The construction machinery aftermarket refers to the various service businesses derived from customer needs during the use of equipment after the equipment is sold, including repairs, maintenance, accessories, oil products, attachments, leasing, second-hand equipment, and remanufacturing.
Aftermarket is a mode of fractal innovation
After the equipment is sold to the user, the OEM must also provide equipment warranty service. If the equipment fails, the manufacturer will also provide after-sales service, in many cases these services are completed through agents or service providers.
The OEM found that the repair service and second-hand equipment market after the sale of construction machinery equipment is very large. It not only needs to complete equipment maintenance regularly, including: oil change, filter replacement and routine maintenance, users also often need spare parts and repairs. , The demand for maintenance services will increase. For example, the ratio of the aftermarket maintenance and spare parts potential of the excavator in the life cycle to the price of new equipment is almost 1:1. These businesses can bring business revenue beyond equipment sales and higher profits.
After the equipment has been used for a certain number of years, users still need to trade in old equipment. Second-hand equipment and leasing businesses have greater potential. These businesses have gradually formed a large-scale aftermarket ecological chain. As the number of construction machinery and equipment continues to increase, The market potential is also gradually expanding. The current aftermarket of maintenance services and accessories has a scale of hundreds of billions, and the second-hand equipment and rental market has reached a scale of trillions. Obviously, the aftermarket has become a business sector that cannot be ignored.
In the past, maintenance and parts were treated as passive after-sales service after equipment sales. Now, OEMs treat them as a new business model. Based on the whole machine business development curve, a second post-market development has been formed. curve.
The fractal innovation of this model not only injects new growth momentum into the development of OEMs, but also makes the development of agents more balanced, because when the whole machine market fluctuates greatly, the aftermarket revenue ensures the survival of agents , And the business of the aftermarket is mainly affected by the amount of equipment and the operating rate, which is much smaller than the fluctuation of the whole machine market.
After market decision-making power is in the hands of customers
At the Thousand Talents Summit of Changsha Construction Machinery Aftermarket, Mr. Xue Xiaoping vividly compared OEMs and agents to “elephants” and domestic parts manufacturers to “rabbits”. Those backpackers, parts shops and The repair shop is likened to an "ant". In the aftermarket, "elephant", "rabbit" and "ant" staged a "Romance of the Three Kingdoms" competing for users, but the result was surprising: "Rabbit" and "ant" defeated With the powerful "elephant", most of the users and the aftermarket are in the hands of the "ant". Why is there such a result?
"Elephant" thinks that the equipment is manufactured and sold to users, and the aftermarket should of course belong to them. "Elephant" accessories are of good quality and service is more formal. Of course, they will become the first choice of users. The actual situation is not the case. After the end of the equipment warranty period, 80% of users no longer use the accessories and services provided by "Elephant", and the main force of second-hand equipment and leasing business is not "Elephant."
The ultimate battlefield of market competition is the creation of customer value, or the satisfaction of customer needs. The fractal innovation of the "Elephant" post-market model is indeed an improvement, but they believe that they have the decision-making power of the post-market, continue to use the agent system to develop the after-market, and promote original parts and authorized maintenance services in the after-market. Out of protective thinking, "Elephant" resolutely resists "Rabbit" subsidiary parts and "Ant" unauthorized repair services.
Unfortunately, the most formal channel is not necessarily the user’s first choice. Although the aftermarket was first proposed and developed by the “elephant”, the decision-making power of the aftermarket is in the hands of users. They use their feet to vote for more choices. Suitable partners-"Ant" and "Rabbit". "Elephant"'s protective thinking has made it difficult for them to meet customer needs in the aftermarket. Adhering to the original closed model has caused "Elephant" to lose more market share.
Many "elephants" do not realize this. They still think that they are holding a good hand. Technology, information, users and the market are in their own hands. They didn't do a good job before because they didn't pay enough attention to the aftermarket or the agents were ineffective. Also expect to win back users with the original model. In fact, the "elephant" has not figured out where they lost.
Post-market competition is a dispute between open and closed
Over the years, "Elephant" has been trying to suppress "ants" and "rabbits" in the aftermarket. They hope to protect their high profits through accessory monopoly, technology monopoly and information monopoly. They are not concerned with the needs and interests of customers. It's how to protect one's own aftermarket profits, just like the Mercedes-Benz's 13-fold ratio. In this case, customer churn will be an inevitable result.
"Elephant" is unwilling to disclose the technical parameters and accessory codes of the parts. It also imposes various restrictions on the parts suppliers. It also frequently changes the part codes and changes the drawings of some parts. The purpose is not to improve the performance of the parts, but to avoid The replacement of factory parts protects self-interest. They strictly stipulate that agents can only deal with original parts. During the warranty period, authorized agents are forced to provide services and even set the sales price of parts to protect their own interests. But what about the interests of users?
With the rise of "Made in China", the quality of spare parts produced by "Rabbit" has made considerable progress. Many domestically produced spare parts have begun to replace imports. Many international brand OEMs have also begun to purchase domestically produced parts in order to reduce costs and improve Competitiveness. However, "Elephant" is still reluctant to provide users with more cost-effective parts, even if it is made in China, the original price is still used; the hot market makes authorized agents unable to provide timely maintenance service support for out-of-warrant users. The spot satisfaction rate is also much lower than that of social accessory stores. It is difficult to guarantee the timeliness of customer service, let alone the cost-effectiveness of parts.
