The Connected Aftermarket: How Industrial Companies Can Make Services Smarter
In recent years, economic uncertainties have driven industrial companies to seek out new streams of revenue—ones that aren't subject to the vagaries of supply chains, extreme weather, and geopolitical matters. For many, that new stream has been aftermarket services.
Providing services outside of the pressures involved in equipment production and sales is what makes aftermarket sales so attractive—and profitable. The average operating margin from aftermarket services globally is two to three times higher than the operating margin from new equipment sales. And with digital technologies and smart operations driving new opportunities—and demands—for customer service, now is a good time for industrial companies to explore or expand aftermarket services.
Aftermarket sales can satisfy the expectation of customer-centricity. With the proliferation of smart technologies, customer experience and seamless interactions are table stakes for any business-to-consumer (B2C) enterprise—and that approach is increasingly extending itself to the business-to-business (B2B) market.
And with good reason: 88% of customers say the experience a company provides is as important as the product itself. Even more compelling, customer-focused organizations report a 49% increase in sales or revenue, a 45% increase in profitability, and a 70% increase in customer loyalty and satisfaction.
One of the ways to build out customer-centricity—and therefore, aftermarket services—is connectivity. That is, assets that are connected through digital technologies such as the Internet of Things (IoT) sensors, machine learning (ML), artificial intelligence (AI), and Generative AI (GenAI)—most of which manufacturers have already incorporated into their operations. But these technologies can take aftermarket services to new levels. According to a Deloitte Consulting LLP survey, 70% of companies that have implemented digital solutions improved their customer experience.
Drawing on these technologies can enable industrial companies to develop a connected aftermarket—which can extend the value chain beyond the factory to the full lifecycle of the product. It can connect vast networks of assets, people, and materials to create an integrated system that is in a better position to offer good customer experience.
Working like a B2C in a B2B environment is likely a new world for many industrial companies. They often don't have the data—due to legacy systems and siloed operations—to understand their customers and can lose track of a product once its sold. Industrial companies' linear mindset based on traditional production lines can make it hard to stand up aftermarket services—which don't necessarily fit into a predictable sequence. This also means there can be an overall lack of experience in building out customer-centric solutions.
To deliver aftermarket services that offer the customer-centricity of a B2C and take advantage of today's connected and advanced technologies, industrial companies should consider the following actions:
Digital technologies such as IoT, sensors, machine learning, and GenAI have fueled the proliferation of smart operations in manufacturing and continue to drive gains in productivity and efficiency. These technologies and the aftermarket service they enable can help industrial companies form a buffer — while offering an improved customer experience which could lead to loyalty.
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