products – customer experience is king. For consumer product brands, #servitisation is an opportunity to secure recurring revenue and forge deeper customer relationships.?
On the flip side, failing to embrace change may result in losing customers to competitors offering more personalised experiences.? To stay ahead, product brands must take stock of their current offer and adapt accordingly.?
What is Product as a Service (PaaS)?
Like the ever-popular Software-as-a-Service, the Product-as-a-Service model gives customers access to hardware along with its accompanying services including maintenance, repair and upgrades.
Rather than a one-off purchase, customers subscribe to the products and pay a weekly, monthly or yearly fee, and the product is then delivered as an experience or extra service.?
PaaS as a stepping stone to circularity
Traditionally, consumer product brands have relied on income from one-time product transactions, leading to what we now call the linear economy.?
In this model, customers assume ownership and the burden of that ownership throughout the product life cycle.
Of course, linear business models do not reward development of the best possible product; manufacturers gain the most benefit by maximising the margin between production costs and sales cost.
In a PaaS model, ownership is not transferred.
The company is ultimately responsible for creating a better product, by making it easier to refurbish and fix, which in turn allows them to sell the product again and generate more revenue as it continues its service life with a new customer. Good for the planet and good for your bottom line.?
Innovators in this space are often not the manufacturer but new entrants who see an opportunity. Car sharing services like Zipcar provide the product as a service but are not able to fully integrate with the hardware and access all of the transformational potential of the model.
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How to think like a service provider?
Inevitably, such a shift is likely to trigger valid concerns about change. After all, being a service provider demands a totally different set-up of the organisation than being a product seller. The organisation needs to be built around the client, rather than the product.
This a major pivot for all but the most fleet of foot mass market, or well established product brands. Let's delve into the key considerations and challenges when moving to a #PaaS model:
What is it your consumers really buy from you?
In most cases, products are just an enabler for the value that lies beneath. To shift to this model, your product-focussed mindset will need to evolve to one of value proposition creation.
All but the wealthiest brands must open new collaborations with networked partners to deliver the services around your product.?
Can you think, behave and look like a digital services business?
?Do you have means to shift your hardware business to a service business?or do you need external partners? In this race, businesses who boast experience and service design skills will win out. Of course, there will always be logistical challenges to such a shift. The simple sounding ability to return a product for repair can require significant changes in policy, customer engagement and workshop capacity.?
Do you have a solid strategy in place??
If you’re exploring PaaS for the first time, you’ll inevitably have questions as to whether your brand is compatible for servitisation, and if you can count on the new revenue streams it brings. You might also have concerns about the potential financial losses you might face during the transition.
This is precisely why there is no one-size-fits-all approach to servitisation.
Moving towards a Product-as-a-Service model requires a tailored strategy – one that is built around the needs of your customers and plays to your strengths as a brand.
Above all, it must deliver true value and an outstanding customer experience at every touchpoint.?
The good news? Brands can break down PaaS into manageable elements. Added value services such as repairs or rented accessories can enable baby steps towards a fuller subscription model.
We’ll be taking a closer look at the steps to #servitisation in an upcoming piece with Livework studio - watch this space.
Product as a Service — Next Steps
So, as consumers continue to forego ownership in favour of well designed experiences, brands like yours must leverage the opportunities offered by Product-as-a-Service (PaaS) and begin to create repeat revenue.
Having touched on just some of the potential benefits of PaaS, we can begin to see that it makes sense for both business and the environment, typically driving better outcomes for people, planet and profit.?
If PaaS is a topic on your brand’s radar, together we can explore how your brand values can be further enhanced via PaaS and help ready your hardware for servitisation.
Our future planet needs designing, so let’s start together.
Thank you for reading.?
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Coming soon…?
Sustainable design has entered into a new phase.?
Gone are the days when sustainable solutions were either perceived as overly earthy, reductionist or watered-down. The groundswell has turned and we are witnessing a huge rise in celebratory sustainable design.
Next month, we’ll be delving into this shift in detail, exploring the evolving consumer mindset and showcasing a host of beautiful designs that have sustainability at their core.?
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About Rodd
Rodd is a design and innovation agency dedicated to helping innovative brands do beautiful things.
We work within the inner circle of some of the world’s leading consumer brands and sustainable innovators.
For two decades, we have been at the forefront of brand innovation, helping our partners navigate strategic challenges and tell their story through beautifully executed design.
Together, we will help your brand decipher what’s right for your progress, for people and the planet.
Find out more on https://rodd.uk.com/ or drop us a line at [email protected]
Kiwi Industrial Designer working in London
1 年An interesting read. Makes me wonder how far PaaS can go. Thanks for sharing!