A&S Viewpoint - Selling Service Becomes Key to Winning Commercial Market

With little differentiation among security products, many companies are having a hard time sustaining good profit margins year by year. Therefore, some companies started to explore new business models to maintain their growth and profit. Lately, a few leading companies have changed from a product-oriented sales model to a service-oriented one. By selling service, these companies found their promise land.

Many security companies are aware that their profits have been shrinking over the years. This can mainly be attributed to the little differentiation among general security products, just like current consumer electronic products. If they continue to follow the traditional product-oriented sales model, these companies may end up with zero profit or losing market share.

From The Original Product-Oriented TO Service-Oriented Sales Model
The new service-oriented sales model is now being adopted by many companies. According to the prediction of many industry experts, in the future, companies will mainly earn their profits not through selling products, but via services. That means, in the future, suppliers are most likely to provide their products for free but earn their profits by charging a monthly/annual service fee. For instance, one supplier may provide time-attendance systems to a retail store for free, but charge the store annual service fees for maintenance and monthly time-attendance reports.

Another company shared that it has tried to diversify their business models by using several different approaches, such as the traditional product-oriented model, product sales bundled with data analysis service model, and the service-oriented model. Its services include providing professional data analysis reports on customer flow and POS records for retailers. This way, they are provided with enough marketing information to create more effective business strategies. As for the service-oriented business model, the company expressed that it provides all hardware and installation services for free and will only charge an annual service fee. The company is also able to provide the end user with a free trial of its data analysis report for a certain time period. If the end users want professional business management consulting services, the company could provide the extra service by charging an additional fee. For the end users, especially from major chain stores who are unwilling to invest a large amount of money in security equipment, the service-oriented business model seems to be more attractive.

Now, many industry experts say that end users have become more aware of the value of using customer flow analysis, which is now standard in stores and shopping malls in China, and how it can contribute to their corporate management strategy.

Cloud Services Boost Commercial Market
This new service-based business model has been gradually accepted by end users due to the popularity of cloud service. Cloud service is foreseen to be widely applied by retail stores and in intelligent building solutions in the near future. Instead of installing a local server, a chain store’s end user can easily obtain data, analysis reports, and surveillance videos from the cloud server, which is convenient, scalable, and budget-friendly.

In fact, some manufacturers in the security industry have already begun to provide some basic cloud services for SMBs to watch real-time surveillance footage in the store, factory, or office. Nevertheless, cloud service is not exclusive to the security industry; some Internet service providers have been proactively promoting their real-time surveillance service with free security camera devices as well. For these companies, they do not intend to gain profit only by selling products but also additional services, which is growing to be a trend in the security market.

Cloud service can also be applied to integrating time-attendance records, salary counting, and human resource management. Employees are able to check their salary and attendance record through a given account at any time, anywhere. Even though cloud-hosted time-and-attendance service is broadly accepted by the U.S. and European markets, most companies around the world still hold doubts in regard to privacy and security issues.

Despite its potential, the cloud service market is still developing. There are many problems to be solved before it turns into a fully developed solution. End users may find it convenient to access and save information no matter where and when; nevertheless, privacy and security concerns are still going to be the primary challenge for manufacturers. Still, we can expect the industry to provide pertinent solutions for it in the near future.