Many bank-owned auto and equipment finance providers and manufacturers’ captives today still rely exclusively on traditional financing. They finance an asset, and the customer commits to paying a fixed amount for a fixed term. However, customers now prefer more flexible full-service solutions—making traditional finance offerings less relevant in today’s market.
Servitization of auto and equipment financing is a more responsive approach to a dynamic marketplace. It represents a fundamental shift from a ‘build it and sell it’ mindset. Instead, it seeks to optimize the customer’s experience with the asset.
Customers can appreciate benefits such as:
Flexibility and variability
Convenience and one-stop shopping
Cohesive end-of-lease experiences
Meanwhile, auto and equipment financiers can propel their businesses forward and gain:
Increased cash flow and the release of working capital for other business initiatives
Enhanced competitiveness and productivity, and faster time-to-market
Improved infrastructure and innovation
Less harm to the environment and more responsible economic growth
The shift to a servitization model of financing goes well beyond having the right infrastructure in place. Our experience indicates you should also consider the following key aspects:
Customer financing and accounting. Shift your focus to solution financing that includes assets, software, services and subscriptions.
Pricing. Whether prices are variable or fixed, you’ll need access to consumption data to ensure accurate and appropriate pricing that is transparent and competitive.
Sales and channels. Servitization presents an opportunity to increase direct sales and work with new ecosystem partners.
Marketing. Experiences are key and should be designed to respond to customer needs over the entire lifecycle.
Customer success, service and support. People holding new ‘customer success’ roles see service as a core offering; they can help to drive adoption and usage.
Product engineering. You’ll need to embrace continuous agile delivery, testing, customer engagement and data-driven feature development.
Technology. Servitization models require real-time data collection and analytics at scale.
Take your first steps on the path to servitization today
We have developed a set of key steps to guide your servitization journey:
1. Create a diagnostic blueprint
Define a ‘to be’ blueprint of improvement initiatives with redefined business capabilities and processes.
2. Develop a detailed implementation plan
Cover the approach, team, work plan, impacts and governance. A training plan and a culture of support are also key.
3. Execute and extend the plan
Leverage automation and analytics to streamline error handling, contract management and collections. Elevate the plan with continuous design.
If your organization wants to move beyond a traditional financing model toward one of the four servitization models of the future, the good news is that you don’t have to go it alone. We’re here to help. To find out more, get in touch with one of our specialty finance experts.