Manufacturers: Aftermarket Challenges that Are Costing You Time and Money
As an OEM, energizing efforts to increase market share in the aftermarket is crucial for growth, but also comes with its own challenges as well. In this blog post, we’ll detail a few of those challenges—both of which must be surmounted as a priority to attain aftermarket success.
These are issues which left unattended, will draw excessively on your resources and increase the costs involved in serving your aftermarket customers.
Serving Customers Effectively
In order to compete successfully in the aftermarket, your aim to win the hearts and minds of three types of customer will play a large role with retention and growth:
- Customers who have always been loyal and come to you for their aftermarket needs.
- Customers who come to you when they can’t get their equipment supported satisfactorily elsewhere.
- Customers who own your product but have not dealt with you since their warranty expired.
Make sure you balance out your initiatives when it comes to focusing on each of these customer personas. Maintaining relationship with customers and ensuring this is a practice that is upheld within the entire organization is a pertinent differentiator that any OEM can capitalize on.
Customer Loyalty is Everything
It’s less expensive, more cost-effective and a lot easier to grow revenue by improving service to existing customers than it is to acquire new ones. Use a loyalty program, favorable things like improving equipment uptime, providing real-time information for service operations and decreasing manual process errors will foster retention.
Inventory Management and Optimization
One of the toughest aftermarket challenges for OEMs is the management of inventory. Balancing supply and demand to ensure optimum availability of parts is not easy, since nobody knows when equipment breakdowns will occur. As identified by the authors of a Harvard Business Review article called Winning in the Aftermarket, the market for parts and services is inconsistent and unpredictable. That’s why many OEMs contend with a high percentage of obsolete inventory yet still struggle to ensure availability for their customers.
A key step change in improving parts availability is to shift away from using historical sales performance as a way to gauge demand. Instead, your company should find ways to utilize real-time data on customers, their products, and their buying behaviors to improve forecast accuracy.
Support Availability with Technology and Pricing
Aftermarket success for OEMs depends not on attractive pricing, but upon exemplary service delivery and parts that are available when customers need them. To achieve this goal, your company will need to leverage analytics technology and monitor metrics to assess how well you are meeting customers’ aftermarket needs.
If these metrics indicate a need for buffer inventory to ensure your best customers don’t suffer downtime, so be it. You can adjust your aftermarket prices to reflect the extra cost in carrying that inventory. This is especially relevant for parts which are critical to your customers and which they cannot easily acquire elsewhere. Pricing for value is a key strategy in exploiting aftermarket sales potential. Meanwhile, parts which are less critical can be offered at market prices and pulled through the supply chain on a “just in time” basis.
Improve Efficiency and Responsiveness for Aftermarket Success
Understanding which customers offer the most aftermarket growth potential, proving how much you value them, and leveraging data to meet their need for parts and service availability: These are all steps towards a more cost-effective and efficient aftermarket enterprise. By focusing on these steps, you can ensure that word gets around and customer acquisition opportunities increase.
Aftermarket solutions from GenAlpha can help your business derive actionable insights from sales data and optimize inventory and pricing. To arrange a free solution demo or learn more from our team of aftermarket experts send a message using our online form.