How to Make New Service-Oriented Business Models Profitable?
Interestingly, the service-oriented business model segment accounted for 32.7% of the total global business model market in 2020.
This article talks about how to make new service-oriented business models profitable. We will discuss the strategies and tools needed to turn a service-oriented business model into a successful and profitable venture.
We shall also run through the importance of understanding customer needs and how to use customer feedback to refine the business model.
Last but not least, we shall learn about the significance of staying ahead of the competition and how to leverage technology to maximize profits.
So, let’s dive in.
- What is a Service-Oriented Business Model?
- Identifying the Right Business Model
- 6 Steps to Create Profitable Service-Oriented Business Models
- Benefits of Service-Oriented Business Models
- Conclusion
- How can Deskera Help You?
- Key Takeaways
- Related Articles
What is a Service-Oriented Business Model?
A service-oriented business model is one in which an organization provides services to customers instead of creating and selling products. These services are typically delivered through an online platform, such as a website or mobile app. They can be anything from web design and development to digital marketing and customer support.
Service-oriented businesses rely on delivering value to customers through the services they provide rather than a physical product.
Gone are the days when companies followed a ‘sell-and-forget’ model. These are the times when companies and customers seek long-lasting relationships through diverse channels. The idea is to offer ideas or products as a service.
Also, organizations rely on various opportunities of engaging their customers. It could be through upselling, cross-selling, or any other mode. Depending on a service-based model can help service-based companies to have better control over their products throughout the customer lifecycle.
While you can sell anything, having a profitable business model can be an uphill task. Everything may require a complete overhaul from your teams to how you operate. Because product and service quality now rests directly with the service provider, the shift to a service-based model brings significant changes in success metrics and customer relationships.
Role of Technology
Internet of Things (IoT), machine learning technologies, and service logistics can all play a role in cruising service-business success. At each point of interaction, you'll want to gather and evaluate feedback from the customer's voice and the product's voice; and use it to highlight the continuous innovations that keep customers happy and engaged.
Many of these service-oriented, customer-centric capabilities are nearly impossible to support with traditional legacy systems. They need to be more cohesive, integrate well with modern analytics and mobile technologies, and are challenging to keep up with the latest innovations.
Cloud-based Options
A contemporary cloud-based solution is the best option. It consolidates all of your innovation data and processes onto a single platform, giving you the technology and business foundation you need to deliver a lucrative deal with almost everything you offer.
Defining Profitability
The definition and scope of profitability in a service-oriented business model will depend on the specific business and goals of the company. Generally, profitability refers to the net income generated from a business over a specific period of time and is the result of revenue minus costs.
In a service-oriented business model, the profitability ratio could be calculated by evaluating the service's cost, the service's value, and the total revenue generated from the service. Also, specific performance metrics, such as customer retention, customer satisfaction, and customer lifetime value, could be used to measure the success of the service-oriented business model.
These points, combined with your steps, can ensure heightened profitability!
Identifying the Right Business Model
Identifying the right business model is essential because it sets the foundation for the business's success. It helps the business determine what products or services to offer, how to reach customers, and how to generate revenue. Moreover, it assists businesses with how to position themselves in the market.
By having the right business model, businesses can maximize their potential for success and avoid costly mistakes.
Here are two steps you can follow to identify the right model for your business:
- Researching the market
- Examining your resources
Researching the Market
The research is the stage where you can begin strategizing. Researching the market to identify the right business model can be accomplished in several ways.
First, you can look at what other businesses in your industry have done and use that as a model for your own business. This can give you an idea of what works and what doesn’t and help you develop a successful strategy.
Second, you can talk to customers and potential customers to get feedback on what they want from a business like yours. This can help you develop a model that meets customer needs and is tailored to your target market.
Finally, you can use data to identify trends in the market and develop a model that takes advantage of those trends. By doing this, you can create a business model that is current and relevant and can help you to stay ahead of the competition.
Examining Your Resources
You can begin by analyzing the customer and market demand. Understand the needs, wants, and preferences of the target market. Next, you can take a look around and assess the competition. This way, you can examine the current competition and identify the advantages and disadvantages of their business models.
Evaluating the cost structure can be your next step. Estimate the costs associated with the various components of the business model and determine whether the model is financially feasible. Create a plan to launch the business model, including implementation steps and timeline.
All these steps are essential to examine your resources at hand and proceed accordingly.
6 Steps to Create Profitable Service-Oriented Business Models
A service-oriented business model needs to be profitable in order to be successful. The steps to make a service-oriented business model profitable can begin with identifying the target market. It is essential to know who the target customers are and what their needs are. This will help you decide which services to offer and best position them to appeal to the target market.
