Manufacturing Tomorrow


How Discrete Manufacturers Can Build An Effective After-Sale Revenue Stream

Feb 28, 2017
Manufacturing and Distribution


Any discrete manufacturer will tell you that it’s getting tougher and tougher to stand out to prospects and customers in meaningful ways. And with all the competition, it’s also getting tougher to hold on to expected margins. There are a number of ways to differentiate, with innovating being primary among them. But that’s a challenge given the pace at which most manufacturers are working just to keep up with orders.

Innovation is the lifeblood of any organization, but there’s another way to become invaluable to customers, and one that also contributes to your innovation efforts.

How the Internet of Things (IoT) Makes After-Sale Revenue Possible

Technology is making it possible for manufacturers to create an entirely new revenue stream—one that happens after the product is sold. Today, selling your product to a customer can be just the beginning of an ongoing, mutually beneficial relationship when you establish a robust after-sale subscription-based service program using Internet of Things (IoT) tools. With the IoT, you differentiate and deliver greater value using data that helps you understand maintenance requirements, new product opportunities, and product improvement needs.

In an article titled “How IoT Can Improve After-Sale Performance,” we discussed how the IoT can give manufacturers a clear picture of customers’ equipment maintenance needs by monitoring and measuring equipment and user behaviors, usage patterns, performance, and other metrics. By collecting all the data generated by connected devices, manufacturers have the information to develop informed service timing and replacement recommendations for their customers, and offer suggestions for product and service pairings. Manufacturers aren’t typically seen as consultants, but when you understand customers’ patterns and needs, you have the information you can use to help them improve their processes and operations.

Here are some scenarios in which IoT data and a subscription-based service program could help discrete manufacturers overcome some of the challenges their customers face:
What do you think will happen when a customer experiences problems with your product? Very likely, the next opportunity the customer has to switch to a competitor’s product, they will. On the other hand, with a program in place that makes it possible to proactively service that product, you’re ensuring optimum performance and extending the life cycle of the product—a value that greatly reduces product performance issues and creates real customer loyalty.
A strong aftermarket service management program also breaks down barriers to new product acceptance. If you introduce a new product to a customer who’s already part of your service program and realize its benefits, even the most risk-averse will be less hesitant to adopt what you’re offering because you’ve demonstrated the level of support you’ll provide after the sale.
Part of what you promise customers is a quality product that performs to expectations. All products experience issues at one time or another, but if your service program helps eliminate problems and deals swiftly with those they experience, you reinforce your quality position.
Trying to innovate in a way that directly addresses customer needs is difficult, if not impossible, without good information. With an IoT-powered service program, the data leads to insights into how customers are using your product and issues they might be having with it; this information is the basis of innovation aligned with actual needs.

In a report published by International Data Corporation (IDC), a global provider of market intelligence for the information technology, telecommunications, and consumer technology markets, manufacturers can expect to capture upwards of 30 percent of their revenue from service and service-based product strategies in the future. If you don’t have one in place, Wipfli’s manufacturing team can help you put together a smart, well-articulated, after-sales service approach that helps ensure the value you deliver, generate new revenue and keep competitors at bay.

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