From Product to Service – The Customer Value of Servitization - A study examining the potential customer value of servitization of the indoor climate

Abstract: In an environment that constantly changes and with increasing competition, firms struggle to stay competitive. To be able to compete, firms have to differentiate. One way to do so is through servitization. By offering customers services instead of products, firms can improve their offering to customers by increased customization. Servitization is becoming more popular among manufacturers for several reasons. By offering services instead of products, the firm will gain a more stable revenue stream, improved customer relations and decreased liability of customers. It can also be considered better from a sustainability perspective. The firm, in which this study is in collaboration with, Firm X, is a manufacturer that offers products related to the indoor climate, that due to mentioned benefits of servitization, among others, has started to consider servitization. To examine the feasibility of servitization within the industry, the firm must know their customers' interest in such a change, and the potential value it can bring. The purpose of this research is twofold. Firstly, the purpose is to identify what value Firm X can deliver to their customers in the form of a service, which will be the practical contribution of the research. Since most literature on servitization focuses on the intra-organizational perspective of servitization the second purpose is to make a theoretical contribution with the external perspective, the customer perspective. To achieve this, a research question has been formulated. What is the potential customer value of servitization? The research has taken a qualitative research approach, using semi-structured, qualitative interviews to gather data from customers and potential customers of Firm X. Twenty-four respondents from nineteen different firms have been interviewed. The interviews resulted in interesting findings. The potential value of servitization for property owners is different depending on the level of servitization. The potential customer value of servitization in the form of purchasing the indoor climate as a pure service is low, mainly because it would negatively affect the valuation of their property. The second level of servitization, purchasing complementary services to the indoor climate, has the potential to increase customer value through sustainability benefits, increased quality, exploitation of supplier capabilities and cost reductions. Many customers saw potential value with purchasing complementary services to their indoor climate. Thus, servitization has the potential to increase customer value.