Next, you can develop an effective pricing strategy. Pricing is key to making a service-oriented business model profitable. Setting the right price for each service and creating a pricing structure that is attractive to customers is essential.
Finally, you must consider investing in customer service. Providing excellent customer service is essential to making a service-oriented business model profitable. Investing in customer service will enable the business to create a loyal customer base.
Let's learn about the steps in detail. Let’s take a look:
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Identify Target Market Needs
Conduct market research to identify customer needs and wants. Analyze customer feedback and use the data to determine what service-oriented business models will meet customer needs.
Design a Service Model
Develop a comprehensive service model that outlines how your business will deliver services to customers. Consider factors such as pricing structure, customer service policies, and technological capabilities.
Develop a Pricing Strategy
Determine the pricing structure of your service model by considering what customers are willing to pay for the services offered. Use market data to set competitive prices to attract customers and ensure profitability.
Build Customer Loyalty
Focus on creating relationships with customers to ensure their loyalty. Offer rewards and discounts to customers who use your service regularly. Create a customer feedback system to gather customer opinions and use it to improve the service model.
Utilize Technology
You can utilize technology to streamline service delivery and reduce costs. Invest in customer relationship management (CRM) software to track customer data and provide an efficient platform for customer service.
Promote the Service Model
Promote the service model through various marketing channels such as social media, email, and print advertising. Utilize digital marketing strategies to reach potential customers and increase brand awareness.
These steps can go a long way in ensuring that your service-oriented business model is profitable and successful.
Benefits of Service-Oriented Business Models
Implementing service-oriented business models can possess multifold benefits for companies. The following section enlists the various advantages for your business:
Streamlined Processes
Service-oriented business models allow businesses to become more efficient by streamlining processes and providing customers with tailored services. This helps businesses save time and resources by reducing the need for manual processes and making it easier to access customer data.
Flexibility
Service-oriented business models offer businesses increased flexibility in delivering services to their customers. This enables them to quickly adapt to changing customer needs and to scale their services up or down as necessary easily.
Better Cost Management
By automating processes, service-oriented business models help businesses manage their costs more effectively. This is because they don’t have to invest in hardware and software or in hiring additional staff to perform manual tasks.
Increased Customer Satisfaction
Service-oriented business models provide customers with personalized services that meet their individual needs. This helps businesses build strong relationships with their customers and increase loyalty. Thus, resulting in higher customer satisfaction.
Enhanced Data Security
By relying on service-oriented business models, businesses can keep sensitive customer data secure. This is because all data is stored in a centralized system rather than on individual devices, making it easier to protect.
Conclusion
To sum up, the success of any service-oriented business model depends on careful planning and execution. It is essential to develop a comprehensive plan that takes into account customer needs, operational costs, and potential revenue streams.
By understanding the market and customer base, devising a strategy to meet their needs, and investing in the right technologies and services, businesses can create and maintain profitable business models. A service-oriented business model can generate long-term success and profitability with careful planning.
How can Deskera Help You?
Deskera offers extensive business solutions that can help organizations manage their inventory more effectively. It has functions such as stock tracking, alerts, order fulfillment, supplier management, and more.
It also provides useful inventory information, allowing businesses to make more informed purchasing and stocking decisions.
You can also avail of the multi-dimensional business solutions from Deskera:
Deskera Books: A cloud-based accounting solution for managing finances, invoicing, and financial reporting.
Deskera ERP: A cloud-based ERP solution that offers a comprehensive suite of modules for enterprise resource planning and automation.
Deskera CRM: A customer relationship management solution for managing customer data, sales, marketing, and customer service.
Deskera People: An HR management system for payroll, employee attendance, leave management, and more.
Key Takeaways
- A service-oriented business model is one in which an organization provides services to customers instead of creating and selling products.
- These services are typically delivered through an online platform, such as a website or mobile app.
- The definition and scope of profitability in a service-oriented business model will depend on the specific business and goals of the company.
- Identifying a suitable business model is essential because it sets the foundation for the success of the business.
- Researching the market and examining your resources can be the steps to identify a suitable business model.
- Researching the need to identify a suitable business model can be accomplished in a few different ways.
- There are six steps to creating a profitable service-based business model. It starts with identifying target market needs.
- The second step is to design a service model and create a pricing strategy.
- After building customer loyalty, you can promote the service model. Utilize digital marketing strategies to reach potential customers and increase brand awareness.
- The service-based models offer various benefits. Companies can have streamlined processes, flexibility, better cost management, and enhanced data security.
- Beyond this, they can also accomplish increased customer satisfaction.