Enhancing Services
Services play an increasing strategic and financial role for many business-to-business firms that sell primarily products. Adding high-quality services to their product offerings allows companies to provide greater value and establish closer ties with customers.
A classic example is Rolls-Royce, which has invested heavily in developing giant jet engine models for the new jumbo planes being introduced by Boeing and Airbus. An important source of profits for Rolls-Royce, beyond selling engines and replacement parts, is the add-on “power by the hour” long-term repair and maintenance contracts it sells. Margins are higher because customers are willing to pay a premium for the peace of mind and predictability the contracts offer. ...
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