Installed Base Business Potential in an Industrial Setting (OEM's after-sales service perspective)

Abstract

The installed base represents a critical yet sometimes underutilized business opportunity in the industrial sector, particularly from the perspective of Original Equipment Manufacturers (OEMs). As the competition for new equipment sales intensifies, OEMs are increasingly recognizing the importance of after-sales services to enhance customer satisfaction, generate recurring revenue, and maintain long-term relationships. This shift places greater emphasis on leveraging the installed base information for after-sales service activities, including maintenance, spare parts, upgrades, and replacements.

Understanding the business potential of the installed base is crucial for several reasons. First, it gives OEMs valuable insight into their customers’ needs throughout the entire life-cycle of their equipment. This allows companies to provide more customized, proactive after-sales services that help extend the life of the machinery and minimize downtime. Second, with tools like RFM-analysis, OEMs can break down their installed base, identifying their most valuable customers and focusing their often-limited resources where they’ll have the greatest impact and generate most revenue. Finally, in an industry where equipment reliability is critical, offering robust after-sales services strengthens customer loyalty, encourages repeat business, and establishes the OEM as a key partner in for prolonged and productive relationships.

The theoretical part includes a comprehensive literature review on three focal themes – 1) management of after-sales service business utilizing installed base information, 2) maintenance as a significant after-sales component for the installed base, and 3) B2B customer segmentation and categorization based on purchase behaviour. By synthesizing existing research, this study proposes a tentative framework that outlines the strategic utilization of installed base information for identifying and managing business potential in after-sales services entailing an iterative dimension to it for building long-lasting relationships with customers.

The results of the empirical stage propose two central findings – a revised tentative framework for the utilization of installed base information for identifying and managing business potential in after-sales services, and the expansion to the RFM-analysis based on exploratory findings from both literature and by qualitatively gathered data. This research underscores the importance of aligning after-sales services with customer needs, since fundamentally, the customers are the ones purchasing service activities. Both the revised tentative framework and the RFM-analysis extension are applicable on a managerial level, establishing solid grounds to include them in strategic discussions as well. Qualitative data was gathered as semi-structure interviews from 13 case organization representatives, for which thematic analysis was applied for predefined groups.

This research is conducted with an interventionist research approach, which contributes to academic discourse by bridging gaps between theory and practice in after-sales service management. It advances the discussions on how OEMs can fully leverage their installed base to create sustainable business models. Additionally, the findings enhance existing methodologies for customer segmentation in B2B contexts, offering a more nuanced understanding of customer behavior through the lens of installed base information. The framework and extended RFM-analysis proposed in this study provide a foundation for future research and offer practical guidance for OEMs seeking to capitalize on after-sales opportunities.