Aftermarket benchmarking is an essential activity if you want to grow your aftermarket business, develop your aftermarket business and avoid complacency.
In this article, we consider why benchmarking is so important before going on to discuss the difficulties that manufacturers and distributors of engineered products face in aftermarket benchmarking, as well as how to overcome them.
Why Benchmarking Is So Important
If we want to grow or develop anything, be it our own knowledge, a skill or a business capability of some kind, then knowing your starting point and where you want to get to are absolutely critical.
Without knowing your starting point, you risk wasting a lot of time and energy in developing the wrong things or developing them in the wrong way.
To illustrate what I mean, let’s take an example.
Think back to when you were studying mathematics at school.
If you had good teachers, like I did, they follow a tried and tested process of building your knowledge gradually.
Those kids that are the brightest progress faster than others, but they still follow the same approach.
I remember learning addition and subtraction, before learning multiplication and division.
I remember learning simple algebra before attempting simultaneous equations.
When I was older, I learned about trigonometry, logarithms and differential equations.
And during my final year of my pure mathematics degree, I was learning about complex calculus, algebraic topology and catastrophe theory.
The progression wasn’t easy, but it was a logical, methodical approach, teaching me more complex subjects as my knowledge and mathematical capability grew and matured.
In other words, I followed a maturity development path, just like we all do when we learn and develop anything.
The alternative of trying to learn complex calculus before we can understand fractions, percentages or complex numbers would be ridiculous.
Yet, all the time, we see businesses taking on projects or programmes to develop their business and struggling with them because they don’t have the foundational capabilities in place first.
We also see businesses spending time and resources in areas where they are weak and their competitors are stronger, while ignoring areas of strength that they could exploit much easier with better results.
We also see businesses resting on their laurels and getting complacent because they think they have their aftermarket sorted, when the truth is somewhat different.
And this is a particular issue for aftermarket because it often makes the lion’s share of the profit for modern manufacturing businesses.
That’s why aftermarket benchmarking is so important.
- It clearly establishes your existing maturity and starting point.
- It highlights your strengths and weaknesses.
- It compares your results against other comparators.
- It helps provide a clear development and growth path.
Aftermarket Benchmarking In Practice
Whilst the concept of aftermarket benchmarking is quite simple, the execution can be much more difficult.
That’s because there are a few key things you must have in place for it to be effective.
The first is to have a reliable and consistent measurement tool.
The second is to build logically from your current level of aftermarket maturity.
The third key is objectivity.
And the fourth is to perform your aftermarket benchmarking in a way that allows you to compare against other businesses or industries as well as other divisions of your own business, for example.
Let’s now look at each of these in turn so that we can better understand and overcome them.
Aftermarket Benchmarking Tool
The first key to developing your aftermarket capability is to have a reliable and consistent measurement tool.
A capability benchmarking tool provides a structured approach to exploring capability areas and capturing capability scores for assessment.
It should also provide a simple way of displaying results and capability gaps in graphical form.
And ideally, it should also provide a way of comparing a benchmark undertaken at one point in time with another taken sometime later, thus allowing progress to be measured.
Aftermarket Capability Maturity
The second key to developing your aftermarket capability, just like developing our mathematical capability, is to build logically from your current level of aftermarket maturity.
This implies that you will need an aftermarket capability maturity model.
If you don’t have an aftermarket maturity model, then you’ll need to develop one or find someone to help you, who has a model already.
Your capability model also needs to be holistic, providing maturity measures spanning all the core aftermarket capability drivers and critical aftermarket capabilities that impact performance and profitability.
The capability model that we always use within our capability assessment tool, for example, is called Aftermarket 360™, which covers 80 different aftermarket capabilities across 10 different capability areas of an aftermarket business.
Aftermarket Benchmarking Objectivity
The third key to successful aftermarket benchmarking and subsequent development is that of objectivity.
Cognitive bias is the enemy of objective decision making and comes in a variety of forms, all of which can trip up your results and scupper your benefits if not addressed.
Confirmation bias is the tendency to search for, interpret, favour and recall information in a way that confirms pre-existing beliefs or hypotheses.
Close relatives are optimism bias and its sister, pessimism bias, which are the tendency to think your capability is better or worse than it actually is.
There are many other forms of cognitive bias that can all combine to get in the way of the factual evidence and hard truth about your existing aftermarket capability.
However, remaining objective at all times and focusing on fact based decision making is extremely difficult to do by yourself or with your internal management team.
The antidote for all of this bias, of course, is not to undertake the benchmarking activity yourself but to ask an independent external organisation to undertake it for you.
Which brings me to the fourth and last key.
Aftermarket Capability Comparison
If you work for a large corporate business then it is entirely possible for you to address the three previous keys.
With an appropriate measurement tool, holistic aftermarket capability model and someone from head office or an internal consulting team bringing a large dollop of objectivity, say, then it is possible to have a good crack at aftermarket benchmarking yourself.
If all you want to do is compare one of your business divisions against another, then this can work very well and I have done this myself in the past.
But what happens when you want to compare your company benchmarks against other companies in your industry or with different industries to yours?
For that to work, you’d have to benchmark those other companies with your benchmarking tool, maturity model, etc.
What’s the chances of those other companies letting you do that?
The obvious answer to this problem is to use an independent third party that already possesses an appropriate measurement tool, aftermarket maturity model and 100% objectivity.
So ask yourself:
Are you able to measure your aftermarket maturity on your own?
Do you have access to a credible aftermarket capability measurement tool and maturity model?
Do you possess the objectivity and commercial independence to undertake your aftermarket benchmarking yourself?
How Servispart Consulting Can Help
Our aftermarket benchmarking service is called Aftermarket 360™ and is specifically designed to assess your aftermarket capability strengths and weaknesses to create an aftermarket growth strategy that delivers high impact results in minimum time.
More information on how to discover your aftermarket genius and grow your aftermarket business is available here.