16.–21.01.2023 #immcologne

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From product to service

Servitisation in the interiors industry

Solutions instead of products: Customers’ needs and wants today are no longer fulfilled merely by purchasing an object. Pioneering business models are increasingly focusing on providing a service and adopting the product-as-a-service concept. How can the interiors industry respond to this, and what digital strategies are already being applied? We’ve put together a summary for you here.

Servitization in the interior design industry by Balázs Kétyi on Unsplash.

The as-a-service model transforms the mere purchase of an item of furniture into a buying and product experience that strengthens customer loyalty. (Photo: Balázs Kétyi on Unsplash)

Servitisation and the future of commerce

Service orientation, after sales, customer loyalty – these are all familiar aspects of successful business models. But with the advance of digitalisation, they are attracting greater attention and driving a paradigm shift from product to solution. In the world of digital technology, as-a-service and subscription models have become detached from the sale of physical hardware. Instead of buying an expensive, high-maintenance server, customers pay for virtual storage space or computing capacity in the cloud that always meets the latest technical standards.

And this mind shift is being adopted in other sectors: There are fixed-price servicing plans with automatic software updates for cars, and custom complete packages with cleaning, shopping or parking services for apartments. Companies don’t sell products any more. Instead, they fulfil customers’ needs with individually tailored all-round solutions. This trend is destined to reach furniture manufacturers, too.

Virtual product experiences in the interiors industry

Global digitalisation is a crucial element underpinning innovative business models. Servitisation means moving away from a conventional – and often replaceable – product and towards providing a unique service. After all, there’s nothing new about custom-made shelves. Up until now however, very few well-thought-out digital planning tools for bespoke modular shelving have appeared on the market. This is why providers offering such a service – including MYCS and Tylko – have been so successful with their innovative configurators and superb user experience. The start-up foxxbee takes this one step further by selling a complete interior design consultation as a digital service. Other providers such as IKEA and Villeroy & Boch are focusing on augmented reality . Their tools are a great source of help for customers, allowing them to transform interior design dreams into real dream interiors.

By focusing on user-friendliness and the product experience, these approaches give companies a pioneering advantage compared to conventional sales strategies. New digital touchpoints expand the target group, extend the customer journey and strengthen brand loyalty. However, turning these concepts from mere customer retention tools into genuine servitisation concepts means changing the former business model even more fundamentally and extending it beyond the purchase of a product.

Servitization through digitization by John Schnobrich on Unsplash

Digitalisation is a crucial element underpinning innovative servitisation strategies, which transform products into unique services. (Photo: John Schnobrich on Unsplash)

Assembly instructions as a digital service: Watch & Build

In the B2B sector, the start-up Watch & Build recently won one of the 2022 German Innovation Awards. The Berlin company develops clear and easy-to-follow assembly videos with a host of innovative features for furniture and furnishings manufacturers. In addition to developing, producing and hosting the videos, Watch & Build offers interactive context menus, dynamic linking and integrated after-sales and cross-selling modules. Aimed at manufacturers, the comprehensive service also enthuses end customers, guiding them through assembling their furniture and making it a relaxing experience. As the single-source provider of a complete solution, the start-up has immense potential, and the jury of the German Innovation Awards recognised this in their statement:

“The more complex a product is, the more important good instructions are. This improves the user experience, and the manufacturers themselves also benefit from this as complaints and returns are reduced and customers are more willing to recommend their product and brand.”

Servitisation in the furniture industry with assembly videos from Watch & Build

The start-up Watch & Build offers furniture manufacturers a comprehensive service that allows them to enthuse and retain end customers. (Photo: Watch & Build)

From manufacturer to service provider with excellent user-friendliness

When a producer switches its focus to providing a service, this triggers a fundamental paradigm shift. Instead of selling a physical product with marketing strategies, it has to identify intangible needs and offer suitable complete solutions. A business that anticipates customers’ desires at an early stage doesn’t just sell products – it solves problems. The resulting long-term loyalty enables a new form of value creation that has future viability.

As this transformation advances, hybrid business models are already proving to be highly successful because the product-as-a-service concept is essentially based on the good old leasing model. Specialist companies offer an all-round service with the latest furniture trends. But the items aren’t purchased; instead, they’re merely leased for a limited period – naturally along with an interior design consultation and digital visualisations of future living spaces. This approach has already taken root in the field of consumer electronics: Coffee machines are leased on subscription plans with maintenance included, and washing machine manufacturers are opting for pay-per-use.

The interiors industry will no doubt follow suit and develop new, future-proof business models with outstanding user-friendliness. The market may soon be defined by personal interior design consultants offering bespoke home decor ideas rather than sofas and decorative furnishings. And instead of individual objects, interior design lovers could receive a personal interior design consultation that fulfils their individual desires.

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