Parts of the world have reinstituted lockdowns as COVID-19 cases began to rise. Faced with extended periods of reduced in-person engagement, non-digital firms have adapted to more digital-driven business models.

Focus shifted firmly to digitized service initiatives in the early pandemic months, but expectations have changed since 2020. It is now expected of industrial firms to adeptly combine physical products and digital services in efforts to arrange distinctive aftermarket offerings that maintain customer engagement steady.

Teodora Gaici

Author Teodora Gaici | Copperberg

Photo: Freepik

COVID-19 has suddenly and fundamentally reshaped customer engagement, pushing industrial firms to modify how they interact with clients. As digital became the dominant interaction channel for much of the pandemic, many pressed ahead to build a strong digital presence to stay close to customers and service their requirements fully via online channels. To this day, digital still makes it easier for firms to assure clients of uninterrupted service. Industrial firms have recently set up major expansion plans for service digitalization to prop up dwindling sales in the aftermarket and generate consistent revenue growth. Most manufacturers confirm digital-focused approaches will remain essential to their operating strategy—at least for the rest of 2021. But new expectations have arisen, prompting industry players to unite around a fresh ambition: working on advanced offerings linking physical products and digitized aftermarket services.

Digital service interactions will continue to increase during the rest of 2021. But while most do not expect a return to pre-COVID-19 behaviors or buying patterns, physical products are likely to remain in high demand across all regions. This has stirred the interest of many to invest in what Gartner refers to as “digital and product experience”—or, to be more specific, a mix of physical products and digital services. The rising trend of “digital and product experience” can be understood as a means of arranging integrated aftermarket offerings in the purposeful attempt to connect with the customer more closely and find profit after the initial sale.

This article, which intends to address the pivot towards combined product and digital offerings, is the first in a series examining the most important trends in manufacturing for 2021. It also briefly presents the key innovations anticipated to impact the industry in the coming future.

Physical and Digital Combine into Advanced Aftermarket Offerings

Digitized aftermarket service is fertile territory for continued growth. Manufacturers used the initial pandemic-induced lockdown to do away with traditional operations and expand into digital aftermarket services for sustainable gains. The new and more advanced service offerings—which imperatively included the provision of remote assistance, self-service portals, or predictive maintenance—turned into stable revenue sources. Months later, the concept of “digital and product experience” has started coming of age, driving the transformation of existing business models. Analysts observed what led to the trend’s rapid acceleration:

“The pandemic limited customer engagement touchpoints due to the severe lockdown restrictions globally. The combination of digital and product aims to address this challenge of providing an engaging platform that matches consumers’ expectations. This is not just about an additional service, but the ability to have a new digital business model where manufacturers can maintain a connection with the consumer past the sale of the product.” — Gartner, Top Five Business Trends in Manufacturing for 2021

No business model is static. COVID-19 has provided a stark reminder of how rapidly a business model changes as a result of evolving customer expectations. When the trend of “digital and product experience” gained momentum, all players in the industry saw more profound changes in aftermarket business models—many of which strongly favored the blending of physical and digital into differentiated offerings. A concrete example of such premium offerings includes, as the case may be, the provision of custom-designed spare parts combined with real-time fault diagnosis of components and expert remote technical assistance. But the options are practically unlimited; industry players only need to decide which products and services work best together.

The rewards certainly make up for the effort. Amid the uninterrupted supply chain disruptions and component shortages presently affecting the aftermarket, utilizing a forward-thinking business model that strategically promotes the perfect blend of physical products and digital services is a differentiating way of:

  • Engaging the customer continuously
  • Providing integrated experiences
  • Creating added value for the customer
  • Driving recurrent revenue
  • Ensuring business continuity

Industrial firms continuing efforts to engage in close customer interactions through harmonized product/digital offerings and consistent aftermarket experiences may significantly increase and stabilize gains.

New Innovations Set to Arrive in a Few Years from Now

One of the few certainties in the post-COVID-19 world is that the manufacturing sector is unlikely to ever return to normal. For some time now, manufacturers traditionally fixed on non-digital interactions have complemented their existing physical product offerings with digitally-enabled services. Hybrid experiences have risen in importance amid the continuing pandemic, but what happens when the present situation runs its course?

Not too far from now, whether or not the world moves out of the pandemic, combined product and digital experiences will turn into a commonplace practice as new developments profoundly upend the industry again. Already, predictions are being made in this direction. Gartner anticipates that some manufacturers “will have invested in a brand app using AI, embedded technology in the product, videos as a digital asset, and/or integrated innovation with IT and R&D teams” by the time 2025 rolls around. e-Commerce is to establish as a key distribution channel in the aftermarket during the same year.

Technology is poised to play a much larger role in industrial settings as the years pass. Looking ahead, much of the focus will lie on using advanced technology in products, services, and many other processes in the pursuit of superior customer experiences. Investments may be potentially attributed, for example, to real-time 3D product configurators that improve client engagement through interactive and customizable aftermarket e-Commerce experiences.

Industrial firms may face difficult choices about where and when to invest as they go through yet another reset. But they must work harder to put together a systematic approach for identifying technological opportunities; not investing at all will be a risky bet.

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