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Winning In The Aftermarket

The Ultimate Playbook: To Winning In The Aftermarket

Written by: Kris Harrington


For original equipment manufacturers (OEMs), the aftermarket opportunity is substantial. Every experience your customer has with you after they’ve purchased your product will determine if they continue to do business with you or switch to an alternative supplier. When you make it easy for customers to find what they’re looking for, service them when they require support and deliver the right goods when they need them, they will support you. Building customer confidence and ultimately, customer loyalty is the number one job in the aftermarket. When executed successfully, customer satisfaction increases along with revenue.

With every great opportunity, often come great challenges. When you strive to execute at high rates of customer satisfaction, you are continually responding to changes in your business. New product releases, changing customer dynamics, new acquisitions, advancements in technology, consolidation in business activities and new inventory controls can all have an impact on aftermarket performance. Balancing the opportunities with the challenges is the demanding work of a well-run aftermarket department. To support you in your aftermarket efforts, we’ve created The Ultimate Playbook: To Winning in the Aftermarket.

This white paper is designed to provide strategies that will help you evaluate your current aftermarket performance and determine if it is time to tweak or change how you are managing your business. We recognize that to keep customers happy, the aftermarket team must be consistently improving. Things that are improved today typically require weeks or even months before the customer or the business truly experience the benefit. Once you’ve improved one area of the business, another area will require analysis for further enhancements. Action is key in the aftermarket.

Our hope is you will refer to this playbook often to ensure you are employing every strategy to delight your customers and grow your aftermarket profitably.

1. Strategic Questions To Ask When Reviewing Your Aftermarket Strategy

Whether you’re starting with a fresh aftermarket strategy or tweaking an old approach, reviewing your strategy is always a great opportunity to lower costs, achieve organizational alignment, and re-energize revenue. So, take a few minutes to ask yourself the following questions to focus your review:

Are You Making The Most Of Your Business Model?

As the aftermarket continues to evolve, many OEMs are encountering the need to address both B2B and B2C models to accommodate the changing playing field brought on by the internet. Shifting paradigms in the way buyers shop are giving OEMs more power than ever to capture markets with end-users thirsty for information and autonomy in the buying process. To manifest this power, manufacturers must be willing to get creative with business modeling.

How Do You Define Risk?

A different and perhaps more pressing question is: do you define risk? If not, then you’re not alone. An article entitled “Ten Common Misconceptions About Enterprise Risk Management” by John Fraser and Betty Simkins found that only 10% of the companies participating in their investigation had a well-implemented Enterprise Risk Management (ERM) program.

Understanding risk management through real-time metrics is essential for aftermarket success because it forces you to plan ahead. Which stock pool will your inventory come from if a customer’s equipment breaks down? What are the probabilities it will be one particular part over another? Remember, it’s about risk management, not risk prediction. Preventative maintenance prepares you for the future, but risk management helps you navigate potential outcomes once they happen.

Are You Putting Yourself In Your Customers' Shoes?

Customers are willing to pay for services and experiences as well as for products. Their willingness to do so is a good opportunity to focus your attention on competition from third parties. According to Defacto Research, 55% of customers are willing to pay more for great service. You might not be able to beat third-party competitors on price, but you can beat them on service. And according to numbers, that’s enough to clinch customer retention.

Do You Establish Customer Relationships and Expectations?

If you’re investing in your aftermarket strategy, then you already know how much money is left on the table by OEMs who aren’t making the same investment. According to The NPD Group, a global information company, snagging your biggest share of the trillion-dollar aftermarket can start even before the customer is finished buying the original product. Let the customer know during the sales process about your better service and aftersales support. This step takes commitment. Establishing relationships and solid service is a high priority for buyers, whether we’re talking B2B or B2C. Research by Bain & Co. reveals that customers are four times more likely to opt for a competitor because of bad service versus price.

Are You Using All Available Resources?

To get the edge on the competition, it’s important to take advantage of available resources. For example, your customers may be interested in ordering aftermarket services and communicating online, so find out where your clients are and make your services visible. Use technology for repetitive and redundant tasks absorbing your resources in the aftermarket. This approach frees your team to provide human-to-human contact when the challenges are more difficult.

2. Achieving Organization Alignment

Alignment and collaboration between original equipment sales, parts sales, and field service teams is an essential factor in aftermarket success for OEMs. All too often, these departments gravitate into silos with each team competing against the other and hinders the growth within the aftermarket.

