From product to service - a radical change in the elevator industry

We are living in a new digital world where technology is developing faster than ever. Digitizing the use of products is causing major changes in user behavior and desires. For example, more and more companies are switching to ‘pay per use’. The name already says it, users no longer pay for the product, but for using it. We are also starting to see this development within the elevator industry. In fact, the big companies are completely ready to make the switch. Are you?

What is pay per use?

As mentioned above, users no longer pay for the product itself, but for its use. The product does not become the user’s property as it remains property of the provider. The provider is responsible for the product operation and has to ensure it’s working at all times. Pay per use is already widely used. Think of lease cars, but it is also possible for household appliances like washing machines. Even a bus trip could be seen as pay per use!

 

A bus trip is also based on pay per use. You pay to get to your destination and you do not become owner of the bus. Does the bus get a flat tire along the way? You don't have to pay extra costs and you are not responsible for fixing it. The bus company has to ensure that you can resume your journey as soon as possible, because that is what you paid for.

 

What are the advantages of pay per use for the user?

For the product user, the biggest advantage is that he only pays for the actual use. In addition he does not have to worry about malfunctions and/or defects, because he is not responsible for them. There is no risk of unexpected costs. Because it is paid per use, there is also no purchase price. Therefore the user does not have to save up for buying the product, but can start using it immediately.

What are the benefits of pay per use for the provider?

The benefits to the user are clear, but offering pay per use also has added value for the provider.

  • Increased turnover

Because using the product is lowers the bar for the user, they will more quickly and easily decide to give it a go. This can result in an increase in sales and a broadening of the market. In addition, it ensures a constant turnover spread.

  • Quality pays off

If the purchase price was the most important selection criterion in the past, it will soon become the price for use and uptime. And quality products with a long lifespan will then score better which is in everyone's interest.

  • Responding to customer needs

The use of the product is accurately registered for the billing of the user. This means that a lot of information will be available about the user and product usage. This allows the provider to respond to customer needs, which ensures higher customer loyalty.

  • Retaining customers

Thanks to the information about the users working with contracts, the provider knows exactly when it is time to contact the customer for a possible renewal. Thus, the provider is always one step ahead of its competitors.

  • Circular economy

The pay per use concept fits perfectly with the pursuit of a circular economy: an economy that is based on reducing raw materials and waste, resulting in a more sustainable world. Because the product remains the property of the producer, the producer keeps track of the raw materials. It helps a company tremendously in corporate social responsibility (CSR).

Pay per use in the elevator industry

The elevator industry is also going to move with this development. Building owners will no longer pay for the elevator, but for transporting people within their building. From product to service and from ownership to use. This offers the possibility of fine-tuning the elevator contracts to the actual use of the elevator. Unnecessary and overdue maintenance will be history. The customer pays exactly what he uses. Fair enough!

What challenges does pay per use bring?

As mentioned earlier, the big players have been preparing for this new way of offering services for some time. We are now waiting for the moment that 'the button is pushed' and the developments are implemented. From then on it will go fast, because the big players are already completely ready to start.

For the independent elevator companies a new challenge then immediately arises: can they offer this (=prefinancing)? Also, they can no longer always maintain third-party elevators, because the building owner no longer decides. A consultant who deals with the use phase will also have to reorient his role. That’s why our expectation is that multinational elevator companies are going to push this 'button' soon to radically change the game. Don't want to be left behind? Then make sure you are also prepared when the time comes.

What is needed for pay per use within your company?

Deploying pay per use requires adjustments in business operations, for both the building owner and the elevator company. After all, it is a completely different way of offering a product. It brings challenges in operational terms and, in the beginning, also in financial terms: the equipment has to be purchased, but the revenue follows later on spread out because there is no purchase price. In addition, of course, software is needed to register the use of elevators and optimize contracts.

How can Liftinsight help?

It's no secret by now that customer demand for pay per use is growing. Our software is completely ready for it. In Liftmanager all data on the use, maintenance and defects of elevators is registered and with the help of our Liftboxes sensors we can make predictions, so that tailor-made contracts can be offered. The data generated allows us to learn more about elevator usage within a building, so we can continuously respond to the needs of users. Of course, we are also happy to think along with you about how to optimize the operational part for pay per use. As true pioneers, we find challenges in the further development of the industry.

 

 

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