Customer experience is one of the most vital avenues that drive financial growth for the services industry. Nurturing customers will drive excellent revenue. Let’s take a look into the insights.
According to several pundits, this is the golden age of services. Every company should transform itself into a service business if they wish to survive, prosper and outlast the competition. There are several industries where the aftermarkets have soared beyond imagination and have amplified to a substantial extent. For industries such as automobiles, electronics, IT, industrial machinery, and white goods, companies have dished out solutions and sold so many units over the years that their aftermarkets have become four to five times larger than the original equipment business!
But what are these solutions that businesses have started offering along with their original products? They are broadly classified into:
- Conducting inspections and day-to-day maintenance
- Executing repairs
- Installing upgrades
- Selling spare parts
- Offering technical support
- Reconditioning equipment
- Arranging finances
- Consulting and training, and many more.
According to the research firm Aberdeen Group, the sale of spare parts and aftermarket services in the United States accounts for 8% of the annual GDP. With American consumers spending more than USD 1 trillion per year on assets they already own, the US aftermarket is significantly bigger than the most prominent global economies apart from the first eight.
The present scenario of the aftermarket sales and the existing challenges
Although most businesses used to squander the potential of the aftermarket services even a couple of decades back, OEMs have become more thoughtful and started paying heed to their aftermarket solutions. They have started understanding how bountiful the aftermarket solutions can be on the general financial health of their businesses. OEM aftermarket sales are less cyclical and produce more profits compared to the sale of original equipment.
According to a study by Deloitte, the average operating margin from the global aftermarket business is 2.5 times the operating margin from the sale of new equipment. McKinsey & Company has concluded that specific companies in the manufacturing and supply chain industry understand the pulse of their customers and are constantly polishing their efforts to improve their customer relationships. The only way they are doing this is by prioritizing their aftermarket sales and relentlessly focusing on execution. As a result, they are witnessing a windfall in the services revenue by 30-60% within 3 to 5 years of operation.
However, the challenge in maximizing customer retention and gaining a competitive edge in the niche market is still enormous. Manufacturers need to come up with robust aftermarket sales plans that will ensure improvement of customer experience. They also need to provide the fact that customers and dealers purchase OEM parts. It will drive business growth by increasing the profit margins.
How to promote customer experience and implement seamless aftermarket sales?
Customers expect a rich B2C experience from the OEMs. If companies prioritize offering flawless experiences to their customers via digital and offline channels, they will build lasting relationships and encounter increased profitability. Let’s see how.
Providing a frictionless experience
A recent study has shown that customers are often willing to pay slightly more if they have the assurance that their machines will have more lifespan and less downtime. However, they are going to independent vendors because they like to avoid the frictional experience that comes with purchasing from the OEMs.
Whether the purchase and subsequent transactions occur via digital media or call centers, buyers need a responsive and straightforward process. They also need to be confident that they are buying the right equipment, even if they are first-timers. The supply of information should be exhaustive.
Since OEMs have the quality and credibility that buyers seek when purchasing machine units, providing an intuitive and easy way to make the transactions irrespective of the buying channels will ensure repeat business. Customers will constantly do business with such organizations that make their jobs easier.
Using suitable tech tools
The fast and agile technology specifically designed for the equipment industry will help manufacturers provide a seamless customer experience. With a fully integrated technology solution that spans the entire equipment lifecycle from manufacture to aftermarket services, it is easy to pull data from an ERP or elsewhere and minimize the waste of time and other resources.
While ordering, customers expect quick and easy processes similar to the purchase experience they have in real life. Aftermarket organizations that ensure such seamless processes will encounter a surge in repeat customers.
Aligning the organization structure to the customer’s benefits
An aftermarket organization should have a common goal that they should pursue unanimously- providing flawless customer satisfaction. Since customer support, new equipment sales staff, and service staff frequently visit or talk to the customer; they should have constant interaction. An effortless mechanism to share the crucial customer-centric information between these teams will improve buyer satisfaction as they won’t have to repeat the same things over and over again.
With groups working cooperatively and collaborating to boost customer loyalty, organizations can differentiate themselves. Since every member of the organization is a representative of the brand image, getting them aligned to deliver an outstanding customer experience should be the focus.
For a growing group of industrial machinery manufacturers, aftermarket sales are worth more than 50% of the inherent revenue. Since the aftermarkets offer the maximum touch points of the OEMs with their customers, their convenience leads to increased turnover, improved margins, and outperforming the industrial competition.
Hence, it is true that reverse logistics has a holistic impact on each dimension of triple-bottom-line sustainability performance and can be leveraged suitably to amp up sustainable development.