So how can you break these silos down and align your organization to secure the improvement of the customer experience and an upward trend in revenue generation? Here are a few ideas that may help.

Rewrite The Mission Statement

OEMs traditionally see themselves as primarily being suppliers of equipment, not as service providers. Even though there is a shift in that perception today, your company may not have recrafted its mission statement to reflect the importance of aftermarket growth. Any activity which can generate 30% or more of a company’s overall revenue should be considered worthy of inclusion into the corporate vision and, therefore, a place in its mission statement.

A strong mission statement helps to utilize all organizational members in a drive to meet common objectives, providing strategic direction for the entire enterprise. So, if necessary, your company should revise its mission statement to include the vision of aftermarket success and differentiation through proactive product lifecycle support.

Select The Right Performance Metrics

Of course, along with a revised mission statement, strategic objectives and performance goals must also reflect the importance of aftermarket success. This change, in turn, drives a need for key performance indicators (KPIs) to measure results and steer efforts in the right direction.

Take a look at your aftermarket success measurements and ask yourself and your colleagues the following questions:

• Do our metrics cut across teams and departments to measure sales and service performance effectively?
• Are any of our KPIs likely to encourage creative conflict and competition among teams?
• Does our KPI suite compromise customer-focused metrics, or does it predominantly focus on internal activity?

While it’s important to quantify performance internally, customer-focused metrics can be better used to transcend silos and unite new product sales, parts sales and field service teams in creating value for the customers they serve.

It’s also true that functional KPIs can increase the risk that teams and departments will behave in a way that can be detrimental to cross-functional effectiveness. In this case, performance measures might hinder progress, rather than drive customer satisfaction and aftermarket success. KPIs that bring alignment, such as overall customer growth, should be the focus of this activity.

Clear Category Management

Category management is a concept employed to segment aftermarket parts and team members into distinct areas. Most of us already break our parts down internally by categories, because it is an easy way for us to look across our inventory. However, we need to engage the entire OEM team to grow and gain market share, so we need to think a little more strategically and add additional categories. Each of these distinct teams is defined by a set of factors to ensure that similar types of parts are grouped and are marketed according to their specific attributes, such as:

• Provide application expertise
• Allow for strategic product initiatives
• Support feedback from customers
• Drive for innovation and launching of new product

Having a clear strategy in place for category management means that all the departments focused within the aftermarket (e.g., marketing, sales, product, aftermarket managers, etc.) are on the same page when it comes to achieving increases in market share.

Collaborate With Technology

Gaining team alignment for aftermarket success can be easier with the right business tools in place. Collaboration software helps teams work together to meet shared objectives, while analytics applications can provide data and dashboards to track customer-centric metrics and performance indicators. For instance, we know that many manufacturers are adopting the SMAC (Social, Mobile, Analytics, and Cloud) to gain real-time insights into customer information and equipment status, enabling them to respond faster and improve service levels. In addition to this, select a CRM (customer relationship management) system that will help with the following:

• Monitor key customer-facing information that can help in the sales process
• Record opportunities across the various sales departments (product, service, and aftermarket)
• Forecast future bookings and sales by region
• Identify market trends by region, market segment, and product
• Enable market segmentation analysis to help with positioning
• Communicate alerts across the enterprise if customer equipment is non-operational

Breaking down organizational silos is never easy. However, today’s technology can greatly facilitate efforts to do so, especially when combined with a clear vision and a top-down approach to alignment.

3. Challenges Costing You Time & Money

As an OEM, energizing efforts to increase market share in the aftermarket is crucial for growth, but also comes with its challenges as well.
Below are issues, when left unattended, will draw excessively on your resources and increase the costs involved in serving your aftermarket customers.

Serving Customers Effectively

To compete successfully in the aftermarket, your plan to build relationships with the following three types of customers 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 your initiatives when it comes to focusing on each of these customer personas. Maintaining relationships with customers and ensuring there is an enforced practice 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. By using a loyalty program, favorable things like improving equipment uptime, providing real-time information for service operations, and decreasing manual process errors will encourage retention.

Inventory Management & 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 inventories and 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 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 & Pricing

Aftermarket success for OEMs depends not on attractive pricing, but upon exemplary service delivery and parts being available when customers need them. To achieve this goal, your company will need to leverage 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 of carrying that inventory. Such adjustments are especially relevant for parts that 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, less critical parts can be offered at market prices and pulled through the supply chain on a “just-in-time” basis.