The backpackers engaged in maintenance services in the "Ant" are all equipped with special skills. They have been rigorously trained and exercised in the "Elephant", otherwise it will be difficult to survive solo. "Ant" is closer to users, and service response is more timely. With the increase in equipment ownership, it is difficult to increase the equipment operating rate and rent. If they cooperate with the "elephant", it will be difficult to make money. Users have to take measures to reduce operating costs, and the cooperation with "rabbit" and "ant" It has become an inevitable choice for many customers, and the result is a continuous decline in market share after the "elephant".
Unfortunately, "Elephant" did not realize the changes in user choices, and did not make any substantial changes to meet the needs of users. It still adopts a closed protective thinking and builds thicker "walls" (technical barriers). To protect your own interests, is this really feasible?
In 2014, 10 ministries and commissions led by the Ministry of Transportation issued Document No. 186, which provided guidance to the automotive and construction machinery maintenance industry. The core is 9 words: break monopoly, promote development, and serve the people’s livelihood, with only one purpose: to break monopoly, Promote the transformation of the maintenance industry to a modern service industry and bring benefits to users. Therefore, change is the only choice facing the "Elephant" in the aftermarket.
Under the tide of the Internet, some startup companies are trying to connect users, "Rabbit" and "Ant" through Internet platforms, to break through the parts barriers between brands, original parts and auxiliary parts, and provide users with faster, Convenient and more cost-effective after-market products, including: connecting users and service technicians, matching the parts and logistics required by users as soon as possible, and satisfying users' needs in the most efficient manner. Why don’t "elephans" join the Internet and participate in the construction of Internet platforms in order to provide users with greater value? Maybe they are unwilling to give up comfortable days. What you have will eventually become a constraint on you . If one day, Internet platforms like Ali and JD.com begin to enter the aftermarket of construction machinery, if the "Elephant" still adopts a closed and protective thinking, it will be an inevitable result that the aftermarket will exit.
Taking history as a mirror, we can know the rise and fall. Microsoft's Windows operating system is a typical closed system. No matter how unfriendly its interface and how cumbersome its functions are, users have no choice but to suffer. Until October 5, 1991, the 20-year-old Finnish young hacker Linus Torvalds officially announced the birth of the Linux system, which was open sourced to the world, breaking the former closed pattern of the technological world. Open source technology wisely borrows the world's top talents and creates a very efficient way of technological innovation.
Linux has become the nemesis of closed systems such as Windows and Apple, completely changing the software world and affecting the future business landscape. The era of Microsoft's exclusive monopoly on PC operating systems for many years is gone. Today, this 100% open source Linux system almost dominates the server operating system, especially in the mobile Internet era, the Android system based on open source technology occupies more than 80% of the global market share.
Once the world's most popular Microsoft IE browser, with a market share of 95% at one time, it is the masterpiece of more than 50,000 Microsoft's top software engineers in the world. Because this is a "closed" software, users must buy in bundles to help maximize Microsoft's profits, but it pushes IE into the "valley of death", and IE's market share plummets from 95% to about 5%. , Replaced by the open source Google Chrome browser.
Openness is an important feature of the Internet age. Only more openness can maximize the role of technology and bring greater benefits to customers. Open innovation around customer needs is the most needed "burning point" in this era. On the contrary, "Elephant" has set up barriers everywhere. When these technical barriers are not thick enough, customer loss will be inevitable.
What is the original intention of "Elephant" in the aftermarket? It is to provide customers with better service support. However, the lure of huge profits in the aftermarket makes the "elephant" farther and farther away from its original intention. In the future, the dispute between open and closed aftermarkets will continue. The key is not the company's attitude towards competitors, but their attitude towards users, whether it is "elephant", "ant" or "rabbit", we must always ask I have a question: What value do we provide to users? Can these values meet their needs? Don't forget the original intention, always have to do it, and never forget our original intention for the aftermarket.
The total value obtained by the customer is the benefit (or customer experience) they obtain from the product or service, the total cost of the customer is the total cost (or customer expectation) in using the product or service, and the net present value of the customer value is the customer The total value obtained minus the total cost spent. The value of an enterprise is the sum of the net present value of all customers. The number of purchases per year by customers is multiplied by the customer unit price, and then multiplied by the customer's life cycle. All customers are added together and then discounted. This is the value of an enterprise.
In other words, the higher the customer value, the higher the corporate value. The mission of a great company is to continuously create value-added services and customer experience to enhance customer value.
Jiang Nanchun, the founder of Focus Media, said: "Life is for the purpose of serving and making money is easy." Jeff Bezos, the founder of Amazon, also said: "A company that puts money as its primary purpose has no chance to become a great company. In the old world, you spend 30% of your time creating a great service and 70% of your time marketing. In the new world, this ratio should be reversed."
Whether it is "elephant", "ant" or "rabbit", don't forget our original intention to be an aftermarket. Please use an open mind, hardworking hands and a loving heart to care for users and meet the challenges of the aftermarket.
