Aftermarkets - spare parts, repairs, technical support and so on - can be five times bigger than the original equipment business in industries such as cars, white goods and IT.

by Harvard Business Review
Last Updated: 23 Jul 2013

Such services are also high-margin and a source of high customer loyalty. But most businesses treat the aftermarket as an afterthought.

It is notoriously difficult to manage: poor coordination leads to unnecessary delays and dissatisfied customers, while inventory management is complex.

But focusing on after-sales can have strategic pay-offs: it's cheaper to increase sales of parts and service-related products than to find new customers.

A six-step approach is suggested for improving service quality, reducing investments in service assets, and cutting operating costs. Companies should: identify which products they want to support; create a portfolio of service products; use multiple business models; modify after-sales organisational structures; design and manage an after-sales services supply chain; and monitor performance continuously.

Winning in the aftermarket
Morris A Cohen, Narendra Agrawal and Vipul Agrawal, Harvard Business
Review, May 2006.

Reviewed by Steve Lodge.

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