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Subscription business models provide an important component for monetizing the potential of Industrie 4.0. Subscription business is based on a long-term and participative business relationship between customer and provider. However, only digitalization offers the necessary framework conditions to realize the characteristic recurring and performance-based billing, and to ensure the necessary transparency about the usage phase of products as well as continuous performance improvements in the customer process. Against this background, companies must not only recognize the much-cited potential that lies in the total dedication to the success of individual subscription customers. Rather, the central obstacles must be addressed, examined, and subsequently overcome in a targeted manner in order to successfully establish subscription business models and place them on the market.
Pricing is one of the most important, but underestimated tools, to enhance a company's profitability. Especially value-based pricing has a high potential to reach higher levels of satisfaction because it equates the needs of providers and customers. Even though, it is a well-known price model and promises higher satisfaction, many companies struggle to implement it. Especially the manufacturing industry is characterized by cost-plus pricing and competition-based pricing. However, especially for digital products these pricing strategies are insufficient. Therefore, this paper aims at exploring the design fields for value-based pricing of digital products in the manufacturing industry. To achieve this, the basics of digital products and value-based pricing are explored. Furthermore, an expert workshop is conducted that follows a framework for value-based pricing consisting of four consecutive steps analysis, price strategy, pricing, and market launch to capture the design fields. This paper concludes with limitations, and practical and research implications.
The mechanical and plant engineering industry faces a stagnation in the new machinery market and is relying on innovative business models such as subscription to overcome these. In this business model, individually customized solution packages are offered. The success of these models depends directly on the future success of the customer, making the selection of the right customers crucial. The aim of this paper is to identify the criteria that indicate the suitability of customers for subscription models. While there are individual descriptions of suitability criteria in the existing literature, there is a lack of comprehensive consideration of customer relationship, customer company, and customer market, as the extensive consideration was not necessary in the transactional sale of machines until now. Therefore, in this study, expert interviews are conducted with companies in mechanical and plant engineering that offer subscription models. The results show criteria that are used to evaluate customers in the six main categories of creditworthiness, market potential, benefit potential, feasibility, relationship, and sales effort. In total, 24 criteria can provide insight into the suitability of the customer for a successful subscription relationship. These criteria are intended to develop target systems that meet the requirements of different stakeholders in the customer and thus support the economic viability of these business models.
More and more companies in the mechanical and plant engineering industry are transforming their business model and evolving from product to solution providers. Subscription business models play a key role in this development. They enable companies to enter long-term collaborative relationships with customers and thus monetize the potential of Industry 4.0. However, this development is not easy for many companies and is associated with numerous hurdles. One of these hurdles is the development of a suitable range of services tailored to customer needs. In this context, the bundling of individual services to service modules plays a key role in realizing new value propositions. In practice, however, companies often lack an understanding of which services need to be combined in what way to be able to realize new value propositions. Accordingly, the goal of this work is to identify relevant services for subscription business models, to cluster them into meaningful value-adding bundles, and to derive new value propositions accordingly. The new value propositions in turn enable mechanical and plant engineering companies to strengthen customer loyalty and thus achieve long-term economic success.
More and more manufacturing companies are starting to transform the transaction-based business model into a customer value-based subscription business to monetize the potential of digitization in times of saturated markets. However, historically evolved, linear acquisition processes, focusing the transactionoriented product sales, prevent this development substantially. Elemental features of the subscription business such as recurring payments, short-term release cycles, data-driven learning, and a focus on customer success are not considered in this approach. Since existing transactional-driven acquisition approaches are not successfully applicable to the subscription business, a systematic approach to an acquisition cycle of the subscription business in the manufacturing industry is presented, aiming at a long-term participative business. Applying a grounded theory approach, a task-oriented model for themanufacturing industry was developed.
The model consisting of five main tasks and 14 basis tasks serves as best practice to support manufacturing companies in adapting or redesigning acquisition activities for their subscription business models.
Competitive differentiation in the manufacturing sector is no longer based on product and service innovations alone but on the ability to monetize the usage phase of products and services. To this end, manufacturers are increasingly looking at so-called subscription business models as a way of supplementing the traditional sale of products and services. Since supplier success in the subscription business is directly dependent on customer success, the setup and expansion of a so-called Customer Success Management (CSM) is required. While CSM has already been established in the software industry for several years, companies in the manufacturing sector are often still in the conceptual phase of a CSM, parallel to the setup and expansion of their subscription business. Therefore, this paper aims to support the set-up of a CSM by providing a reference data model, based on case study research, that can be used to support the organizational or daily CSM tasks and to serve as a blueprint for conceptualizing CSM-specific IT systems.
