Don’t Make After-Sales An Afterthought

UPS research reveals that most small-to mid-size industrial machinery companies don’t see replacement parts and service as a way to stand apart. That’s a problem.

Brian Littlefield

Brian Littlefield

Industrial machinery manufacturers are wired to focus on what’s new. Such a mindset is understandable.

Companies’ pipelines depend on developing the latest, most cutting-edge products to keep customers happy.

It may sound counterintuitive, but for many manufacturers, new opportunity awaits in the services that are most easily overlooked.

UPS data shows that 78 percent of small- to mid-size industrial machinery companies believe their customers’ expectations for after-sales service are rising. However, just 12 percent of those manufacturers say replacement parts and service are top differentiators for their business.

This tells us that the buyers of industrial machines are increasingly focused on after-sales guidance to ensure their equipment meets the highest standards for as long as possible. It also tells us that manufacturers are missing out on a potential competitive advantage.

Today’s forward-looking company, in fact, knows how to balance new technologies while preserving legacy products.

In an increasingly competitive market, where customers have access to whatever they want whenever they want it, after-sales support is an area brimming with possibility for resourceful firms of all sizes.

Follow the money

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Why not consider an uptick in after-sales support to generate revenue?

The UPS research, conducted by IDC Manufacturing Insights, found that one-third of mid-size industrial machinery manufacturers say up to 75 percent of their profitability comes from parts, service and consumables.

This holds true in a number of geographic markets.

All survey respondents – U.S.-based industrial machinery providers with a global customer base and between $10 million and $50 million in annual revenue – said more than half of their business was in North America, with the near-remainder divided evenly between South America, Europe and Asia.

A small percentage of business was located in the Middle East and Africa.

Why then, are so many firms reluctant to view service after the sale as a way to stand out from the competition?

It’s important to remember that after-sales service is an opportunity to grow business, not something merely meant to placate customers.

Most manufacturers surveyed said the average lifespan of their equipment was between 10 and 19 years.

I’m guessing you can’t afford to wait two decades for new business to materialize. In the interim, why not consider an uptick in after-sales support to generate revenue?

Many companies are already taking this approach.

According to the UPS survey, 35 percent of manufacturers get more than half of their annual revenue from after-sales support. By comparison, 65 percent said such services make up less than half of their annual revenue.

[Also on Longitudes: U.S. Manufacturing in Strong Condition]

An after-sales snapshot

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After-sales is meant to augment your efforts to attract business through innovation.

The UPS research also shows that 56 percent of industrial machinery manufacturers manage after-sales service in-house and have no plans to outsource those efforts.

The remaining 44 percent of equipment manufacturers now use, or plan to use, a third-party service provider for long-term maintenance.

To be clear, there’s no right or wrong way to approach after-sales.

Not every company should ramp up after-sales, nor should each business choose to manage their own service operations. Consider all this information food for thought. Surely, there’s at least something you can do to provide greater after-sales options to clients.

At a minimum, you may want to consider consulting a group specializing in post-sales service.

Regardless, there’s already a clear opening to better meet the after-sales needs of the average purchaser.

Most survey respondents identified an average service response time of between two and three days. In this industry, that’s an eternity. Good luck trying to get repeat business from a customer whose production was stopped for 72 hours while they waited for service. Hopefully you haven’t already learned this lesson the hard way.

[Also on Longitudes: Not Your Grandfather’s Factories]

Fostering innovation

This emphasis on after-sales is meant to augment, not replace, your efforts to attract business through innovation.

Look at it this way: Why would a customer buy a luxury convertible from the same auto dealer who failed to keep their last vehicle running?

Industrial machinery is complex. Timely maintenance and repair is in high demand, and it will likely mushroom as machines get even more specialized.

You are best equipped to assess your company’s strengths and weaknesses. Thoroughly evaluate the potential impact that after-sales can have on your bottom line – and how servicing that part of the business can fuel your development of new products to a legion of brand loyal customers. goldbrown2

Brian Littlefield Brian Littlefield is the director of marketing for the aerospace, automotive, and industrial manufacturing and distribution segments at UPS.

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Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.