When was the last time you did an audit or deep-dive of your Aftermarket?

Imagine, the hard work is done, your new product sales team have successfully sold products into different markets locally/globally, you can relax!

But why leave it at that, what about satisfied customers and repeat sales? Why let someone else offer customer support and make perhaps 5 x the margin you got from the new sale?

Try listening to your customers, many buy because of the support offered from an Aftermarket organization, especially repeat purchases and they will tell you it’s all about the equipment uptime/productivity, if you haven’t already done a customer survey do one now. Customers will tell you what they want and it usually revolves around reliability, quick responses, spares availability, technical support and field service capability. All of this comes at a cost to you but the long term rewards will far outweigh any investments.

Where do you start? You may have a direct business model or you may sell via distribution either way you have to support your end users. Carving out the service activities associated with a product (spare parts, field services, upgrades, modifications, remote monitoring) and analysis of the results during and after the carve out will help identify how to improve new product margins as well as identify highly profitable service options which have been missed previously.

We all look for sustainable profitable growth but recent history has shown us it's simply not possible to predict any market with certainty. However additional profit can be found without growth, you already have an installed base of equipment, look at your Aftersales customer share, ask yourself, what is your conversion rate of inquiries to orders? What amount of waste do you have in order handling and inventory management? Looking closely into these areas might add several percentage points to your bottom line.

Company boards, shareholders and investors love to see a successful Aftersales business as this helps a strong bottom line even in times of low new product sales.?

It always sounds easy to just create a service business but the lack of understanding over the complexity of how a service business operates is where the first failure occurs.

To really have a world class Aftermarket you need to go right back to design of the product, if every product is bespoke you will always struggle to deliver excellent service, how will you manage documentation? How will you manage parts? How will you manage technical knowledge and training? Also in a world of digital control, how will you manage updates and fixes? .

The foundation of a world class Aftermarket offering starts with finding and appointing an experienced leader to develop a strategy and build a mgt team, also placing P&L responsibility under that Aftermarket leader, many required positions will already be in place but will need to be carved out of the existing organization structure and put into the Aftermarket business line, don’t be tempted to compromise, put your best people into the required roles.

After this very important initial step you can start to look into the following areas and make an implementation plan on how to deliver results;

1, Material master data and documentation - what parts, suppliers, service intervals?

2, Installed equipment database - what is it, where is it and who owns it?

3,Technical knowledge and training group - use your best people, share knowledge.

4, Field service organization - direct/distribution, designed to match installed base and customer needs.

5, Supplier agreements, pricing software, inventory analysis, warehouse mgt and distribution strategy.

6, Dedicated aftermarket sales strategy and sales team including digital sales, again direct/distribution.

7, Service and warranty contracts or agreements- sustainable revenues are very attractive to investors and shareholders.

8, Warranty department - handling claims from customers and claims to suppliers.

Don’t forget your people! Communication of the plan and identifying where they fit in and the career opportunities that will arise are very important to them, also remember to listen, the people closest to the customers often have the answer, you won’t make everybody happy but you have to put maximum effort into this area.?

Safety is also a must have, we want everyone to be safe and to go home at the end of the job, your customers as well as investors will also recognise this, a safe company will attract the best employees and ultimately the best customers.

Starting from scratch this is really a five year project, however many businesses have of course already realized the fantastic earnings opportunity offered from a stand alone service business or at least started but when did you last do a deep dive/audit to see how effective it really is?

Even if you have started a fresh set of eyes coupled with extensive Aftermarket experience could help you simply increase profits, let me share a few examples;

1, Check your quote to order conversion rate - Why don't you get the order?

2, Inventory obsolescence, financial standards set the rules so this can be very hard to avoid. Who wants to scrap good stock and book the costs against their results? Proper analysis of your installed base, sales history and stock movements can save you money.

3, B2B systems cutting unnecessary administration can save significant costs at both your side and your customers.

4, A pricing strategy and even better pricing software will ensure you are always competitive and will not lose sales due to high prices.

5, up selling and campaigns, look to your best customers and increase the customer share.

Hopefully the above gives you some food for thought and encourages you to review your Aftersales support.

?I’m sure people will be along to add their own comment/slant but I had quite a good track record and it worked for me, so if you need help simply reach out, Goodluck.