Chart of the Week: Monetizing Value-Added Services

The chart of the week is from Alec Lee, Practice Leader for Latin America Research:

Value-added services are key in today’s competitive landscape. Companies that provide value-added services tend to see higher customer satisfaction and customer loyalty. But many MNCs fail to monetize their value-added services. It will surprise many people to hear that, according to statistical analysis conducted by FSG, companies that charged for value-added services achieved similar improvements in customer satisfaction and customer loyalty as companies that did not. Charging for value-added services establishes the value that multinationals are creating for clients.

 

The common ways for companies to charge for value-added services are either through a differentiated fee in a bundled package with their core product/service, or via a separate fee billed to the customer in addition to the fee for the core product/service. Whenever possible, firms should charge for value-added services from the beginning of the client relationship, because it becomes nearly impossible to go back to the customer and charge for these services at a later point. If customers are unwilling to pay directly for a value-added service, then MNCs should recognize that they are offering the wrong value-added service, that the particular value-added service is already commoditized and therefore expected for free as part of a product offering, or that more investment in communicating the customer value from the value-added service is needed.

 

This chart comes from a report we put out early this week, “Monetizing Value-Added Services,” that is available on our portal for FSG clients. The report combines survey results from more than 200 multinational executives, with extensive primary and secondary research, to deliver data-driven recommendations on how multinationals can more effectively monetize value-added services in emerging markets.


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