One of the biggest challenges any OEM faces is being able to properly monetize machines beyond their initial sale. Despite aftermarket services having a bigger profit margin —around 25% in front of 10% for new equipment sales— many manufacturers still find it difficult to make the most out of their spare part sales.
Of course, this is partly due to the emergence of digitally native players, who have entered the industrial aftermarket. This has put a lot of pressure on OEMs, who have seen the need to start digitalizing their business. Higher competition has also come at a high cost for them: market prices for replacement parts have plummeted. And even if OEMs can’t always compete with bottom-low prices, they have other ways to smartly regain the market.
1. Stop Blaming Competitors and Beat Them Instead
Customers are easily attracted to replacement parts supplied by third parties since they are usually sold at a fraction of their price. As a manufacturer, you might not be able to beat their prices, but there are a few things you can do to become more attractive to customers:
1.1 (Re)Gain Control of Aftermarket Channels: Build Your Own Ecommerce
Many manufacturers are still using long, exhausting part ordering processes that require the customer to place a purchase order, await a reply from the manufacturer’s side, and hope the whole process won’t take an enormous amount of time.
Offering a self-served purchase process through an eCommerce platform will not only reduce friction for your customers and facilitate their part purchase, but it will also allow you to dedicate less time and resources to managing aftersales while maximizing the profit.
Moreover, by implementing a customer area, you will still be able to track all your customer purchases and will provide you with interesting data you will be able to use for marketing purposes.
1.2 Make Use of Personalization
Once you’ve built your eCommerce you will be able to market your products and spare parts easier.
You will have enough customer data to be able to upsell specific products and complementary components tailored to every single one of your customers in an automated way. For instance, you could send reminders of foreseeable part replacements for parts that wear out after a certain amount of time or remind your customers to reorder supplies they regularly need, as well as offer service and part bundles tailored to every machine buyer. This is something no non-OEM will be able to beat.
1.3 Work on Customer Retention
Now you have all you need to retain the loyalty of your customers. Many manufacturer websites and apps struggle to stay relevant for machine and part buyers.
In order to do so, it is important that your platform (whether an app or a website) offers some value. For instance, you can offer discounts to regular customers as they buy more and more from you, ask them to come and try out new machines and products you launch, and even use them for their daily activities, such as finding parts or look up documentation. The possibilities are endless.
2. Implement New, Effective Tech Tools
Adopting new technologies to digitalize your machine and part information is going to be crucial to your aftermarket business success.
And let’s be honest, in order to achieve this goal, you will have to implement some changes to your organization.
Of course, this might be challenging, and several stakeholders will need to be involved, but getting future-ready will yield a return on investment you never expected.
From ERP to Intelligent Inventory and Asset Management tools, in the past few years, many have tried to help industrial companies digitalize their business and centralize information to help machine technicians and users find information as easily as possible.
One of the latest and most cutting-edge additions to the aftermarket industry solutions is the Partium app, a one-stop tool for machine and part identification and information.
Let’s say you offered your customers the option to use a platform where they can access all their machine documentation in one click, wherever they are, whenever they want to. This would give you an enormous competitive advantage.
Partium allows your customers to access their machine documentation and bill of materials (BOM) from every device, without having to use a specific computer located in a specific room, which usually takes up a lot of time. With Partium, technicians and machine operators can easily search for spare parts, either using BOM, diagrams, text search, or a unique functionality: camera search.
Part identification and reordering become as easier as they can get for aftermarket customers and will leave your competitors lagging behind and without any chances to steal a sale. The machine products you sell and their documentation become intrinsically connected to your sales channels.
3. Utilize Data and Make the Most Out of It
With digitalization, comes a great amount of data. If you use it wisely, it can deliver the most astonishing results.
3.1 Optimize Your Spare Part Pricing: Rely on Market Intelligence
Especially during times of crisis, there is a trend to overhauling instead of replacing machines and any asset that requires a high investment.
Therefore, it is time to focus on your spare part market and be clever about its pricing strategy. Current technologies enable manufacturers to implement intelligent pricing initiatives that protect their margins while maximizing revenue. Fortunately, new digital channels allow for greater control and visibility of all these aspects.
Implementing dynamic pricing or considering the local and regional competition, and specificities, you will more easily close part sales. For this, there are currently many pricing intelligence solutions that can help you reach your goal.
3.2 Develop New Services
Taking a closer look at your data, you are most likely going to stumble upon trends you haven’t seen before. Products that are bought together, services that are more often needed after a specific sale, or an X amount of time after a sale…
This is your opportunity to take advantage of the needs your customers have and turn them into revenue for your business.
3.3 Automate Your Marketing Activities
In order to achieve the personalization we discussed before, you can leverage marketing automation tools that will track the user behavior in your app or website and will help you trigger automated marketing campaigns based on your user’s profile, past activity or purchases, or a specific combination of customer behavior events.
3.4 Don’t Forget the Saying: “Think Global, Act Local”
Every market has its particularities, and there are no magic solutions applicable to every subindustry or geographic area. That’s why understanding the markets and tailoring strategies for every region you are present in is key to reaching a bigger audience and increasing your profits.
However, there are some pretty good language-agnostic tools that can help you provide your worldwide customers with features they will all appreciate, like visual identification of spare parts integrated into a mobile app, powered by Computer Vision.
Partium, your spare part app
Partium is the latest tool for industrial spare part identification and recognition. Improving aftermarket processes and maximizing revenue becomes easy thanks to a connected solution that lets your customers access machine documentation and easily find the spare parts they need, even in challenging environments.
For more information on how to boost your aftermarket sales, you can get in touch or ask for a demo.