Like with just about every industry, the Coronavirus disease (COVID-19) pandemic has proven to be a disruptive force in the manufacturing and durable goods this year. With new orders stumbling along and margins tighter than ever, many original equipment manufacturers (OEMs) are having to make very difficult decisions to remain financially stable.
This has made navigating the holiday season -- a time when OEMs and part shops typically offer discounts to drive sales -- a challenging proposition for many OEMs already struggling with liquidity issues.
So, what can be done to help OEMs and part shops make the most of this holiday season without inflicting greater financial harm on themselves and sacrificing their longer-term KPIs? Here are three things to help navigate the holiday season and strike the perfect balance between appealing to consumers and long-term financial security.
Make data intelligence a staple in commerce
Today, agility and adaptability are arguably the most important features of driving commerce transactions. This means trading in unscientific methods pricing and inventory management for more sophisticated, data-driven tools. OEMs must prioritize data-driven insights so they can gain visibility into inventory and pricing operations, and tailor their strategies as a result. For example, with a “data-first” approach to commerce, OEMs and part shops can dynamically analyze supply and demand, as well as competitor movements to adapt to local market conditions, tweak prices for underpriced items, uncover opportunities to drive sales and more. Simply put, OEMs that don’t leverage their data capabilities to the fullest run the risk of missing out on a significant amount of business.
Prioritize customer service and loyalty
The aftermarket industry presents a huge opportunity for OEMs, dealerships and parts shops as it has an operating margin more than double that of new equipment sales. That makes it a very competitive marketplace to work within. And, while pricing is a big part of driving sales, OEMs can only cut prices so far -- especially now -- and it may not be a fit for KPIs.
As such, differentiation needs to move beyond just simple “dollars and cents,” and customer service can be key in helping OEMs separate themselves from the pack. For example, a great customer service experience can lead to a long-term relationship with customers that will drive repeat business for years to come. Moreover, by developing customer loyalty, brands stand to grow referral rates among customers significantly broadening out their potential client base.
Making the most of POS
Point-of-sale (POS) is a key junction where customer experience and data intelligence merge. Yet at many dealers and part shops, it remains little more than a checkout line. POS allows dealers and part shops to drive personalized service and integrate advanced tools such as retail inventory management (RIM) to gain on the ground, immediate insights into sales and inventory data. Additionally, RIM allows them to automate replenishment and gain key insights about popular products at a given store location. In turn, this allows for a better customer experience as end-customers know what is likely in stock at a local store location without even having to check online.
Margins this holiday season with the manufacturing and aftersales industry are as tight as they have ever been. However, by embracing a comprehensive strategy that focuses on price promotions -- as well as customer experience and data-driven strategies -- OEMs, their dealers and part shops can navigate the hectic holiday season and 2021 more efficiently and effectively than ever before.