Customer retention is not the only motivation for businesses to create and commercialize value added services. Sometimes the motivation is as simple as growing the bottom line. In this post we look at 2 examples of businesses thinking outside their comfort zone to create new business opportunities.

NSTAR Gas

I live in the Northeast (Mass.) and purchase both my gas and electricity from NSTAR. I recently received a mailing from them with an offer to purchase a Home Heating Protection Plan – a service contract for my heating system.

 

In an article I published in 2008, I define the four reasons why people purchase a service contract:

  • Control cost
  • Peace of mind
  • No hassle (convenience)
  • Equipment up time (availability)

The single sided NSTAR offer hit all four hot buttons!

  • The headline offered 20% off.
  • They promised “you can keep your family warm this winter with no worries and no problems” and “…all backed by a name you can trust.”
  • They offered an additional discount if you pay by credit card and sign up for “our convenient auto-renewal option.”
  • They promise “… great service any day, any time.

This offer complements all the other services that NSTAR offers under the heading of ”Gas Energy Efficiency Programs”.

  • Mass Save Home Energy Services
  • Income Eligible Program
  • High-Efficiency Heating Systems
  • High-Efficiency Water Heaters
  • Programmable & Wi-Fi Thermostats
  • Residential Multi-Family Assessment
  • Residential New Construction Weatherization (Insulation)

This is true growth by value added service.

Seagate Technologies Data Rescue Service

Seagate is a leader in the manufacture of disk drives. Most of us have one in our computer, iPod, backup storage unit, set-top box for our cable TV and who knows where else? And in all those pieces of equipment that we own, I doubt we have any idea of who manufactured the drive. If we think about it we realize that, at least for our computer, the data is very valuable and, in many cases, priceless. And we even know that saving data from a defective disk drive is expensive and risky.

As you can imagine, drive manufacturers like Seagate have wonderful expertise in recovering data because they have to stand behind their products. Now they are making that expertise generally available at an extremely low cost to individuals who subscribe to the Rescue and Replace™ for external drives, not the ones inside our computers but the type we use for backup. Here are abstracts from the initial press release:

This first-of-its-kind plan provides recovery services for data loss that may have been caused by physical damage, corruption or accidental deletion, and a drive replacement. Rescue and Replace is a two-year plan from Amazon.com for $29.99 or three-year plan for $39.99. The Seagate Rescue and Replace™ service is available immediately from Amazon.com with protection and replacement for Toshiba, WD, LaCie, Seagate, and other major brands of external hard drives.

Here is a description of the services abstracted from the October 24, 2013 issue of Warranty Week:

A new type of service contract is launching on Amazon.com this week. For laptops and desktops, rather than merely replacing a defective hard drive; Seagate Technology LLC is willing to also recover the lost data upon it.

The service contracts come in two flavors: Rescue, which is a service contract covering just the data, and Rescue and Replace, a service that recovers the data as well as replacing the hard drive. On Amazon.com, Rescue and Replace is offered as a two-year plan for $29.99 and as a three-year plan for $39.99.

And they outsourced all the processes that are outside their core competencies to specialized partners:

  • Amazon is their sales channel
  • Fulcrum Analytics helped design the program and manages a special call center for Seagate
  • AmTrust Financial Services underwrites the insurance portion of the program

This program is not designed to help Seagate sell more drives; it is designed to create incremental revenue by offering a differentiated value added service.

Summary

This post shows how value added services could be used to generate incremental revenue. The customers get incremental value from the seller and the seller increases the top and bottom lines. Good for everyone! To read about the whys and wherefores of changing your business from being product focused to services focused download the white paper from this page.