In recent years, economic uncertainties have driven industrial companies to seek out new streams of revenue—ones that aren’t subject to the vagaries of supply chains, extreme weather, and geopolitical matters. For many, that new stream has been aftermarket services.
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Providing services outside of the pressures involved in equipment production and sales is what makes aftermarket sales so attractive—and profitable. The average operating margin from aftermarket services globally is two to three times higher than the operating margin from new equipment sales. And with digital technologies and smart operations driving new opportunities—and demands—for customer service, now is a good time for industrial companies to explore or expand aftermarket services.
Putting the customer first
Aftermarket sales can satisfy the expectation of customer-centricity. With the proliferation of smart technologies, customer experience and seamless interactions are table stakes for any business-to-consumer (B2C) enterprise—and that approach is increasingly extending itself to the business-to-business (B2B) market.
And with good reason: 88% of customers say the experience a company provides is as important as the product itself. Even more compelling, customer-focused organizations report a 49% increase in sales or revenue, a 45% increase in profitability, and a 70% increase in customer loyalty and satisfaction.
One of the ways to build out customer-centricity—and therefore, aftermarket services—is connectivity. That is, assets that are connected through digital technologies such as the Internet of Things (IoT) sensors, machine learning (ML), artificial intelligence (AI), and Generative AI (GenAI)—most of which manufacturers have already incorporated into their operations. But these technologies can take aftermarket services to new levels. According to a Deloitte Consulting LLP survey, 70% of companies that have implemented digital solutions improved their customer experience.
Drawing on these technologies can enable industrial companies to develop a connected aftermarket—which can extend the value chain beyond the factory to the full lifecycle of the product. It can connect vast networks of assets, people, and materials to create an integrated system that is in a better position to offer good customer experience.
Developing a B2C mindset
Working like a B2C in a B2B environment is likely a new world for many industrial companies. They often don’t have the data—due to legacy systems and siloed operations—to understand their customers and can lose track of a product once its sold. Industrial companies’ linear mindset based on traditional production lines can make it hard to stand up aftermarket services—which don’t necessarily fit into a predictable sequence. This also means there can be an overall lack of experience in building out customer-centric solutions.
To deliver aftermarket services that offer the customer-centricity of a B2C and take advantage of today’s connected and advanced technologies, industrial companies should consider the following actions:
Fuel growth by focusing on customer needs: Industrial companies do not always take post-sale customer needs, expectations, and buying behaviors into account. Developing a connected aftermarket can close the loop between traditional front office and aftermarket operations by challenging manufacturers to think like B2C companies in curating leads and sales opportunities. Creating a seamless connected customer experience also means recognizing that the experience doesn’t end with the sale of a product—but can be shaped by that product’s post-sale performance.
Predict, plan, and position for execution: Once industrial companies understand customer needs, they will likely need the ability to allocate resources, accommodate capacity fluctuations, coordinate their supply networks, and right-size their inventory management and distribution in response to those needs. Thanks to technologies such as advanced sensors, analytics models, machine learning, and GenAI, industrial companies can now gain greater insights from their data, enabling them to proactively detect potential part failures and predict maintenance. Data also enables manufacturers to plan how much capacity to set aside for production versus aftermarket services—and position resources accordingly.
Optimize execution and dynamically adjust: To build a robust aftermarket and meet customer expectations, industrial companies should adjust forecasts and plans according to field conditions as well as customer needs and buying behaviors. By leveraging advanced statistical models and AI capabilities, a connected aftermarket can enable manufacturers to embed aftermarket operations and decisions into their core business operations. And with a smart factory foundation, the connected aftermarket can also help industrial companies adjust workflow schedules based on the real-time availability of key resources (e.g., parts, people, tools, work centers, etc.).
Scaling smart operations
Digital technologies such as IoT, sensors, machine learning, and GenAI have fueled the proliferation of smart operations in manufacturing and continue to drive gains in productivity and efficiency. These technologies and the aftermarket service they enable can help industrial companies form a buffer — while offering an improved customer experience which could lead to loyalty.
Source:Forbes. com