Improve Efficiency & Responsiveness For Aftermarket Success

Understanding which customers offer the most aftermarket growth potential, offering programs that demonstrate 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.

4. Market Share vs. Market Potential

Considerable opportunity exists for improving sales performance in the aftermarket for OEMs. Perhaps your company already has a healthy share in the aftermarket, in which case your goal might be to maintain the status quo and keep in front of the competition. On the other hand, perhaps your competitors currently have the jump on you, and to get ahead, you need to double your current aftermarket sales. The size of your market share should figure prominently in your aftermarket strategy for growth.

Don't Confuse Market Share With Market Potential

It’s critical to understand the difference between market share and market potential in the aftermarket, yet these two metrics are a common cause of confusion. Manufacturers often view the aftermarket singularly and confuse their actual market share with that which they could potentially acquire. Overestimation of share in the aftermarket for OEMs, for example, can easily occur when parts manufactured by a third party are not a consideration.

For instance, suppose you only calculate your market share based on revenue from equipment parts that your company manufactures. Now suppose that share works out to 46% of the total revenue yield. Do you really have a 46% share?

Have you factored in the parts your company purchases and installs on your equipment? The equipment you sell may use parts that you purchase from a supplier instead of manufacturing in-house (for example, pumps, filters, or bearings). If you are not selling those items, your customers have no choice but to buy them elsewhere, perhaps from competitors that were not included in your market evaluation. Looking at items that you engineer and sell as a “whole” instead of items only manufactured by you, and adjusting your aftermarket strategy accordingly will enable you to realize more potential for growth.

Market Potential In Aftermarket Strategy: Why Does It Matter?

As Harvard Business School economists Robert D. Buzzell, Bradley T. Gale, and Ralph G.M. Sultan explain in a Harvard Business Review article ‘Market Share – A Key to Profitability’, larger market share generates several spin-off advantages, which include:

• Higher profit margins
• Reduced marketing costs as a percentage of sales
• Higher product prices
• Improved product quality

These advantages should provide more than enough incentive to analyze and track both market share and market potential in the aftermarket. Market share can be a highly motivational measurement, especially if you publicize a drive to get ahead of a large competitor who is currently ahead of you. An effort like this is something you can target as part of individual employee performance management and incentivization, provided you help your salesforce to understand why it matters.

The Role Of Analytics In Meeting Market Potential

Using market share expansion as a performance incentive requires that you monitor sales data and present it in a way that everyone in your business can comprehend. A good aftermarket analytics platform, capable of displaying data in easy-to-visualize formats, can make ongoing measurement less of a chore and correspondingly, less likely to be neglected.

Data information provided via your eCommerce tools can simplify the monitoring and management of the aftermarket for OEMs. Integrating analytics enables analysis and measurement of parts search to order performance. Data can be translated into actionable information and presented as concise and easier to understand dashboard visualizations.

5. Enabling A Customer-Centric Approach

I have heard it said, “the goal for any aftermarket is not to sell something. The goal is to make sure the customer is happy with their initial buying decision and every experience after the sale meets or exceeds their expectations.” OEMs who do this, gain loyal customers and ultimately increase revenue. Here are four ways to achieve an aftermarket customer-centric approach:

Customer Onboarding

After every piece of equipment leaves your factory, there should be a step in the aftermarket process that reaches your new customer. This process should thank them for their business, give them all relevant information as to how they can contact you, explain how to file warranty claims, and tell them where they go for parts support. Email marketing can play a key role in automating this experience, providing links to your web and eCommerce tools for easy access to all aftersales information. Easing access is a critical first step in identifying for the customer where they can find you once they’ve put your equipment to work.

Design A User-Friendly eCatalog

Here’s where you need to focus on your customers. An online digital catalog gives you the chance to entice users with a great interface. With an eCatalog, you get more of the following:

• A place to showcase all your products. Easily keep up-to-date bill of material catalogs that allow you to add 2D/3D drawings for easy parts identification.
• Limited customer support costs. Give your customers a tool so they can easily parts and information.
• 24/7 availability. Regardless of the time, your eCatalog remains live so your customers can do business with you anywhere, anytime.

