A few years back spare parts were not that important (revenue-wise), but in the current scenario, Original Equipment Manufacturers (OEMs), can’t neglect the role of aftermarket sales in their business. In fact, these sales significantly contribute to more revenue than sales of original parts.
How to create an OEM spare parts sales strategy?
To put it in a nutshell, the aftermarket is not an afterthought anymore! OEMs need to find opportunities and the effect of part sales on their business revenue. However, the tricky part is to adopt a sales plan to make sure that authorized dealers and end-customers purchase OEM spare parts to make the most out of it.
Pricing plays a key role
OEMS generally buy larger quantities of purchased parts, which gives them excellent purchase prices and discounts. Selling prices of those spare parts are usually set at standard markups based on purchase costs. That is why they are sometimes considerably lower than those of third-party suppliers.
OEMs have thousands of parts in their portfolio, and it is a huge challenge to maintain updated pricing as the markets constantly change, with new parts being added to it. It is critical to figure out which parts are currently underpriced. There are several indicators, such as the frequency and degree of price increases, as well as sales volume for OEM spare parts and associated profit rates. With high inflation rates and cost increases due to volatile supply chains, price changes are a constant phenomenon. Third-party suppliers are increasing prices for spare parts at a rapid pace. It is therefore essential for engineering companies to keep up with these price trends and not lose sales and increase margins.
Automation is must
Pricing a large number of spare parts can be tedious, complex, and time-consuming as well, especially if you factor in unstable supply chains, dynamic markets, and increasing competition. To raise prices on underpriced and exclusive parts, automated market intelligence is a must. Identify lost revenue potential related to underpriced and exclusive spare parts. Review your portfolio and study market information and pricing data of competitors.
OEMs must constantly monitor and respond to competitor price changes. According to a recent report, market prices for more than 50% of purchased parts change significantly over a three-month period. Increasing prices of underpriced parts can be an effective, low-risk strategy to boost sales and profits on spare parts. OEM spare parts sales strategy involves using market research tools, while automating and streamlining processes. Automating market research and using that information to price parts can improve revenue for undervalued and exclusive parts.
Customer-centric outlook
It is important for OEMs to build a loyal customer base by offering remarkable service and focusing on true value for money. There should be no compromise when it comes to quality, because every time an end-customer must replace equipment, OEMs face the risk of losing that customer to a competitor. If the spare parts are first-rate, then customer loyalty is a done deal. OEMs need to find balance between over-durable and unreliable equipment for increasing sales. Providing equipment at discounted prices and extended service warranties are two other techniques that work wonders. Remember, end-customers always have the option to turn to third-party suppliers, so OEMs must lock their existing customer base by giving them the option of choosing spare parts conveniently. It is necessary to offer quality assurance, competitive pricing, warranty, and stellar after-sales services.
A well-managed OEM spare parts sales strategy will not only help to improve revenue and increase profits, but also boost brand image. OEMs must perfect the parts management aspect, by monitoring inventory, parts sold, and parts required by dealers in future.
