Why Manufacturers are Deploying Aftermarket Strategies to Drive Revenue and Reduce Risk

Many manufacturers are expanding their operations with aftermarket products and services, and not only as a way to better serve their customers. In the wake of extended supply chain disruption, businesses need new strategies for revenue generation and risk reduction. Scaling aftermarket products and services fit the bill for both concerns, especially in times of reduced demand for new equipment orders and capital spending.

What Are Aftermarket Products and Services?

Manufacturers that deploy aftermarket growth strategies provide product deployment and maintenance support, customisation or enhancement of existing innovations, spare parts, and other value-added offerings. At Pivot UK, we are a one-source, global product development firm and manufacturing partner with DFM expertise that spans fourteen industries and 320,000 square feet of production capability. Our portfolio includes nine subsidiaries and a diverse suite of capabilities and product solutions, including aftermarket specialisation. Castle Creations, our US-based subsidiary, is our aftermarket specialist in low-weight, high-power, brushless DC motors and ESCs with highly configurable firmware. Castle is an industry leader for industrial, commercial, and hobbyist markets that distinguishes itself from its competitors with state-of-the-art innovation and reputation-defining product support. Castle’s small yet powerful motor-control solutions can be found across a wealth of applications, including:

• Large, autonomous, submersible ships used with Navy Seals that can rapidly submerge and quickly reappear.
• Temperature-controlled suits that enable military personnel to withstand intense heat exposure while diffusing bombs. These suits are also used by NASCAR competitors.
• Small, autonomous drone boats that perform harbour security routines with embedded cameras that report on ship traffic.
• Firefighting helicopters that can refill their tanks without landing that feature one of Castle’s highest-performance brushless motors. (The motor includes double shaft seals, reinforced aluminium housing, and integrated Electronic Speed Control (ESC), making it compact and easy to operate.)
• Impact Wrenches for servicing utility poles or wind turbines with up to 12,000 lbs of torque. (A Home Depot wrench tops out at 150-300 lbs.)
• A Diver Propulsion Vehicle (DPV) that enhances underwater exploration via motorised propulsion and can travel at speeds up to 4 miles per hour.
• RC vehicles powered by Castle’s breakthrough technology, CRYO-DRIVE™, which combines motor-supporting sensors and data logging to create the Copperhead 10 Performance ESC.

Why More Manufacturers are Offering Aftermarket Products and Services

Revenue share from new product sales has been in decline. In global markets, new equipment sales often have lower margins than those of aftermarket products and services. As companies struggle to recover from pandemic-related disruption, many are reducing their investment in new industrial equipment. Moreover, evolving customer expectations, sales fluctuations, market maturity, and pricing pressures each pose ongoing risks to manufacturers’ bottom lines, as well as revenue-generating opportunities. For example, a shift is being driven by increased customer demand for service-level agreements. These agreements ensure and extend a product’s service life by providing proactive service and maintenance. But these services come at a premium, and herein lies aftermarket’s revenue-generating potential.

Considerations for Deploying Aftermarket Strategies

Aftermarket products and services are poised to play a more central and stabilising role in the industrial business mix. Manufacturers can take advantage of the rising demand for service-level agreements by rethinking the terms of their customer base and channels. Manufacturers seeking to deploy aftermarket strategies should consider:

• How aftermarket strategies can provide protection from various forms of disruption.
• How digitisation can enhance these strategies.
• How their business model must be reimagined with a focus on value-added offerings.
• How they can surmount common aftermarket challenges.

In prior economic downturns, aftermarket strategies have often proven to be a profit stabiliser and reliable source of revenue. There is good evidence that manufacturers who put a premium on value-added offerings routinely outperform their competition and overcome crises even stronger. And during lean times and periods of abundance alike, manufacturers that skillfully deploy aftermarket strategies for expanding their customer base can further differentiate their service offerings, earn greater customer loyalty, and enhance their market position.

Looking for a Proven NPD and Manufacturing Partner?

If you’re gearing up to launch a new product, Pivot delivers more than 50 years of experience helping clients turn innovative ideas into successful market realities. With a highly collaborative approach to doing business, the latest digital technologies, and end-to-end expertise that takes your product from proof-of-concept to distribution, we’re the partner you’ve been looking for.

If you’d like to learn more about how we can help you successfully scale, contact us today for a complimentary consultation.