Use eCommerce To Go Where The Consumers Are

When you have a system that can tackle the unique demands of the aftermarket, you must take advantage of consumer hubs. If you still think most of your sales will be in-person or over the phone, YOU’RE WRONG. According to Forrester Research Inc. report:

• The $1.134 trillion eCommerce sales in 2018 was 18.9% higher than the $954 billion they projected for 2018
• By 2023, they project B2B eCommerce sales to hit $1.8 trillion
• B2B clients spend more overall when they interact with multiple sales channels

Capitalize On The Cycle

Did you know that up to 90 percent of heavy equipment’s lifetime cost is on maintenance and repair? Concentrate on winning in the aftermarket and create a cycle that brings customers back to you as a manufacturer. Use these steps as an example:

• Sell a great product: this is an obvious place to start, and you’ve probably got this step down pat
• Listen to customer feedback: during a support call, have your team take notes regarding common issues and complaints
• Improve based on feedback: like a new version of a mobile app, improve your next generation of products and parts based on feedback
• Assess company capabilities: can your company still meet your consumers’ needs? What should be adjusted?

Upgrade Your Analytics Techniques

The aftermarket is a volatile place as the demand for new parts can suddenly face unexpected turns. However, with the right analytical tools like those described below, you can begin predicting shifts, trends, and demand well enough to minimize risk:

• Real-time data: OEM’s not measuring customer shopping behavior online are failing to tap into widely available real-time product data, which gives moment-to-moment insight on product trends
• Predictive analytics: with professional help, you can begin to find the patterns in your aftermarket trends and be better prepared for sudden future shifts

6. Using Modern Technology To Transform Service

For the better part of the last decade, manufacturers have operated in a highly challenging economic environment. Since the global downturn of 2008-2009, there has been increasing pressure on costs and a need for manufacturers to disrupt the traditional operational model and reinvent themselves towards better growth and profitability. Given the outlook in the industry, OEMs worldwide have increasingly shifted their business from simply selling products and spare parts to providing complete aftermarket services and value-added support to improve their profit margins through services.

Aftermarket services help counter both the cyclical demand for equipment and the volatility resulting from a tough macroeconomic environment. Hence winning market share in this area is essential to maximize company profitability. Winning here puts significant pressure on service organizations to keep customers happy and ensure they get maximum value from the products they buy. But the question is, how well prepared are OEMs to realize this opportunity in the services space?

Equipment manufacturers face significant ongoing challenges to reap the benefits of strong aftermarket services:

Moving Away From A Product-Centric Identity

For decades successful manufacturers have relied upon product-focused strategies, which traditionally lead to their strong market positions. They have invested heavily in entrenched cultures and processes that revolve around engineering products to help maintain their strong competitive advantage. This effort results in an internal competition for resources between products and services when the organization is moving towards a new strategy. It is critical to overcome these cultural and identity issues.

Reactive Mindset Towards Services

The traditional cultural problems transcend into the service organization as well. Field Service personnel tend to be highly resistant to change, resulting in additional challenges in implementing proactive service models and technology platforms geared towards enhancing the customer experience.

Legacy Technology Stacks

Traditionally, companies have relied on ERP functionality to manage service processes. However, this results in additional challenges to change as significant customization of such systems would have been employed to meet specific needs for service organizations.
Cultural change towards a service-orientated mindset is a long-term goal, and the adoption of next-generation technology could act as a catalyst to achieve these goals. It also helps mitigate capability gaps and introduce high levels of performance. Today, the most important differentiator for OEMs looking to succeed with their aftermarket service offering is providing best-in-class interaction with customers. Getting there requires instant access to relevant information anywhere and anytime and new best-in-breed technology to support such experiences. Use of such technology should essentially meet the following goals:

• Improve equipment uptime and performance
• Increase the productivity of maintenance personnel and service organizations
• Provide real-time information regarding service operations
• Decrease manual process errors

Real-Time Insights

Today, manufacturers are adopting social, mobile, analytics, and cloud stacks to meet their needs. These technologies can help by providing instant access to equipment data, work orders, and materials for maintenance personnel. The use of technology also helps eliminate manual processes and errors. By adopting such technologies, OEMs can gain real-time insights into customer information and equipment status, enabling them to respond faster and improve service levels.

