In recent years, manufacturers and distributors have been witnessing smaller margins on goods sold as products become commoditized in a global market. Heightened focus on product design and greater consistency of initial quality mean it is harder than ever to differentiate on these valued product characteristics, making aftermarket service a more important differentiator and revenue source than ever before. Christine LaVoi, Senior Client Manager, IFS, explains the five areas of aftermarket services manufacturers need to focus on to add value to their current offerings and drive new revenue.
According to a 2013 IDC study, North American equipment manufacturers need to maximize aftermarket service revenue because without it, only 9 percent were expecting increased revenue in coming years compared with 15 percent globally. Aftermarket service is also less vulnerable to hiccups as sales of capital equipment or durable goods pushes from one quarter to the next and occurs less often than new equipment sales, particularly for equipment with long lifecycles.
There are five areas manufacturers must focus on to drive their aftermarket services and optimize operations.