Many manufacturers are “product-driven” organizations, focusing on profitably producing the best products possible. But the smart money is on “experience-driven” firms that offer both OE and aftermarket products and services. They’re selling a solution, not just a component. The classic example is HP: their margins are razor-thin on printers, but they enjoy a recurring revenue stream from their highly profitable inks.  In fact, Deloitte has shown that aftermarket operations deliver 75% greater profitability than manufacturing operations. These are numbers we all can love.

But transitioning from a product-driven to an experience-driven firm is fraught with challenges. For example, incorporating new technologies (often software-driven) takes many manufacturers outside their comfort zone. Just look at how Ford’s customer satisfaction has taken a beating thanks to its MyTouch system.

Further, customer service networks are notoriously difficult to build, and customers can be unforgiving. To wit, McKinsey research has shown that for telecomm companies, a customer’s willingness to recommend the firm precipitously drops the longer (in seconds!) that it takes a customer service representative to answer a service call.

In our membership, we’ve seen some great examples of manufacturers transitioning from component suppliers to providers of systems, and solutions. Whether it be Power by the Hour in aerospace, or Remote Monitoring in automation, the best manufacturers offer their customers comprehensive solutions that allow them to deliver a total customer experience.