Why is the trend of servitization unfolding in the industrial world?

Pourquoi la tendance de la servicisation se deploie t elle dans le monde industriel

Did you know that today servicisation is at the heart of industry and has even become almost imperative. INSEE has observed that 80% of industrial companies already offer services in addition to their traditional offer. Moreover, the institute has observed that more than a third of companies offer more services than products. We are therefore witnessing a profound transformation of the industrial model. This trend is part of a growing tertiarisation of the economic system, with users asking industrialists or manufacturing companies to offer a packaged solution containing products and services. The phenomenon of servicisation is therefore constantly developing, but industrial companies must review their organisation to adapt their offer to the expectations of their markets. In this article we will see how important servitization is today and how to implement a winning service model in your company.

1. Why is the trend of servitization of industry growing?

What is servitization?

Servitization is rooted in the growing tertiarisation of our economic system. This phenomenon corresponds to the tendency of industrial and manufacturing companies to propose a “packaged” offer comprising a product and a service at the same time. This offer is thus more complete than before because it goes beyond the simple sale of a product and offers a whole customer experience.

Today we are witnessing a profound change in industrial and manufacturing companies. This phenomenon is constantly evolving.

Why is servitization a growing trend?

This trend is gradually increasing. It has become part of our habits. For example, where we used to buy software, we now opt for subscriptions. We talk about “software-as-a-service”.

Then it developed in the industrial sector, in the form of “equipment-as-a-service“. This was first illustrated in the automotive world, which was the forerunner of the trend and has developed on a large scale: in 2012, this model represented 11% of sales and in 2021: 82%. The automotive industry now offers several services such as short-term rental, long-term rental, rental with purchase option (which is mainly a financing offer), subscription, pay per use, car-sharing, etc. The manufacturers use a special subsidiary called a “captive” for this purpose.

Here is a concrete example with the Stellantis group: this group has created a subsidiary, the Free2Move captive specialising in mobility. It offers a number of services: car-sharing, long-term rental, rental with purchase option and car subscription. Today, Free2move operates 250,000 vehicles worldwide.

Today, we see servitization taking place in most industries. This model offers many advantages.

The benefits of this service model

Firstly, this model is very interesting for developing loyalty with your customers. Indeed, the customer is committed to a medium to long term relationship as he/she subscribes to additional services such as maintenance or insurance.

Then, the market you address becomes more important. Indeed, you open up purchasing possibilities to new buyers who did not have enough cash to obtain your product yesterday.

And, with servitization you increase your income, as the services offered such as maintenance or insurance are additional to the sale of the product.

Moreover, you can also have more visibility on your revenues since you have more recurrence with the product-service package.

And finally, you will be able to better control your market since you will be more active in the development of your solutions.

2. What are the 3 challenges of servitization for your company?

Issue 1: organisation

The servitization model is profoundly transforming the offer of companies and the organization is at the heart of this mutation. The services offered are now part of the product and are even at the centre. Offering a service is not the same as producing or selling a product. Everything has to be connected: customer service, logistics, all other services and even the establishment of new collaborations.

The questions to ask yourself could be: what is important now to outsource? How to organise the new activity in the complete offer?

Issue 2: Customer experience

The servitization model completely changes the relationship between supplier and customer. Indeed, we are moving from a simple moment for the sale of a product to a medium or long term relationship because the services offered such as insurance or maintenance are part of a process.

The issue of customer experience will become increasingly important in the future. Indeed, consumers’ aspirations will grow, looking for more and more personalised services, with more responsiveness, more interaction, more co-construction and more transparency.

The creation of your services will develop according to the interactions with your customers.

The questions to ask yourself in this area could be: how can you develop a long-term service offer that is satisfactory for your customers’ needs? What offer should you make? What are the right processes to put in place in the customer experience?

Issue 3: Financing

You may be wondering how to finance your equipment fleet if customers are no longer buying it immediately but through a package of services over time? How do you structure your service offering and how do you finance it? How do you manage your programme well? How do you manage your risks? How to set up your administrative management? We can help you

3. How to implement servitization in your company?

Vendor financing is the main device for moving from selling a traditional product to setting up a monthly invoice without having to take any risk. The funder bears the risk. Alternatively, you can set up a captive finance company to set up direct sales using your own resources without having to rely on funders.

We have created our subsidiary, Chetwode 360, which specialises in vendor financing and supporting companies in their transition to servitization. We help you finance your sales and implement the servitization model in your company. We are experts in sales financing operations. We can develop with and for you a tailored contract with quality and innovative services.


Today, you are convinced of the importance of servitization but you don’t know how to master this financial transformation and what actions to put in place to achieve this change in order to develop your growth and be competitive with a new offer?

At Chetwode 360, we are specialists in vendor financing. We will be happy to help you implement financing solutions. To find out more about our vendor finance business, click here.

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