The process of buying spare parts from an Original Equipment Manufacturer (OEM) has been unchanged for years, from identifying the need for a part to placing an order and receiving it.
However, this process continues to cause significant challenges for end users and dealers alike.
But why hasn’t this buying experience become any easier?
Traditional parts ordering
It's essential to understand just how crucial spare parts sales are when it comes to making money as an OEM.
In 2024, a smooth aftersales experience isn’t just nice to have; it can boost customer experience, lift revenue and elevate your entire business.
When companies, especially those making complex products, first launch something new into the world, they're all in on the design and getting it out to the market.
However, their aftersales services usually remain stuck in the past, especially when we talk about finding and replacing parts.
Dealers and customers get basic tools like 2D drawings that often belong in a history book.
They might be ‘digital’ PDFs, but they’re as interactive as a rock.
In today’s fast-moving, digital-first world, that’s just not cutting it anymore.
A revenue pothole you can't afford to ignore
OEMs need to focus on designing for supportability.
It's widely understood that aftersales and spare parts represent a serious chunk of the revenue pie, somewhere in the ballpark of 20-40%.
And this percentage can be even higher for larger, more established companies.
Last year (2023), Ford managed to earn more from its spare parts sales than from its vehicles, highlighting just how much more profitable spares can be over new asset sales.
Factor in the prolonged service life of legacy fleets and this revenue stream becomes even more critical.
Yet industry standard practice still neglects to give aftersales the focus it deserves.
The potential uplift in revenue from spares, provided there’s an efficient system for parts ordering and documentation, could be humungous.
And with technology continuously advancing, that traditional 20-40% revenue share from aftersales has the potential to climb even higher.
Navigating parts misidentification & returns
Tackling the issues of servicing and parts replacement often reveals a significant hurdle: the misidentification of parts.
It's a substantial problem affecting customer satisfaction and operational efficiency.
Partful recently gained insights from a global manufacturer that ships millions of parts worldwide, only to discover that a shocking 20% of these didn't match the customer's orders.
This discrepancy not only incurs costs in shipping and returns but more critically, undermines customer trust and satisfaction.
This scenario isn't exceptional but a routine challenge.
Consider the inconvenience of waiting weeks for a car part, an issue well-understood by car dealerships.
They prioritize aftersales service and stock up on spare parts not only to expedite repairs but to ensure customer loyalty.
Yet, this approach isn't universally adopted, leading to frequent returns that frustrate consumers and OEMs alike.
The core of this problem often lies in the confusion caused by the inconsistent naming of parts.
Different terms for identical parts result in inefficiencies and frustrations.
Dealers find themselves bombarded with emails, calls, and texts, sometimes including photos, in attempts to clarify exactly what the customer needs.
The critical KPI
Order fulfilment rates can be a key metric to gauge operational health, contrasting orders placed with those successfully sent off.
This comparison paints a vivid picture, especially since the industry standard is around 70% to 80%.
This figure speaks volumes about missed opportunities and customer dissatisfaction.
The struggle with identifying the correct parts only increases these challenges, driving customers to seek alternatives, a situation no business wants to find itself in.
Frustrated parts staff, dealers and customers
It's pretty common to see the industry treating the supportability of products as an afterthought.
Only after getting the product out do they start thinking about what happens next, like how to order a spare part.
This approach, which focuses on the here and now rather than planning for the future, needs reviewing.
There’s an idea starting to take flight, about prioritising support right from the get-go and making products easier to maintain while they're still on the drawing board.
This means a new level of organization with spare parts, detailed Service Bills of Materials, and an understanding of how to sell spares months before they're needed.
It's about switching gears and being proactive, really changing the game when it comes to how we think about product design and support.
The old way of handling customer parts purchases adds unnecessary complexity for both the customer and the OEMs.
By integrating supportability into the design and production from the start, businesses can create a smoother aftersales experience.
An evolving customer experience
The customer experience (CX) is now, more than ever, a critical factor in business success.
It's interesting to note that it can even trump the quality of the product itself!
When a product doesn’t meet expectations, customers quickly become frustrated, often turning to non-OEM providers online, which can hit both your revenue and brand loyalty hard.
Marketing champions
The push for exceptional customer experience is really spotlighting the roles of Chief Marketing Officers and Heads of Marketing within manufacturing businesses.
They're all about using aftersales services to keep the digital conversation going with customers throughout the entire life of a product.
This strategy is clever, not just for boosting brand loyalty, but also for turning one-time buyers into regulars.
The customer journey today stretches way beyond the initial purchase.
It encompasses the entire lifecycle of the product, and that's where brands face their biggest challenges, especially if a product doesn't meet expectations.
This shift is crucial for brands focused on strengthening customer relationships and encouraging repeat business with their go-to-market (GTM) strategies.
The D2C hybrid model
There's an interesting shift happening with OEMs where yhey're moving towards a hybrid model that minimizes reliance on dealers for ordering spare parts.
They're looking to sell directly to the consumers (D2C), particularly in areas where dealers are few and far between.
If an OEM based in Europe aimed to broaden its reach in South America, with global shipping, platforms like Partful could easily serve customers directly, even in the absence of a local dealership network.
This isn't just good for boosting revenue by cutting out dealer discounts and markups, but it also meets the modern consumer's desire for direct interactions with brands.
The innovators leading the change
Both established brands and startups are really getting into these exciting new trends, focused on global outreach and harnessing the power of innovation.
Established OEMs
Well-known companies with complex machinery are aiming to broaden their global reach.
They're open to embracing a bit of change and stepping into the innovative currents flowing through the manufacturing industry.
Startups
Then you’ve got start-up companies that haven't set up their dealer networks yet.
They're usually too pressed for time or short on resources to go big GTM in 30 countries.
With a new approach to aftersales, they're now launching new products across multiple countries, all in the span of a single year!
For these start-ups, digital technology is enabling them to expand globally at an incredible pace and completely transforming the way products are launched and supported all around the world.
The digital renaissance in aftersales
The days of navigating through hefty parts catalogs and the reluctance to share detailed product information with customers are long gone.
Now, it's all about being transparent and providing easy access to support and parts documentation, meeting the modern customer's expectations for openness.
We're seeing a major shift in how OEMs approach aftersales support, engaging more with customers, and adopting direct-to-consumer models.
This change isn't just for show – it’s creating real opportunities for increased revenue and stronger brand loyalty.
In today's rapidly changing marketplace, embracing technology and focusing on innovating the customer experience and product maintainability are crucial for staying competitive.
Whether you're a startup gearing up for global expansion or an established brand looking to refresh your aftersales approach, the landscape is filled with opportunities.
There's never been a better time for those willing to adapt and take the lead.
Want to learn more about the experiences users have with OEMs and discover why a smooth after sales journey is the key to keeping customers happy? Listen to Episode 2 of our Podcast, “The Pains of After Sales Customers”
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