How to Overcome 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 has its own challenges. In this blog, we’ll detail a few of those challenges—both of which must be a priority to overcome to attain aftermarket success.
These are issues that, left unattended will draw excessively on your resources and increase the costs involved in serving your aftermarket customers.
1. Serving Customers Effectively
In order to compete successfully in the aftermarket, you should aim to win the hearts and minds of three types of customers that will play a large role in 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 relationships 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.
2. Building Customer Loyalty
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. On average adding a new customer is 5 times more expensive than retaining an existing one.
Introducing a loyalty program, identifying ways to increase equipment uptime, providing real-time information for service operations, and decreasing manual process errors will foster retention.
3. Managing and Optimizing Inventory
One of the toughest aftermarket challenges for OEMs is the management of inventory. Balancing supply and demand to ensure the optimum availability of parts is not easy, since nobody knows when equipment breakdowns will occur. 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.
4. Providing Real-Time Price and Availability
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 offer customers the ability to quickly and accurately access price and availability information and leverage analytics technology 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. This is especially relevant for parts that are critical to your customers and that they cannot easily acquire elsewhere. Pricing for value is a key strategy in exploiting aftermarket sales potential. Meanwhile, parts that are less critical can be offered at market prices and pulled through the supply chain on a “just in time” basis.
5. Improving 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 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 demo or learn more from our team of aftermarket experts send a message using our online form.