CMO Council Research Reveals Disparities in Revenue and Customer Relationship-Building Opportunities as Manufacturers and Retailers Struggle to Drive Profitable Post-Purchase Experiences
SAN JOSE, Calif. (Oct. 10, 2017)—The customer aftermarket has become an afterthought for makers of home appliances, power tools, consumer electronics and other durable goods. Manufacturers and their retail partners have differing opinions when it comes to ensuring a valued, satisfying and profitable product ownership experience.
New research among consumer, marketer and retailer audiences by the Chief Marketing Officer (CMO) Council and LiveTechnology highlights the need for leading brands in the $12 trillion consumer durables market to improve commitments to quality aftermarket service, 24/7 multi-channel customer support, and timely and efficient repair and parts replacement that is not dependent on retail partners.
The new report released today—entitled “ELEVATE WHAT CONSUMERS APPRECIATE: Increase Brand Attraction by Upgrading Ownership Satisfaction”—notes discrepancies in how manufacturers and retailers view and approach post-purchase revenue, profit and relationship-building opportunities in the aftermarket service sector.
Despite the fact that 93 percent of manufacturers view ownership experience as important to the business and a significant brand differentiator, they lack leadership, focus and commitment to realizing revenue and profit from the aftermarket business. Only 19 percent of manufacturers derive more than 10 percent of their revenue from aftermarket services, and only 20 percent generate more than 10 percent of their profit from this area. This compares to 65 percent of retailers who source more than 10 percent of their revenue and 51 percent who earn more than 10 percent of their profit from the aftermarket.
Just 45 percent of marketers representing manufacturing companies say their companies view aftermarket services as a strategic area of focus and essential to customer experience and business success. This compares to 56 percent of marketers from retail organizations.
While 71 percent of manufacturers believe their level of ownership satisfaction is excellent or very good, retailers are not as sanguine. Only 26 percent give manufacturers the same ranking, with another 31 percent saying it varies greatly by brand. In fact, 61 percent of retailers say they play a significant role in advancing the ownership experience and helping manufacturers distinguish their brands in the aftermarket service sector.
“While top management on the manufacturer side is strongly committed to creating customer-centric cultures, they don’t appear to be giving CMOs the responsibility to take ownership of the aftermarket as a revenue and margin opportunity or a critical area of customer loyalty-building and brand attachment,” noted Donovan Neale-May, Executive Director of the CMO Council. He pointed to findings in the research that showed less than 10 percent of chief marketers had responsibility for this area of operation, and it was mostly fragmented across multiple titles and functions.
Earlier this year, consumer research by the CMO Council and LiveTechnology—entitled “Product Ownership: Lasting Satisfaction or Painful Distraction?”—revealed that nearly 35 percent of 2,000 North American homeowners surveyed rated product manufacturers as poor or needing improvement. Some
60 percent of poll participants rated their post-purchase experiences with manufacturers as underwhelming, and 56 percent were disappointed with service from retailers and eCommerce sites.
The CMO Council’s online survey of 150 marketers, evenly split between retail and manufacturing decision makers, was fielded in Q2 2017. Most notably, there was some discrepancy between what manufacturers said they were doing to upgrade the ownership experience versus what retailers thought manufacturers should be doing. Here are the top five recommended strategies by the two groups:
Retailers and Distributors
LiveStuff—an innovation from LiveTechnology that will serve as the world’s largest, centralized product data repository, enabling product owners to identify and source replacement parts, receive product alerts (e.g., recall information) and updates, and access crowd-sourced guidance and self-help from other owners—is offering an Ownership Experience Evaluation that will evaluate the process required to discover or find important information pertaining to a specific product. This Ownership Experience Evaluation, at a cost of $1,120 ($728 for CMO Council members) will:“Customer advocacy should be the lynchpin of marketing for all brands as the primary driver of the purchasing decision is the sharing of information between friends and family and by other owners (e.g., ratings, reviews and forums),” explained Wayne Reuvers, CEO of LiveTechnology. “As product owners constantly rely on their mobile devices to access relevant information on the things they own (manuals, specifications, parts, accessories, advice, etc.), a consistent, intuitive experience will turn owners into advocates that positively communicate their brand experience. Frustration, on the other hand, results in strong negative posts.”
The evaluation will help to benchmark and scorecard a brand’s aftermarket service offering and is designed to empower leading manufacturers of consumer durables and their retail and distribution partners to understand their current state of ownership experience and work to elevate all aspects of the global aftermarket service experience.
The evaluation will also include:
The assessment will result in a comprehensive scorecard, including key recommendations on how to address deficiencies across the ownership experience.
The “Elevate What Consumers Appreciate” report includes findings from both the marketer and consumer surveys, as well as in-depth interviews with brand leaders at companies like Ace Hardware, Casio, Dell, DeLonghi, Electrolux, Emerson, Janome, JD Power, Kia Motors, Keurig, Lennox, Lenovo, Microsoft, Samsung, Vitamix, Wally/Sears, Whirlpool and Yamaha. Source the full 88-page report and a complimentary executive summary by visiting https://cmocouncil.org/aftermarket-report.
About the CMO Council
The Chief Marketing Officer (CMO) Council is dedicated to high-level knowledge exchange, thought leadership, and personal relationship building among senior corporate marketing leaders and brand decision-makers across a wide range of global industries. The CMO Council's 12,500-plus members control more than $500 billion in aggregated annual marketing expenditures and run complex, distributed marketing and sales operations worldwide. In total, the CMO Council and its strategic interest communities include more than 65,000 global executives in more than 110 countries covering multiple industries, segments and markets. Regional chapters and advisory boards are active in the Americas, Europe, Asia-Pacific, Middle East, India and Africa. The council's strategic interest groups include the Customer Experience Board, Coalition to Leverage and Optimize Sales Effectiveness (CLOSE), Marketing Supply Chain Institute, Digital Marketing Performance Institute, GeoBranding Center and the Brand Inspiration Center. For more information, visit www.cmocouncil.org.
LiveTechnology, a U.S. technology innovator and marketing solution provider, is building the world’s largest, centralized product data repository with mobile application interface (—) to advance the aftermarket service opportunity. It will enable consumer buyers of durable goods to easily register, store and retrieve essential product/parts information, warranties, owner’s manuals, and purchasing records on demand. The LiveStuff consumer service will enable product owners to identify and source replacement parts, receive product alerts (e.g., recall information) and updates, and access crowd-sourced guidance and self-help from other owners. The big-data LivePlatform will provide advertisers and marketers with valuable analytics and owner insights for cross-selling, repeat selling and upselling, as well as managing warranty and product return programs. It will also enable them to track satisfaction, advertise and promote their brands, and enhance many new aspects of the ownership experience. For more information, visit www.livetechnology.com.