Executive Briefings

Aftermarket Sales Have Been an Afterthought for Too Long, Study Suggests

The aftermarket has long been just an afterthought to the sales and marketing processes, but today more and more OEMs have finally begun to realize its strategic importance as a competitive differentiator.

This trend has also been confirmed in a joint study carried out by Deloitte and arvato, whose branding includes the lower-case spelling. The results were definitive; the continued success of high-tech companies requires new pioneering approaches to the aftermarket focusing not only on cost savings, but increasingly more so on customer satisfaction.

Arvato, an outsourcing provider for logistics and aftermarket services, and Deloitte recently teamed up to assess the status as well as future priorities of the aftermarket and reverse logistics strategies of high-tech manufacturers. The study involved extensive personal interviews with executives at 25 global high-tech companies.

The most frequently mentioned trend in after-sales and reverse logistics (24 percent of interviewees) concerned replacements or swap instead of repair, driven by declining product prices in consumer electronics together with increasing transportation and processing costs for repair. Another broad trend highlighted in the report is the rising importance of social media in after-sales strategies, including using user-communities, Facebook and Twitter to perform first-level support tasks. Changing consumer behaviour was also highlighted as increased device usage, interconnectivity and higher user dependency are all making the returns and repair processes a more involved and urgent event for end users.

The most common pain points highlighted were the setting up and managing of aftermarket and reverse logistics operations in emerging markets and the increasing challenge of providing fast and efficient delivery of spare parts globally.

Significantly, the report also revealed that while in past years cost efficiencies were the most important objective in after-sales strategies, this has now been replaced by customer satisfaction as a main objective.

The study found that high-tech companies are increasing their efforts in e-channel solutions and social media in order to further improve and integrate customer interaction and to help them gain greater control of the returns process as early as possible. Additionally the report highlights the fact that cross-selling and up-selling opportunities can provide a major revenue driver for OEMs. However, many lack the capabilities to take advantage of those opportunities with current channel conflicts also helping to keep them out of focus.

The report found that the best-in-class aftermarket operations are those that enjoy a high level of IT systems integration within their organisations' after-sales value chain resulting in end-to-end process transparency, optimisation and efficiencies.

"The study results are consistent with our experience," says Marcus Karten, vice president of global business development at arvato.

Wolfgang Kurz, manager of Deloitte Consulting, says: "The survey revealed how customer satisfaction and total cost of ownership can be improved at the same time - if all elements from first customer contact through to returns qualification and filtering to reverse logistics and remarketing are fully streamlined and integrated."

The report is free and available for download, click here.

Source: arvato AG

This trend has also been confirmed in a joint study carried out by Deloitte and arvato, whose branding includes the lower-case spelling. The results were definitive; the continued success of high-tech companies requires new pioneering approaches to the aftermarket focusing not only on cost savings, but increasingly more so on customer satisfaction.

Arvato, an outsourcing provider for logistics and aftermarket services, and Deloitte recently teamed up to assess the status as well as future priorities of the aftermarket and reverse logistics strategies of high-tech manufacturers. The study involved extensive personal interviews with executives at 25 global high-tech companies.

The most frequently mentioned trend in after-sales and reverse logistics (24 percent of interviewees) concerned replacements or swap instead of repair, driven by declining product prices in consumer electronics together with increasing transportation and processing costs for repair. Another broad trend highlighted in the report is the rising importance of social media in after-sales strategies, including using user-communities, Facebook and Twitter to perform first-level support tasks. Changing consumer behaviour was also highlighted as increased device usage, interconnectivity and higher user dependency are all making the returns and repair processes a more involved and urgent event for end users.

The most common pain points highlighted were the setting up and managing of aftermarket and reverse logistics operations in emerging markets and the increasing challenge of providing fast and efficient delivery of spare parts globally.

Significantly, the report also revealed that while in past years cost efficiencies were the most important objective in after-sales strategies, this has now been replaced by customer satisfaction as a main objective.

The study found that high-tech companies are increasing their efforts in e-channel solutions and social media in order to further improve and integrate customer interaction and to help them gain greater control of the returns process as early as possible. Additionally the report highlights the fact that cross-selling and up-selling opportunities can provide a major revenue driver for OEMs. However, many lack the capabilities to take advantage of those opportunities with current channel conflicts also helping to keep them out of focus.

The report found that the best-in-class aftermarket operations are those that enjoy a high level of IT systems integration within their organisations' after-sales value chain resulting in end-to-end process transparency, optimisation and efficiencies.

"The study results are consistent with our experience," says Marcus Karten, vice president of global business development at arvato.

Wolfgang Kurz, manager of Deloitte Consulting, says: "The survey revealed how customer satisfaction and total cost of ownership can be improved at the same time - if all elements from first customer contact through to returns qualification and filtering to reverse logistics and remarketing are fully streamlined and integrated."

The report is free and available for download, click here.

Source: arvato AG