TL;DR
- Every customer matters, not just your top ones
- Today’s customer expects to be served in a personalized way
- The dichotomy of being able to personalize experience WHILE being able to do so at scale is difficult
- Other industries have shown it is possible with data & analytics
- The OEMs that achieve this goal will reap market-beating returns
- This needs to be a top 5 priority on the CEO’s agenda
- Bonus tip: Appoint a Chief Installed Base Officer and equip them to drive the transformation
Over the past few months, I have published a number of articles that seem to have struck a chord with readers on LinkedIn: how the Aftermarket was too important to be left to Aftermarketers; about how it was hard to have 100% installed base coverage at scale and about my belief that there needs to be a new leadership role in OEMs. These articles got a large number of views, comments, and direct messages to me from people far and wide which led me to wonder – what was it about these articles that elicited this response?
Based on the comments, it is clear that I gave voice to the ideas that were present in the minds of the readers. That each customer is different, and a one-size-fits-all approach simply doesn’t work in most industrial situations. That the people on the ground are striving to provide personalized service, but it simply doesn’t scale. Customer-facing teams know this, and try their best to make it work within the constraints of their operating parameters.
My point of view is that every customer matters. Not just the top 20%15% or the number of your choice. They matter because, in the face of fierce competition, the OEM’s biggest customers are also their least profitable. And they matter because you never know which customer is going to leave you over misaligned expectations and service.
In today’s world, customers are digital-first, seeking a top-notch experience- and they aren’t shy about expressing their opinions loudly, publicly, and socially. News about unhappy customers spreads quickly and widely.
Top customers may be detrimental to growth and profitability due to their higher leverage over Industrials
The Rise of Social Media Platforms are Putting Pressure
The rise of social media platforms, rating sites, and other social media tools are really putting pressure on OEMs to pay attention to customers large and small because the fallout from any service/experience misstep is extraordinarily high. Power has shifted to customers like never before, and the OEM that realizes this before others, establishes broad and deep relationships with customers, and builds a repeatable, scalable engine to “leave no customer behind” is going to win.
More importantly, the consumerization of B2B experiences has led to expectations that OEMs really know their customers well, anticipate their needs and requirements, and pre-empt these with stellar service. Amazon, Uber, Yelp…you name it, they all have embedded these expectations into the fabric of our society and these are bleeding over into B2B buying as well.
But most OEMs aren’t set up for success in this new environment. They have been operating under rules and constraints from times when resources were scarce, the world wasn’t flat, and a one-number-fits-all approach worked. The way OEMs solved this was by focusing on their top customers. This approach made perfect sense in the environment described above. Pareto’s Law made sense when you couldn’t connect with your “long tail” of customers. As my colleague Rob Bradenham wrote on LinkedIn recently, the rise of AI/ML may have effectively ended Pareto’s stranglehold on prioritization by making the “cost of search and discovery” of an OEM’s Installed Base an order of magnitude less expensive than in the past.
New Opportunities for Industrial OEMs
With new capabilities come new opportunities. If you can identify and anticipate the needs of your “not top 20%” customers at scale, then you can also start crafting bespoke solutions that fit their specific needs. In other words, you can create account plans at scale. As one of our customers recently said to us, “The extreme visibility and recommendations give us personalization capability we never could imagine before”.
We have seen our customers benefit from this approach in many ways, the most common being replacing the “spray and pray” marketing and sales approach with a timely and targeted Aftermarket strategy that 1) reducing cost, 2) increasing customer retention 3) increasing transaction size and finally 4) increasing consistency of engagement with customers.
The old adage “What you can’t measure, you can’t manage/improve” still rings true to this day. What’s the best way to measure something – have someone be accountable for it. The same applies to installed base data & installed base initiatives. I come across several folks in the industry who are exclusively dedicated to this craft – they are bridging the gap between business & IT, connecting systems & tools that hold installed base data, running analytics to derive real-time insights. These folks belong to aftermarket, service, sales, IT, and often sales enablement functions. So here’s my suggestion – give them visibility, give them the tools they need and carve out a niche function called the Installed Base Office. The individual heading that office would by extension be referred to as the Chief Installed Base Officer.
OEMs by nature are cautious adopters of technology. The perceived risks of making a bad decision far outweigh the benefits of a good decision. However, in this instance, adopting modern personalization technologies built on AI/ML is the least risky decision they can make. Unless they want to follow the path taken by Blockbuster, retailers, taxi services, and others.