Issue #37

When the Customer Stops Buying the Product

How Hilti made the power tool only part of what the customer was buying

Twenty-five years ago, one of Hilti’s customers asked a question that sounded simple: could Hilti take care of its entire tool park?

The customer, Bati Group, had more than 1,000 tools. The challenge was not simply finding another drill, breaker or saw. Hundreds of tools could move between sites. They had to be available when needed, tracked, repaired when they failed and replaced when necessary. Hilti describes what the customer wanted as “peace of mind”: confidence that the tools would be maintained and ready so the company could concentrate on its own work. Hilti says the Bati relationship began in 2001, after an early pilot involving eight customers. An earlier Hilti company report records the first Fleet Management customer agreement in 1999, so the transition is best understood as developing around the turn of the century rather than as a single launch-day event.

For a company known for professional power tools, this presented an interesting shift.

The customer still needed good tools. But the tool itself was only part of the problem.

The Work Around the Product

The conventional transaction was straightforward. Hilti made professional tools. A business bought them. Once those tools entered the customer’s operation, much of what happened next became the customer’s responsibility.

Someone had to know where the tools were. Someone had to arrange repairs. Someone had to deal with breakdowns, replacement, inventory and periods of higher demand. Someone had to manage the cost of keeping the tool park working.

A customer featured in Hilti’s 2021 company report described the older model clearly. Chart Ferox had previously purchased hand tools much like other input materials. Over time, that left the company with different brands across production stations and increasingly complicated repair-service conditions. When Hilti later analysed its tool park, the customer expected another offer for tools. Instead, the conversation expanded to the processes surrounding them.

That distinction matters.

A manufacturer looking at the market through its own product category might see demand for drills, breakers and other equipment.

A customer running a jobsite sees something larger.

It sees equipment that must be available, maintained, located, repaired and replaced without disrupting the work.

The product solves one part of that problem. Ownership creates several others.

Hilti began moving into that space.

When the Offer Became Bigger Than the Tool

Fleet Management changed the structure of the relationship.

Instead of simply purchasing individual tools, customers could choose a fleet and pay a fixed monthly rate for a defined period. Hilti would then support the fleet through services including tracking, repairs, replacement, temporary tools during repairs or peak demand, theft-related support and eventual renewal. Hilti describes the proposition today with three words: “Use Instead of Own.”

That could easily be described as a subscription or leasing story.

But that misses the more interesting change.

Changing from one payment to monthly payments changes how a customer pays. Fleet Management changed more of what the customer was paying Hilti to take responsibility for.

Consider the difference:

Traditional purchase

Product → Customer owns it → Customer manages the lifecycle

Fleet Management

Product + repair + replacement + management + lifecycle support → Customer uses the fleet while Hilti manages more of what surrounds it

The power tool had not disappeared from the value proposition. It was still essential. A service model built around poor equipment would not remove the customer’s problem.

What changed was the boundary of the offer.

Hilti was no longer creating value only through what happened inside the tool. It could create value through some of the work the customer previously had to do around the tool.

Hilti’s current Fleet Management material makes that wider proposition explicit. It talks about reducing downtime, managing costs and supporting productivity, while the service itself runs from an analysis of the customer’s needs through onboarding, ongoing fleet support and eventual renewal.

The marketing proposition had therefore become operational.

There Is a Name for This Shift

The broader idea is known as servitization.

In manufacturing, servitization describes a shift in which services become a more important part of the value offered around, or sometimes instead of, the physical product.

It does not necessarily mean abandoning manufacturing. Nor does it mean that every product company should turn itself into a subscription business.

The more useful distinction is between selling an asset and taking responsibility for more of the customer outcome surrounding that asset.

Hilti continued making power tools. But Fleet Management allowed the physical tool to sit inside a broader relationship.

That relationship could include the tool being available when required, repair being handled, replacements being organised, costs becoming more predictable and the fleet itself being managed more systematically.

The difference sounds subtle until it is viewed from the customer’s side.

A customer may say it needs a drill.

But the business does not ultimately exist to own drills.

It needs holes drilled, installations completed, workers productive and projects moving.

The closer a supplier gets to that larger problem, the less its value proposition has to end at the physical edge of the product.

The Experiment Became a System

Fleet Management did not remain a small customer-service experiment.

By 2015, a Harvard Business School and IESE case reported that Hilti had approximately 1.5 million tools under Fleet Management contracts across 40 countries, with total contract value exceeding CHF 1.2 billion. That figure refers to contract value, not annual Fleet Management revenue.

By 2021, Hilti reported:

3 million tools under Fleet contracts globally.
More than 131,000 customers had joined Fleet Management since 1999.
Around 1 million tools, batteries and chargers were being collected annually for circular use.

Those numbers do not prove that Fleet Management caused Hilti’s wider company growth. Nor do they tell us that service-based models are inherently better than conventional product sales.

They show something narrower and more useful.

A proposition that began around the operational burden of managing tools became large enough to encompass millions of physical products.

And as the model developed, the boundary continued expanding.

Hilti’s ON!Track system and connected tools now give customers greater visibility into areas such as tool location, utilisation and battery health. Hilti says tool-park analysis can also identify opportunities to optimise fleets and reduce unnecessary purchases.

The company is still making tools.

But increasingly, the tool can exist inside a system of information, maintenance, availability and management.

The Product Was Never the Whole Problem

This is where the Hilti case becomes useful beyond power tools.

B2B companies often organise themselves around what they make.

A manufacturer thinks in machines. A software company thinks in software. An equipment supplier thinks in equipment. A component manufacturer thinks in components.

The customer does not necessarily divide the problem the same way.

It may buy a machine but worry about uptime.

It may buy software but worry about completing a business process.

It may buy equipment but worry about maintaining an operation.

That creates an important distinction between the product category and the customer problem.

The product category is defined by what the supplier makes.

The customer problem is defined by what the buyer is trying to get done.

Sometimes they overlap almost perfectly.

Sometimes there is a large amount of work sitting between them.

Hilti found itself looking at exactly that space. Its customers needed professional tools, but they also had to manage the consequences of owning hundreds or thousands of them.

Fleet Management allowed Hilti to absorb more of that work.

This does not mean the correct answer is always to add services. Moving further into a customer’s operation can create new complexity for the supplier too. The company must actually be capable of delivering the promise it has added to the proposition.

The important point is more fundamental.

The boundaries of a product do not automatically define the boundaries of customer value.

When Marketing Has to Describe Something Larger

This also changes what marketing has to communicate.

When the offer is a tool, the value proposition can centre heavily on the tool itself: performance, durability, safety, engineering, speed or reliability.

When the offer expands, those attributes remain important, but they are no longer the entire story.

Now the conversation can include downtime. Cost predictability. Fleet utilisation. Repairs. Administration. Replacement. Productivity.

Marketing is no longer explaining only why this product is better.

It also has to explain why the customer may be better off managing the problem differently.

That is a much larger task.

It requires the supplier to understand not only how customers use the product, but what happens before, during and after that use. It requires understanding the work the customer performs simply because it owns the product.

For Hilti, the original customer question exposed that difference.

“Can you completely take care of my tool park?” was not a request for another feature.

It was a request to redraw the line between what the customer managed and what the supplier managed.

That line can be strategically important in B2B markets.

Because sometimes the next opportunity is not hidden inside the product.

It is sitting in all the work the customer still has to do around it.

And that leaves a useful question for any company whose marketing still begins and ends with what it makes:

Is your customer actually buying your product, or using your product to solve a much larger problem that you have left them to manage?