While being on the constant hunt for modernization and digitalization, more organizations are migrating from product-based business models to service-based models. This development has become more common in recent years due to the realization that recurring revenue is a more reliable and consistent form of business.
Particularly in manufacturing, companies are always looking to adapt the way they deliver products to market in accordance to how the industry changes. According to Frost & Sullivan research, “advancing technologies enable a massive shift from product-based to service-based business models. The demand for digital technologies in the industrial space is expected to grow from $1.5 billion in 2020 to over $4 billion by 2027.”
Accelalpha, the expert at implementing, integrating and managing Oracle Cloud Applications, explains that many of its clients transformed their business from simply selling a product to a distributor or directly to the end customer to selling their product as a service.
The number one reason for companies to switch to recurring revenue is that when they sell a product, they receive an immediate payment. However, if they sell a service, the customer pays the organization every month or until they no longer need the service. In this way, companies increase revenue over the longer term, but they will need to provide exemplary customer service to ensure the customers renew their annual contracts.
Customers of the current digital age expect a recurring revenue service to have the tools they need for successful growth; all delivered in a useful package that is specifically catered to how a company operates. As the standard payment model for services and products has changed, the most versatile firms can adapt and offer exactly what a customer needs for their business.
Naturally, achieving such an approach is not easy for an enterprise alone. This is why firms like Accelalpha offer consulting services that can help define the best strategy for each company. By helping to implement Revenue Transformation, Accelalpha tailors each company’s experience toward scaling productivity and efficiency in their digital transformation journey.