The other aspect brought on by these next-generation technologies is predictive analysis. For manufacturers to consistently achieve high levels of quality and efficiency, they need to maintain maximum uptime of their equipment. Forward-thinking organizations are utilizing predictive analysis software to convert massive amounts of data gathered from their products, sensors as well as internal systems such as ERP, CRM, and other business applications into actionable information. Revealing such useful information can help manufacturers foresee equipment failures that can lead to unplanned losses. Such maintenance strategies result in considerable value addition to customers, and a more predictable service and parts revenue stream for the OEM.

It is no surprise that such technology is gaining prominence for companies serious about their aftermarket service strategy. The demands of the industry are resulting in manufacturers adopting innovative technology to bring in positive disruptive changes. Manufacturers are leveraging new technologies to identify value propositions for their customers, address specific customer needs, and enhance the customer experience. These technologies are helping manufacturers remain agile and competitive in today’s volatile marketplace.

7. Growing Sales With Data Analytics

You may have noticed that there’s significant buzz about big data these days. Capturing data is one thing, what you do with data is what matters most. What will make a difference to your aftermarket sales performance is having the analytics capabilities to turn OEM data into actionable insights.

The following tips will help you on your data-driven journey to improved margins, revenue, and ultimately, profit:

A Culture Shift Is In Order

According to a Forbes article called “10 Ways Analytics Are Accelerating Digital Manufacturing”, no other sector in the entire global economy generates as much data as the manufacturing industry. However, to benefit from all the data available to you, your leadership and everyone else in your aftersales support team needs to trust in its power to provide insight. Moving your people away from decision-making based on gut instinct won’t necessarily be easy. You should, therefore, treat your push into big data analytics as you would any other implementation, complete with a change management strategy and plans for open dialogue with all involved stakeholders.

Historical Data Is Not Enough

Choosing a solution that generates reports from historical or even near-real-time data may not offer you the best opportunities for aftermarket sales growth. Instead, you should look at data points that reveal major trends and patterns in historical data, then apply them to the prediction of future aftermarket parts sales and service outcomes.

Find A Supportive Analytics Vendor

Even with the best tools, working with big data can be daunting. Therefore, it helps to have a supportive vendor to help you with implementation. Find a partner who can help you identify gaps in business intelligence and determine the best way to address them. The goal is to shift to proactive data use, thus unlocking increased sales revenue, reduced overhead, and improved inventory management.

Use Analytics To Counter Change Resistance

Driving growth in aftermarket parts sales and aftersales support means that you look at your products as a whole, capturing all the parts sold for a uniquely engineered piece of equipment. This effort may meet some resistance from your salespeople, who will possibly believe you’re overpricing your parts and undermining their ability to sell them. In such a situation, this is where data can greatly help your case. Use analytics to present data showing that the parts do sell, highlighting factual information about pricing and the rate at which SKUs are moving. Not only will this help your sales team to buy into your aftermarket sales push, but it will also demonstrate just how beneficial analytics can be when used in sales strategy development.

Drive Customer Service As Well As Sales

Whether your aftermarket strategy involves only parts sales or includes installation and maintenance services, analytics can help you build up a predictive model, using historical equipment and service data to anticipate when parts on customer’s equipment will require replacement. You can use this knowledge to support customers' preventative maintenance practices, reducing equipment downtime and increasing the value of your services.

Waste No Time Putting Your Data To Work

The mass of data accumulated by your operation is of little value lying unused in application databases. A good analytics platform will put that data to work, aiding you in making strategic and tactical decisions for growth. Using the data gathered helps make real-time decisions with real-time information and puts an end to speculation. Rest assured that if your competitors haven’t discovered that already, they soon will. That leaves little time to waste in putting these tips to use and getting up to speed with aftermarket data and analytics.


Adapting to the ever-changing aspects of a thriving manufacturing company is at the heart of realizing any aftermarket opportunity. It is important to review the strategies and decisions made in the past to determine if there are small things you can improve upon that may have a big impact on how your customers perceive you. To gain new insights, reference the seven sections of this playbook throughout the fiscal year.

The work in the aftermarket is never complete. We hope that by regularly revisiting the strategies outlined in this playbook, you will identify actionable insights that bring value to your customers and profits to your bottom line.

Kris Harrington is the President and COO of GenAlpha Technologies. Kris spent the larger part of her professional career in global aftermarket positions for leading manufacturers in the mining industry. She spent the past seven years using her aftermarket knowledge and experience helping manufacturers transform their parts and service business online.

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