Industrial companies are moving to a solution driven business by offering smart product service systems (Smart PSS). In addition to an existing portfolio of physical goods and technical services, companies develop new digital services and combine all three offerings to an integrated digital solution business. While the development of new digital services does not pose any major challenges for companies, the successful sale of Smart PSS does. Due to changing customer requirements and value propositions of a solution, the sale of Smart PSS requires new design principles for the sales organization compared to the simple sale of physical goods or technical services. While there are already many publications on the topic of industrial sales in research, the description of Smart PSS in particular represents a new field of research. The combination of both topics is therefore not only interesting from a theoretical point of view, but also has a particularly high practical relevance and impact for industrial companies. This paper therefore describes on the one hand, which characteristics can be used to derive customer requirements for Smart PSS and on the other hand, which effects these requirements have on the sales organization of the industrial company. The design principles give recommendations for the organizational structure, the resources, the information systems and the culture of the company depending on the targeted customer type. In order to identify and describe both the customer requirements and the design principles, two morphological boxes were developed based on a literature research and semi-structured interviews with industrial companies. The paper gives an outlook on the different characteristics of the design recommendations and describes first best practices for the successful transformation of the sales organization.
Pricing is one of the most important, but underestimated tools, to enhance a company's profitability. Especially in the furniture sector, customers place a special interest in cost-efficient products and easy processes. Individualised and sustainable furniture can help to create a unique selling point and deliver real value to the customers. Therefore, a platform to create designs together is needed and can involve several stakeholders in the design and production phase. However, in order to include several stakeholders, the pricing and revenue model need to reflect individual needs and be a benefit to all. In this paper, the initial situation and potential revenue model options will be presented. Furthermore, multiple scenarios for practical use will be discovered and an overview given.
This paper contributes to an assessment framework for valuing data as an asset. Particularly industrial manufacturers developing and delivering Smart Product Service Systems (Smart PSS) are comprehensively depended on the business value derived by processing data. However, there is a lack in a framework for capturing and comparing the Smart PSS data value with the purpose of increasing the accountability of data initiatives. Therefore a qualitative data value assessment approach was developed and specified on Smart PSS, based on an industrial case study research. [https://link.springer.com/chapter/10.1007/978-3-030-57997-5_39]
Ziel des Beitrags ist es, aufzuzeigen, wie produzierende Unternehmen entlang der Customer-Journey systematisch kundenbezogene Daten erheben können. Nach einer Einleitung zur Motivation der Themenstellung, einer Begriffserläuterung und einer Vorstellung des Studiendesigns wird ein Referenzprozessmodell der Kundeninteraktionen produzierender Unternehmen gestaltet, darauf aufbauend ein Datenmodell des digitalen Schattens der Kundeninteraktionen abgeleitet und zuletzt ein Vorgehensmodell zur Implementierung des digitalen Schattens der Kundeninteraktionen präsentiert.
Manufacturing companies are constantly increasing their efforts in the subscription business, also known as product-as-a-service business, offering usage and outcome based solutions (value-in-use) instead of transactional services and products (value-in-exchange). Customers are becoming contractual subscribers of the solution in return for recurring, performance-related payments. To address arising, inevitable challenges like (1) reducing customer churn, (2) increasing usage intensity and outcome quality, (3) ensuring the adoption of product and software releases as well as (4) fostering customer loyalty, leading manufacturing companies are setting up a new organizational, customer-facing unit, called Customer Success Management (CSM). This unit has its origins in the software-as-a-service business, operating next to established entities like sales, key account management and customer service. Since there are currently no holistic models for an end-to-end description of CSM-tasks in the manufacturing industry, this paper contributes to a taskoriented reference model, using a grounded theory approach, examining both manufacturing and software companies. Containing a reference framework with 8 main tasks, 17 basic tasks and 76 elementary tasks, the reference model supports manufacturing companies in adapting and customizing a company-specific CSM concept.
Manufacturing companies (MFRs) are increasingly extending their
portfolios with services and data-driven services (DDS) to differentiate themselves from competitors, tap new revenue potential, and gain competitive advantages through digitization and the subsequently generated data. Nonetheless, DDS fail more often than traditional industrial services and products within the first year on the market. Particularly, companies are failing to sell DDS successfully and efficiently with their existing (multi-level) distribution structures. Surprisingly, there is a lack of scientific research addressing this issue. Since there are currently no holistic models for an end-to-end description of distribution-tasks for DDS in the manufacturing industry, this paper contributes to a task-oriented reference model for mapping interactions in the multi-level distribution management. Therefore, a case study research approach is used, to identify and describe the interactions in the multi-level distribution management of DDS, as well as to develop a regulatory framework for MFRs and their multi-level distribution management. This research uses the established theoretical framework of Service-Dominant-Logic to address the co-creation in multi-level distribution management of DDS. As a result, this paper identifies different interaction variants as well as the need for a new management function with 4 main and 14 basic tasks.