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.