If yours is like many Original Equipment Manufacturing (OEM) organizations, your aftermarket product and service provisions represent an under-utilized gold mine, filled with unrealized potential to generate profits possibly exceeding those yielded by primary-product sales.
According to statistics published in The McKinsey Quarterly, for example, aftermarket parts sales for a piece of industrial equipment, marked up at 25%, can easily generate the same amount of profit over the equipment’s lifetime as was made from the original equipment sale (assuming a 15% margin on that sale).
Who wouldn’t want to continue generating revenue on a product after it has been sold? That was the easy question. A much tougher one is “how do we capitalize on our aftermarket sales and service potential?”
There are actually ways you can begin your journey to a 50% aftermarket business increase without overhauling your enterprise. You could try any of the following initiatives for example:
All of these offerings should be relatively straightforward to bring to market, since they require no prototyping, product R&D, or engineering.
Strengthening the customer centricity of your parts and service sales is another way to entice buyers away from third-party aftermarket providers and to encourage loyalty. This will typically mean introducing convenience factors into your aftermarket customers’ experience.
Leveraging an eCommerce platform, for example, not only provides your customers with the convenience of online purchasing at any time of day or night, but it also serves as an aftermarket sales outlet that doesn’t take breaks, sleep, or require more than a minimal amount of operational labor to support.
Once the low-hanging fruit is in a state of perpetual harvest, securing the full 50% aftermarket business increase will entail some organizational and cultural changes as well. The three areas most likely to require development are:
Aftermarket Growth Starts with Equip
Equip from GenAlpha is your complete OEM aftermarket solution, integrating tools to drive decision making, bring convenience to your customers and streamline parts-inventory management. While it will be your people, their inspiration, and their ideas that drive your aftermarket growth to the 50% target, GenAlpha offers supporting technology with OEM at its core, so your team can do naturally what it does best.
Learn more about our OEM aftermarket platform with integrated decision-support and eCommerce capabilities.
Alternatively, please contact us directly and get your questions answered by a knowledgeable Equip specialist.