Deep tech and automation are building connected aftermarket services that drive revenue. Follow this blog to get deep insights into this trend.
The global manufacturing and supply chain industry faces significant challenges, from compliance to modernization. Recent years, particularly during the COVID-19 pandemic, have seen major disruptions. According to an IDC survey, entering new markets remains a significant hurdle for manufacturers. However, focusing on connected aftermarket services presents a promising opportunity for revenue growth and long-term resilience.
Why Aftermarket Services Are Critical
Aftermarket services include maintenance, parts management, and logistics support for original products. These services generate higher profit margins compared to new equipment sales. For instance, McKinsey & Company research highlights that Earnings Before Interest and Taxes (EBIT) for aftermarket services reach 25%, compared to 10% for new equipment. This underscores the value of investing in aftermarket services to retain customers and boost profitability.
The pandemic has further amplified the need for manufacturers to diversify revenue streams. New equipment sales have slowed, but industries like automotive and electronics have seen aftermarket services thrive. With projected growth rates of 3% and 3.77% respectively from 2021 to 2026, these services represent a vital opportunity.
The Role of IoT and Machine Data in Aftermarket Services
Driving Connected Solutions
The Internet of Things (IoT) enables manufacturers to create connected products, which support predictive maintenance, recalls, and loyalty programs. By leveraging IoT, businesses can proactively address customer needs and enhance service offerings. Connected products also generate valuable data, allowing manufacturers to analyze usage patterns and optimize services.
Benefits of Connected Assets
Connected assets enable remote servicing, faster resolutions, and reduced downtime. With real-time performance monitoring, field technicians gain the insights needed to improve first-time fix rates. Additionally, connected systems provide analytics for predictive maintenance and seamless integration with business processes like asset tracking and warranty management.
Immediate Revenue Benefits
IoT-enabled aftermarket services yield measurable revenue gains:
- Lower Warranty Costs: Prevent false claims with performance data.
- Inventory Optimization: Predict failures to streamline stock levels.
- Reduced Service Costs: Equip technicians with relevant asset information.
- Enhanced Customer Loyalty: Minimize downtime and improve service efficiency.
Final Thoughts
Automotive OEMs, like GM with OnStar, showcase the immense potential of connected aftermarket services. By using IoT and machine data, manufacturers can drive customer loyalty and unlock significant revenue growth. Embracing these technologies positions businesses to thrive in an increasingly competitive landscape.
Harnessing IoT-powered aftermarket services isn’t just an operational upgrade—it’s a strategic move for future success.
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