Why an e-commerce capability is essential to your aftermarket growth strategy
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When planning a digital transformation for your business, the priority is often to increase employee productivity or reduce other operating costs. Unfortunately, focusing on internal processes often bypasses the biggest impact on available costs – sales and profit growth.
Unless you have already migrated to the world of product as a service (PaaS), bot as a service (RaaS), or asset as a service (AaaS), the simplest and the least risky way to start your transformation is e-commerce.
Why get into e-commerce?
“We expect hardware to grow from about 31% of company earnings today, on average, to 23% by the end of the decade,” a recent Bain report predicted. report.
Today, in many industrial equipment companies, profit comes from services, and the largest contributor is the sale of spare parts and consumables. This makes this area a growth target.
According McKinsey & Company“The high bar that B2C giants have set for a personal and personalized customer experience is increasingly extending to B2B companies, including industrial OEMs. Therefore, to expand the potential of services, OEMs will want to improve their customer experience game.”
Customer expectations are changing rapidly. Customers expect their experiences buying parts and consumables from equipment partners to be as quick, easy and intuitive as when buying toothpaste on Amazon.
Over the past few years, the attitude of customers was that if the shopping experience from a vendor was as easy as buying from Amazon, the vendor was the best. But now, if the shopping experience is not as easy as when buying from Amazon, the supplier will be removed from consideration for future purchases.
Most non-automated coin-selling operations depend on spreadsheets, cheat sheets, and knowledgeable people. Unfortunately, the key people are those retiring, moving or rethinking their careers.
Imagine this situation
A customer has a packing machine that is not working and the input hopper is overflowing with fruit that spoils quickly. Every second the customer is on the phone with a newbie spare parts order taker feels like an eternity as the business owner or responsible person keeps walking past their workstation. Customer dissatisfaction is an order of magnitude worse than when the seller doesn’t pass the Amazon test, and the person on the phone feels like their job will be done before the end of the shift.
Remember that e-commerce solutions are not just about spare parts and consumables. The system should be used for everything you sell, including standard and custom products, spare parts, and services.
Why are companies hesitant to embark on an e-commerce project?
According to my friend Kristina Harrington, President and COO of GenAlpha Technologies, a provider of e-commerce solutions for industrial OEMs, the three most common reasons companies give for not moving forward on an e-commerce project are :
- They don’t think their data is ready for digital commerce and so are planning or changing their ERP software.
- Many manufacturers have built their business with the support of their dealer partners. For this reason, they believe that setting up an e-commerce site will disrupt these important relationships. (Channel conflicts.)
- Both internal customer service teams and external sales reps see e-commerce as a threat to their jobs.
According to Kristina, each of these objections can be easily overcome. For example, data should not be a reason to delay the start of a customer-facing digital solution. Manufacturers have a wealth of data available in their systems (ERP, CAD, technical publications, PIM, CRM), which, if properly organized, can be repurposed for use in a digital commerce environment. Manufacturers have invested money, time and resources in creating processes built around these systems.
It’s time to leverage this data to improve the part identification and ordering process for industrial buyers. Implementing e-commerce isn’t an event, it’s a journey, and improving data is something that will continue as this important sales channel grows.
There are many ways to get started in e-commerce. For manufacturers with dealer partners, improving the parts identification and ordering process for dealers can be the most important first step. If so, Kristina recommends starting with an e-commerce site for channel partners and large accounts, where they log in to see pricing and availability and create orders.
Make it easier to do business with you, and dealers are likely to recommend your brand over competing brands because you provide a better experience. Over time, as the business environment evolves, manufacturers and resellers can work together to open the site to end customers to meet the increased needs of online shoppers.
No company should use a new system to take money out of their partner’s pockets regarding channel partners. This is an internal issue and should never be an excuse to prevent customers from enjoying the benefits of a digital solution.
As for internal teams that view e-commerce tools as a threat, this can be easily overcome when stakeholders engage teams in the e-commerce assessment and implementation process. A good e-commerce site will make everyone’s job easier: customer service, sales and partners. Both dealers and customers increasingly want self-service capability. When they have this capability, it will offload recurring transactional activities – parts identification, price request, availability and order status – and allow everyone to work on the most complex sales challenges and opportunities. When it’s done well, everyone wins.
How can an e-commerce solution help increase service revenue?
I posed this question to Kristina, adding, “Do most parts purchases not happen because a spare part has been used to repair a unit and needs to be replaced, or there is a problem with the equipment and the end user has to purchase a part to use for the repair?” She said the ease of use of the software frequently creates new sales situations.
Here are some examples:
- On each part’s page, the company may list any special tools or instructions needed for the repair, along with a link to the tool’s page.
- The same applies to frequently purchased parts used with the main component to be purchased. For example, if the company recommends that an o-ring receive a light coating of a special lubricant, this can be explained in a note that includes a link to the lubricant page.
- Many OEMs assemble common industrial components into their equipment. These common components can also be assembled in competing brands. For example, many specialty trucks start life as standard commercial vans made by Dodge, Mercedes-Benz or Ford. The OEM then adapts them to the requirements of the end user and can even install the advertisements on the outside and the ladder racks on top. If during maintenance the end user needs a set of brake pads, they can shop around and find the OEM has the lowest price and good inventory. In this case, they can purchase all brake pads from one OEM with the e-commerce software regardless of the truck manufacturer. The OEM with the best customer experience can increase their parts market share by selling these common industrial components for competitors’ equipment.
- Here’s a reason that may be counter-intuitive: OEMs have dedicated technicians available to answer customer calls, help them decide which parts they need, and provide all pricing and availability information. Thanks to e-commerce software, the number of calls handled by these helpline people gradually decreases as customers shop online. This frees up technicians’ time and allows them to provide more in-depth help on difficult calls. The technician can discover other problems with the equipment during the troubleshooting session, and the end user can buy more parts and perform a better repair than if they were using only e-commerce.
- Finally, the most obvious reason is that sales may increase.
According to Gartner, “Manufacturing buyers want to interact with suppliers through easy-to-use online ordering capabilities, even with custom products. Some 64% say they would switch providers if the company offered personalized real-time pricing. Some want to receive estimated freight quotes, information on bulk discounts, MOQs, and customization opportunities, preferably any time of the day or night, and through multiple channels.
If your e-commerce solution impresses your customers, they will likely consider your business for products and services they have already purchased from a competitor. They can even convince you to enter new markets that you never considered.
Take away key
There’s no reason why you shouldn’t have an e-commerce site. The benefits are significant, while the reasons for not doing so can be resolved quickly. Your customers want and deserve e-commerce.
Sam Klaidman is the founder and principal advisor of Middlesex Council. It helps its B2B product manufacturer clients to increase the turnover and profitability of their services by applying the methodologies and techniques associated with the Customer Value Creation and Customer Experience businesses to support its customers in the design and the marketing of new services and the associated business transformations. Contact Sam here.
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