The service you already deliver and never invoice.
The service you already deliver and never invoice.
There is a version of aftermarket leakage that has nothing to do with competitors. At a €3 billion specialty chemicals company, people were on customer sites constantly, advising on dosing, troubleshooting, running trials, training operators. Real service work. None of it appeared as a line on any invoice.
It was bundled into the price of the chemical, which meant it had no price, no volume, no margin and no owner. One of that company's own customers described the arrangement from the other side, approvingly:
We buy the functionality of the product as a bundle: the materials, the service, and other instructions.Category Director, global forest products group
That is a satisfied customer describing a business that cannot grow its service revenue, because it does not have any. Not zero service, zero service revenue. The distinction is the whole problem.
“We were never offered it”
The most uncomfortable finding we have produced on this subject came from a global marine cargo-handling manufacturer, where we interviewed customers about why they did not buy more service. The answers were not about price, and they were not about the competition. Repeatedly, customers said they had never been offered a service agreement. Not declined one. Not compared one. Never seen one.
What customers actually complain about
Share of customers raising each issue, ranked. Eight of twelve shown.
The same picture emerged from the account managers' side. Across a broader interview base at an industrial OEM, the highest-severity bottlenecks in an account manager's week were quotation follow-up, coordinating the technical team, and answering customer technical enquiries, all necessary, all reactive, and all consuming precisely the hours proactive selling would need. Aftermarket “sales” in most OEMs is not a sales function. It is a customer service function with a revenue target attached.
What the diary costs
Sales opportunity released by reducing time lost to process bottlenecks, for a single division.
| Reduction in time lost | Additional RFQs won | Annual sales opportunity |
|---|---|---|
| 10% | 859 | €4.32m |
| 20% | 1,717 | €8.65m |
| 30% | 2,576 | €12.97m |
At a separate €2 billion industrial OEM, the absence of systematic proactive follow-up was costing an estimated €30 million of aftermarket revenue annually.
The cheapest fix we have ever quantified
While mapping that same marine business, we looked at what happened after a service engineer completed an inspection and wrote a report recommending work.
One extra column on the report
Rate at which customers ordered the recommended parts.
An engineer who has been inside the machine, with the customer's own equipment in front of him, is the most credible salesperson the OEM has. He is also almost never compensated, targeted or trained as one.
Why the giveaway is structural, not sloppy
It would be easy to read all of this as an execution failure. It is not, or at least not mainly. Four mechanisms produce it reliably in well-run companies.
- Service investment loses internal competitions it should win. Inside a product business unit, a service proposal is judged against new product development on equipment's payback logic, bigger headline numbers, clearer sponsors. It loses systematically, even when its risk-adjusted return is higher.
- Nobody knows what service actually earns. Where parts move at internal transfer prices and field overhead is shared, service margin is a matter of allocation policy rather than fact. Roughly 28% of OEMs report a separate P&L for services at all.
- And it does get traded away. Deal teams carrying equipment-volume incentives will discount the service agreement to close the machine sale. It is the rational move: the give-away lands in a future period, in a different cost centre, against someone else's target.
- The operating rhythms are incompatible. Equipment is low-frequency, high-value and project-governed. Service is high-frequency, low-value, local and labour-constrained. One management system will not run both well.
The metric that would fix most of this
If we had to name one number to install, it would not be aftermarket share of revenue. Aftermarket share is a badly behaved KPI: it falls when equipment booms and rises when equipment collapses, so an OEM managing to a share target is whipsawed by the cycle it is trying to hedge. We have watched a major mining OEM's aftermarket share drop several points in a year in which its service business grew.
Attachment rate is half the prize
Share of aftermarket lifetime value attributable to each lever.
The uncomfortable arithmetic: direct sales channels typically attach service at 70–100%, while indirect channels attach at 30–50%.
Which makes it a channel question
An attachment rate that halves the moment a partner is involved is not a training problem. It is a question about who owns the customer relationship at the moment the machine is sold, and for almost every OEM, the answer involves partners it does not control.
That is where most OEMs discover that reach, not intent, is what limits them. It is the subject of part three.
SprintlyWorks runs eight-to-ten week sprints for industrial OEMs on installed base visibility, aftermarket capture and service channel design. The interview base and the time model behind this article were built inside client engagements, and handed over with them.
Part three, on reach you do not own, follows.
