The document discusses identifying hidden services provided for free by manufacturers and transforming them into new fee-based service offerings. A four step methodology was used that included understanding customers, identifying hidden services, segmentation, and developing new offers. Interviews and journey mapping revealed services like consultations and returns that were undervalued. This provided a foundation for new modular service packages tailored to customer needs. It was concluded that hidden services can be transformed from free to fee-based to increase revenue if bundled and unbundled effectively based on customer value perceptions.

1. Hidden services in the lighting industry
– from Free to Fee
8th International Conference on
Business Servitization, San Sebastian 2019
21-22 November 2019
Dominik Kujawski, Dr Shaun West and Jonas Ledermann

2. 8th International Conference on Business Servitization, San Sebastian 2019 | Kujawski, West and Ledermann
Introduction
Problem and purpose of this presentation
… to provide a guide to support firms on creating a new service
offering and how to analyse the pre- and post-sales activities
This paper describes the
process to identify hidden
services that were given
away for free with the
products and create new
service offering for
manufacturers
… to describe the process of identifying hidden services that were
given away for free with the product
Purpose of this presentation
…firms provide free services, with associated costs being absorbed
into the product price, this leads to negative price feedback
Problem

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Introduction
Regent Lighting, who are they and what do they do?
Regent designs, manufactures and installs lighting solutions in a complex B2B environment
“Regent…, with their headquarters in Basel, have
approximately 600 employees in six countries, are a
market leader in Switzerland and one of the leading
manufacturers in Europe. Our products are sold
internationally through our distribution partners in 35
countries around the world.”
(www.regent.ch/en/company/about-us/)

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Regent creates offers and project tenders different using geographic regions
Introduction
What is the current state at Regent?
- Sells luminaires to electrical installers
- Mix of transactional offers and project tenders
- Sales process as a key, no market segmentation

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Free services with costs absorbed in the product price, led to negative price feedback
Introduction
What does the literature say on hidden sales processes and customer segments?
“The sales process bundled the services
(intangibles) with the product (tangible) aspects,
giving scant regard to the service value that was
provided over the pre-sales, sales, and post-sales
phases.”
(Pekkarinen & Ulkuniemi, 2008)
“bundling and unbundling individual services to
various offers, to not only fulfill different
customer needs but also influence the value
perception and therefore increase the
willingness to pay. ”
(Anderson et al., 2009)
“it is crucial that customer segments and customer
needs are identified, which requires the supplier to
understand the customer’s processes.”
(Mukhopadhyay & Setoputro, 2005)

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Methodology
A four step methodology was applied in this study
The methodology was designed to create a starting point for a new hidden service offerings
Understand
customer
In-depth interviews
Personas/Empathy
Customer
Industry analysis
Surveys
Literature
Initial segments
Hidden Services
identification
Segmentation
Value propositions
Prototype new offers
Bundle value
propositions
Offer development
Understand the problem (with the key actors)
Build and test solutions (with the key actors)

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Results and initial analysis
Transaction journey
basisIt supports the identification of: hidden services, timing of service events and actor importance
“The good consultation and
relationship influence
my buying decision.”
“... and of course also
because of the quality “
Me: for a high price?
“Yes, but it is justified”
“What is quality for you?”
“Good question. I think it’s
a long lifetime”

8. 8th International Conference on Business Servitization, San Sebastian 2019 | Kujawski, West and Ledermann
Results and initial analysis
Industry analysis
Provides insights into the segmentation
- Segments have different competence level
- Some consult with end customers (high)
- Some need additional services (low)
basisThe industry analysis shows that some services are underserved and confirms which of them are valuable

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Results and initial analysis
Hidden services identification: wrong order example
One of many insight to support the development of foundation for hidden services
Patrick
“Wrong orders happen.
But here, Regent is very
fair: I can return lamps
for a small fee”

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Results and initial analysis
Creating service offers
Three options to offer solutions with no services, with core ones and all services

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Discussion
Refection on the structured methodology
Understand the problem
- It supports understanding and timing around transaction
- Customer journey, persona and empathy maps is an
effective process
Build and test solutions
- Helps with segmentation in line with customer needs
- Combines tangible and intangible service components
This supports modular offer structure approach to create packages with clear value propositions

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Conclusions
The business must understand how to charge for hidden services
Hidden services can be transformed from Free-to-Fee
Bundling and unbundling supports the Free-to-Fee transformation
Customer journey, personas and empathy maps are effective here
Hidden services effect the product price as services need a charge
This process contributes by
confirming that hidden
services can be identified
and then unbundled from
the product. It also supports
building of new micro-value
propositions to satisfy
customer needs

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Recommendations
Further research and application of the process should be undertaken
More research is needed in
this area if industrial firms
are to take advantage from
micro-value proposition
understanding and hidden
service development
Test in other cases to confirm applicability
To analyse the implementation process for increased revenue/value
Ways how the valued services can be charged for to increase profit
The lessons need to be translated so managers can use them

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Thanks for your time!

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Who we are…
The people behind the work
For more information please visit slideshare.net/ShaunWest
Jonas Ledermann
Bachelor Student

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Results and initial analysis
Hidden services identification
There are many intangible-based micro-value propositions that are provided for free
Coherence level between phases and industry
- Value is connected to satisfaction
- Service quality determinants
- How services are affecting determinants
- Service coherence with company’s environment