Taking your Aftermarket Servicing to the next level.
Not only can improved Aftermarket Servicing enhance customer satisfaction, but the Aftermarket service function of your business holds huge revenue potential. According to Deloitte, Aftermarket Services have 25% margin vs 10% on new equipment sales. As your new orders inevitably plateau with time, maintenance volumes in-turn will increase and can grow to account for up to 50% of business profits as a recurring revenue model.
It’s true, there is a gold mine to uncover, but companies first need to know where to dig, and importantly how hard.
There are many areas which Aftermarket Service providers must consider, from inventory optimisation through to service processes and spend reduction. Things like operational complexity and difficulty identifying customers Aftermarket needs are common blockers for success.
Traditionally manufacturers focus on selling equipment, whilst Aftermarket Services remain as an ancillary business. In 2021 we saw global equipment sales hit a record high*, with demand remaining strong in 2022. As a result of this we will see an increased need for Aftermarket Servicing. Remember, Aftermarket Services can hold a revenue opportunity of 25% vs 10% on new equipment sales, so by implementing a successful aftermarket business model now can see you reap the rewards in the future.
So, if Aftermarket Services are so bountiful, why do a lot of businesses view it as a necessary evil? This is mainly because it is perceived as notoriously difficult to manage, with new processes and solutions hard to implement, the fear of disruption, and not to mention how challenging it can be to get stakeholder buy-in too.
Which is why working with an expert in Aftermarket Service solutions is key to addressing some of these common blockers. Working with someone who understands how to assess your current challenges and suggest relevant use cases, how to best implement new processes and solutions with minimum disruption to your business and with the full support of key stakeholders along the way.
But what steps should you take to kick start the transformation process? Firstly, we recommend looking at your current Aftermarket business model, and ask yourself these simple questions:
- What is our current Service Strategy, is it documented?
- What processes and equipment are a priority to us, can they be improved?
- What’s our current digital capabilities, does our current digital infrastructure support our long-term Service goals?
Only when you begin to understand the answers to these three questions, can you start to identify opportunities for improvement, taking your Aftermarket Servicing to the next level. If you struggle to answer these questions, or perhaps find there is a lack of substance behind each of your answers then we would suggest it’s time to start talking to someone about addressing these issues and putting a plan in place for the future.
At CAD-IT we’ve helped hundreds of industrial businesses in their journey to true Aftermarket transformation, whether it’s simply process improvement, strategy support or implementing a new industry 4.0 solution. To find out more, or to speak to a member of our business transformation team head over to www.cadituk.com or email us at firstname.lastname@example.org