Aftermarket service programs can be significant profit generators for OEMs, but only if they’re implemented and maintained correctly. An inefficient, ineffective after-sales structure can do more harm than good if it costs the OEM money or does damage to established customer relationships.
A successful aftermarket service program depends on a smoothly functioning network of processes. Having a framework on which to base a service structure that does wonders for a manufacturer’s bottom line.
Here are six tips that can help you build the type of aftermarket sales program that will deliver the results you need.
1. Target the Right Customers
The most important step in developing and implementing an aftermarket service program is knowing which of your customers will make the program optimally profitable for you.
It’s tempting to think that all of your customers are great candidates for aftermarket service, or that your biggest customers are the best places to focus your aftermarket efforts. The truth is likely more complicated than that.
To identify which customers are your best aftermarket targets, begin by finding those who own the greatest number of your products and who have the greatest demand for aftermarket parts and labor. These could be your biggest customers, but they could also be the customers who own the products with the greatest service needs or whose businesses drive greater parts and maintenance consumption. Don’t just look for sales volume; look for service needs.
You should also be aware of factors that make a seemingly attractive target customer not so attractive. A big customer, for example, might own lots of your products but may be in a position to do much of their repair and maintenance on their own. In this case, the customer might not be the best focus for your aftermarket resources.
2. Use Data to Sell Service Contracts
In order to sell service contracts to your customers most effectively, you should know how to explain the benefits of the contract to the customer. The benefit of the contract for you is obvious, but the customer needs to be convinced that the deal is good for them, too.
Come to sales meetings well-equipped with the data that supports your claim that the service contract will save your customer money. This means that you’ll have to know your customer’s business well so that you can offer specific data showing how your maintenance contract will increase the customer’s uptime, limit maintenance costs, improve operator performance, and prolong the lifespan of the equipment.
3. Develop Reliable Procedures and Invest in Training
Your service contracts will deliver the most value for your customers if they keep the equipment running as much as possible. That will happen most reliably if the maintenance program includes inspection procedures that spot problems before they occur.
You’ll be able to develop these procedures if you use historical data to identify maintenance issues for all of your products. Use the data to build inspection procedures and be sure that all of your technicians are effectively trained in all of the most current procedures.
Invest in training your technicians to explain to your customers how and why these procedures are vital. It’s also important to have established processes to assess the efficiency and productivity of your technicians.
4. Build Efficient Stock- Handling Processes
Effective data analytics can show you precisely which parts you need to keep your maintenance programs running efficiently, and leveraging data to drive your stock-handling procedures is essential to building a profitable aftermarket program.
Know which parts you need to keep on the shelf and make sure that enough of those parts are always on hand. Conversely, know which parts don’t move quickly—and don’t over-invest in them.
It’s fundamental inventory control, but the relative unpredictability of service programs can make it more complicated. Use data as a tool to make the process more efficient.
5. Nurture Customer Relationships
By far the most valuable aspect of an aftermarket program is its potential to build customer relationships that deliver more and more over time. That only happens, however, when you use the program to nurture the customer relationship and build loyalty.
To keep the relationship strong, continually assess how the program is working, both broadly and for individual customers. Use data to track the performance of the program for each customer, and work quickly to correct any problems as they occur. Even more importantly, react to problems by improving processes so the problems don’t happen again.
The underlying principle of a service contract is that you are taking care of your customer even after the initial sale is made, and it is essential that your customers feel as if you are committed and responsive to their needs. Keep lines of communication open using all the technological tools at your disposal, and regularly assess how well you’re communicating with your best customers.
6. Stay in it for the Long Haul
The goal of an after-sale program is to foster customer relationships that grow and add to your bottom line over time. The key to making the programs successful is to see them as a long-term investment, not just a sale that will take care of itself after the contract is signed.
To make an aftermarket program do its best work for you, you’ll have to view it as an ongoing process that demands constant attention and refinement. If you do it the right way, an aftermarket program will deliver great rewards for both you and your customers.