Aftermarket sales have the potential to drastically expand your business, but only if your customers are committed to working with your brand alone. With increased competition, more extensive procurement processes, and higher service expectations, many manufacturers are finding it difficult to keep customers coming back.
Author Nick Saraev
Photo: Freepik
Göran Olson, the director of service, business, and strategy at Marel, shared his strategies for boosting customer loyalty at our recent Spare Parts Business Platform. By centering loyalty, you can turn a one-time sale into a continual partnership.
The Value of Aftermarket Loyalty
The entire product sales cycle can take roughly one year. If this is the only time you work alongside your clients, you could wait ten or twenty years before making another sale. This makes it exceedingly difficult to maintain relationships with customers and leaves a lot of potential revenue on the table for other companies to take.
If you become the preferred service partner throughout the product life cycle, you stay connected to the client and show your value consistently. This requires a strong partnership between your sales and service teams, as you can easily pass customers back and forth without losing them to competition.
Because this growth takes place over the entire lifecycle of a product, it usually takes several years to reap the rewards of spare parts and service. However, if you are continually making your biggest customers more loyal to your business, your revenue is sure to grow.
Back to the Basics
Even large companies can sometimes forget the foundations of growth and loyalty. It can be helpful to revisit these concepts and see how they take shape in your business, especially when trying something new like focusing on spare parts.
Competitive Pricing
When you are facing a lot of competition for spare parts, a great way to differentiate your offering is with attractive prices. There’s been a huge uptick in companies that exist solely to offer spare parts. If they boast significantly lower prices than you, being an OEM won’t be enough to keep customers coming back.
Make sure you do your research and have prices that are in line with industry standards. If your prices are too high or too low, you’ll be leaving revenue behind.
Customer Support
A huge factor in customer loyalty is support. Your goal should be to have every customer leaving an interaction with your team feeling better than they came in. You can do this with
- Timely Responses – 50% of customers will reconsider working with a brand that takes too long to respond to questions
- Personalization – Modern customers are demanding omnichannel service, and personalized recommendations and support are a great way to show them you care
When clients have a positive experience with your customer service team, they are far more likely to return to you the next time they need a spare part.
Rewarding Loyalty
Customers who consistently purchase spare parts from you should be rewarded for their loyalty. This could be through a loyalty program that offers discounts or exclusive deals, or simply by acknowledging and thanking them for their continued support.
Showing appreciation for their business goes a long way in building a strong and lasting relationship with your customers.
Strategies for Building Loyalty in Aftermarket Sales
Ultimately, if you want to foster loyalty and push your spare parts sales, a single strategy won’t be enough. The reasons that clients go to competitors for aftermarket sales are vast, and the solutions must be just as varied.
Olson shared his insights on boosting loyalty in your customer base. By finding the perfect mix of these strategies and tips, you can make a huge impact on your aftermarket bottom line.
Measuring Loyalty
Understanding how loyal your customers are can be challenging. There is no surefire way to know exactly how much each client should be spending on spare parts, but you can make educated inferences and measure them against the actual revenue.
For example, you can create a baseline for what you expect each product will require in spare parts and maintenance. This should be anywhere from 4-10% of the purchase value per year, depending on the level of maintenance that needs to happen.
You can then take this number and compare it to the annual aftermarket revenue coming from each client. While it won’t necessarily show you how much money you can make in aftermarket sales, it will give you a direction to grow. If someone is spending less than you expect, find out why that is.
Value-Based Sales
Traditionally, companies sell service packages based on hours and parts. When you focus on the customer’s point of view, and the problems you can solve for them, you easily stand out from the competition.
To sell clients on the aftermarket and keep them loyal in the long run, you need to shift focus from what you’re doing to what the customer gains. How you make that happen can come after.
Commit to the Value of Your Service
One of the biggest mistakes you can make is offering service-based incentives to make a sale. If your sales team gives a customer even 10% off on service calls or spare parts, that customer will expect those discounts for the entire lifecycle of the product.
10% off for a year or two is one thing, 10% off for ten or twenty years is a massive loss of revenue. A great way to avoid these kinds of mistakes is by having a separate sales team for your aftermarket sales. Look for incentives that respect how massive your role in maintaining products will be.
Focus Your Efforts
When you are starting to push for more customer loyalty, you need to pick and choose the segments of the market you will defend. For example, Marel offers parts for
- Maintenance
- Break-Down Repair
- Consumables
Rather than splitting their focus and building loyalty for each of these segments, they zeroed in on the one they had the best value proposition for. Marel didn’t just have the parts and tools for maintenance, they also had the expertise.
As they connected with customers about service contracts and long-term commitments, they only had to sell, deliver, and track the success of one segment.
Analyze Spare Parts Use
An additional value-adding service you can offer to your customers is a routine inspection of their spare parts usage. This is especially important for large clients with several sites.
If a client is over or under-ordering spare parts, you can use that to start a conversation with them. For example, they may believe that a certain part is too expensive when coming from you when in reality they are simply ordering more than they need.
Offer Customer Training
A more creative way to encourage loyalty is by offering training sessions for your clients. If they understand your products and can use them to their full potential, they are more likely to keep buying from you.
This training can be used as an incentive for loyalty, or be a part of your onboarding process when installing new equipment.
In Conclusion
There is a lot that goes into a successful aftermarket strategy, including field service, spare parts pricing, and product support. However, the most important factor in growing your aftermarket sales is customer loyalty.
When you foster loyalty, you can trust that your biggest clients will continue to bring in revenue for years to come.
