Recent UPS research, conducted by IDC Manufacturing Insights, has reported that one-third of midsize industrial machinery manufacturers are getting up to 75% of their profitability from parts, service and consumables. 78 percent of manufacturers said that their customers’ expectations for after-sales services are rising, but just 12 percent manufacturers say replacement parts and service are top differentiators for their business.
In the remaining 88% of manufacturers, 45% of manufacturers believe machine (product) performance and 43% believe machine quality is their top most business differentiator. It is a known fact that, machine/product performance also greatly depends on Aftermarket services.
The research indicates that while manufacturers focus on developing and deploying new machinery, the buyers of industrial machines are increasingly seeking after-sales support to maintain the complex machinery for optimal productivity.
“Industrial machinery manufacturers are in a challenging situation. Their pipeline depends on developing new products, yet over one-third says that 50 to 75 percent of their profitability comes from after-sales service. For many, enhancing service after the sale could be a way to differentiate from the competition and offer potential for revenue growth”, says Brian Littlefield, UPS director of industrial manufacturing and distribution.
This survey also reaffirms the fact that, sales is a transaction and Aftermarket/After Sales is a relationship. 61% of the manufacturers have said that, their machines average lifetime is 10 to 19 years. If they approach After Sales rightly, they can get perennial revenue throughout the lifecycle of the product.
Offering an enhanced level of aftersales support is not easy as majority of manufacturers surveyed sell broadly across multiple industry segments (64%); from multiple facilities(68% sell from 2 – 9 locations);to locations around the world (48% sales from outside North America).
Survey also throws light on typical response time taken by manufacturers to respond to a new parts or machine repair requests from their customers. Majority of manufacturers (60%) admitted that, on an average they take 2-3 days of response time for service requests. Given the potential for significant lost productivity and revenue, that 72 hour window is likely unacceptable. Downtime creates lasting memories and anything less than immediate service can dim the prospects for loyalty and repeat sale.
The results are based on a March 2015 survey of U.S.-based industrial machinery providers with a global customer base and between $10 million and $50 million in annual revenue. All survey participants said more than half of their business was in North America, with the remaining divided evenly between South America, Europe and Asia. A small percentage of business was located in the Middle East and Africa.
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Quest Informatics is an Aftermarket IT product and services specialist company having more than two decades of experience in supporting Fortune Global 500 Companies. Quest Informatics was awarded as the Aftermarket Brand of the Year-2014, by Silicon India.