Case Study: Rada Product-as-a-Service
Rada: Innovative showering and tap technology
Rada – a Kohler Company – manufactures innovative showering and tap technology in Cheltenham, Gloucestershire. Renowned for water saving and infection control solutions, service has become an increasingly important part of their value proposition in recent years.
Rada’s traditional business model, like many manufacturers in the construction sector, is transactional and indirect. They sell their products as a one-off sale through wholesalers. They then sell product repair and maintenance as after-sale services direct to the end-customer (typically a hospital, education facility or leisure centre).
What is Product-as-a-Service?
We worked with Rada to design a new Product-As-A-Service business model. Under this model, the only sale is a service contract direct to the end-customer. For a fixed annual or monthly fee the customer receives the product; commissioning; preventative maintenance visits (1 or 2 per year as needed) and service call outs.
The product is leased to the end-customer and does not become their property. At the end of the contract period they have the option to renew the contract, purchase the product outright or send it back to Rada.
Why is this more sustainable?
This is a more sustainable approach because correct preventative maintenance keeps Rada’s products performing well for longer, leading to a longer in-service life and a slower replacement cycle. It also makes Rada responsible for the costs of repair and replacement, incentivising them to make products that are more durable and easier to service.
What do customer's get out of it?
Rada’s customers benefit from a lower cost initial purchase; predictable and tax efficient costs throughout the product’s life; better product performance and fewer breakdowns.
What do Rada get out of it?
Rada benefits from a higher profit per unit -through this initiative they expect to grow their proportion of products with service contracts from <5% to over 30%. The affordability of this model has also created significant new sales opportunities. Equally importantly, it gives Rada a direct relationship with their end-customers, improving customer service and creating the possibility of sales opportunities for new services in the future.