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Evaluating Aftermarket Performance – Importance & Steps

In this untapped and evolving Industrial landscape, aftermarket plays a crucial role in driving revenue growth and enhancing customer satisfaction. The main objective of any business is to cater to its customers, as they are more likely to support those businesses that have provided them with excellent service and seamless experience. By comprehending customer needs, prioritizing aftermarket sales, and executing strategies proficiently, Industrials can increase their service revenue by 30 to 60 percent within three to five years (McKinsey & Company, 2019).

To enhance aftermarket performance, Industrials must assess the current state of their aftermarket operations, identify Key Performance Indicators (KPIs), and analyze data and metrics. By doing so, Industrials can gain valuable insights into their performance and enhance the effectiveness of their true potential. In this blog, we delve deeper into the steps that can help Industrials to unlock the potential of their aftermarket.

IMPORTANCE OF EVALUATING AFTERMARKET PERFORMANCE

Assessing aftermarket performance is crucial in the evolving Industrial landscape for several reasons-

  1. It allows businesses to meet customer demands and enhance satisfaction, which in turn drives revenue growth and builds customer loyalty. 
  2. By evaluating performance, original equipment manufacturers (OEMs) can ensure they are delivering excellent service and a seamless experience, which are key factors for customers when choosing a business to support. 
  3. Assessing performance enables OEMs to maximize profitability by identifying areas of improvement and implementing effective strategies. 
  4. It helps them stay ahead of the competition by understanding customer needs, prioritizing sales, and making informed decisions based on data and insights. 

By embracing data-driven strategies and regularly measuring after-sales performance, Industrials can unlock its full potential and achieve long-term success in meeting customer demands.

STEPS TO EVALUATE AFTERMARKET PERFORMANCE

Assessing the Current State of Aftermarket Operations

Before evaluating aftermarket performance, it’s crucial to have. a clear understanding of the current state of your after-sales operations. This assessment involves examining various aspects of your after-sales, inventory management, order fulfillment, and customer satisfaction. Evaluate the efficiency of your processes, identify bottlenecks, and determine the areas of improvement. This analysis serves as a foundation for developing effective strategies and setting realistic goals for your aftermarket performance. 

Identifying Key Performance Indicators (KPIs) for Benchmarking

Once you have assessed your After-sales Operation, it’s time to identify the key performance indicators (KPIs), that will help you to measure your progress and benchmark your aftermarket performance against the Industry standards. KPIs vary depending on your specific aftermarket business, but some common metrics to consider include:

1. Customer Satisfaction

Measure customer feedback, ratings, and reviews to gauge satisfaction levels. Consider factors such as response time, problem resolution, and overall customer experience.

2. Fill Rate

Evaluate your ability to meet customer demands. A high fill rate ensures the customer receives the right products or services on time, leading to customer loyalty and satisfaction.

3. Return Rate

Track the number of returns and analyze the reason behind them. A high number of returns indicates product quality issues, poor customer support, and mismatches between customer expectations and delivered value.

4. Service Level Agreement (SLA) Compliance

If you offer your service or warranties, track your compliance with SLA. This KPI helps measure your ability to meet agreed-upon service response times and resolution targets.

5. Service Contract Renewal Rate

Measure the percentage of customers who renew their service contract. A higher percentage indicates customer satisfaction and value delivered through after-sales service.

Analyzing Data and Metrics to Measure Aftermarket Success

Data analysis is a crucial step in evaluating aftermarket performance. By leveraging data one can valuable insights into customer behavior, market trends, and operational efficiency. Consider the following strategies to analyze your after-sales data effectively: 

1. Data Collection and Integration

Collect data from various sources including sales transactions, customer interaction, and feedback channels. Integrate the data received from various platforms such as ERP, CRM etc, to get a comprehensive view of your after-sales operations.

2. Data Visualization

Use data visualization tools to create meaningful dashboards and reports. Visual representation of data makes it easier to identify trends, patterns, and areas that require attention. Interactive dashboards provide valuable insights and help in decision-making.

3. Comparative Analysis

Compare your KPIs with historical data, Industry standards, and competitor performance. Identify areas to improve and set realistic goals for your after-sales operations. This analysis enables you to measure progress and make data-driven decisions.

4. Root Cause Analysis

When encountering performance issues or deviation from the target, conduct a root cause analysis. Identify the underlying factors contributing to the problems and take corrective measures to resolve them. This analysis will address the root cause of the problem rather than just the symptoms.

Evaluation of an Aftermarket performance is an ongoing process that requires careful assessment, identifying KPIs, and data analysis. By investing time and resources in these steps you can gain valuable insights into your after-sales operations, make data-driven and informed decisions, and can unlock the full potential of your aftermarket. Continuous improvement and adaptation to the changing market dynamics are crucial to maintaining a competitive edge in the aftermarket arena. Also, If you are prepared to revolutionize your aftermarket business you should attend our webinar ‘Assess your Aftermarket Maturity’ featuring Vivek Joshi, CEO, of Entytle, where he will talk about “Aftermarket Maturity” and how Industrial OEMs can know if they are ready to transform their Aftermarket operations.

 

 

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