Data and Service Agreements Bolster Aftermarket Sales for Caterpillar Dealers

Jordanne Waldschmidt Headshot
Updated Apr 17, 2023
Service shop at Cleveland Brothers Caterpillar dealership
Cleveland Brothers

Gone are the days when you sit behind a desk and wait for a customer to call to say they need service.

Bob De Lange, group president of services, distribution and digital for Caterpillar, says today’s dealers are benefitting from a myriad of digital tools that help customers increase uptime while growing parts and service revenue.

And it all starts with connected assets.

Caterpillar says it has doubled the number of connected assets in its digital ecosystem in the last five years, generating billions of data points on fuel consumption, uptime, equipment health and productivity. Using advanced analytics, machine learning and proprietary algorithms, Caterpillar combines that information with engineering data, customer interaction details and service events performed by dealers to deliver in-depth machine insights.

An uptick in Customer Value Agreements (CVA) is also accelerating services growth, with more services being performed on machines four-years-old and older. Roughly 60% of Caterpillar’s construction machines are sold with CVA, and 45% of those customers choose to renew.

Here are the key areas Caterpillar has combined the power of machine data with service agreements to transform dealer aftermarket sales and distribution:

Condition monitoring: This allows dealers to monitor customer assets and identify upcoming service leads. The goal is to turn unplanned failures into planned machine overhauls, and therefore reduce the amount of customer downtime.

“By being proactive, a customer could avoid an unplanned failure of the transmission, which, if it were to occur, could also cause a lot of collateral damage, for example, contaminate the hydraulic system, which would then cause a lot more downtime,” says De Lange. “Instead, a customer can now plan and overhaul their transmission, which then also generates about $50,000 in parts and services revenue for the local dealer.”

By combining connected assets, analytics and the customer value agreement, dealers sell around 30% more parts to customers, adds De Lange.

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Prioritized service events (PSE): Using engineering recommendations on component life, service invoices, work order history, reports from Cat Inspect and more than 20 other data sources, Caterpillar can help dealers pinpoint aftermarket sales leads.

“For larger events, think for example, an engine rebuild, we can send that precisely timed lead straight to a dealer CRM and the dealer sales team responsible for that specific customer,” says De Lange. “For sales leads that are not determined by the equipment condition, we also have marketing PSEs. When we see through connectivity that preventative maintenance is due, we can send a sales lead for an oil and filter kit.”

Caterpillar started experimenting with PSEs in 2019 and has since generated $1 billion in dealer parts sales to users from warm PSE leads with a goal to double annual sales by 2023.

eCommerce: Caterpillar has integrated multiple digital tools to make it easier for retail customers to purchase the correct parts online.

“When talking to small retail customers, they will tell you that one of the reasons they’re not buying more online is because they want to have the confidence that they’re buying exactly the right part,” says De Lange. “This is where QR codes come in. We’re starting to place these on our machines and engines, making it easy for customers to scan and then be directed straight to a landing page with information for their specific asset and serial number.”

Coming soon, a new retail mobile app will enable customers to buy parts, register for warranty, renew their CVA, connect with their local dealer, complete equipment inspections, find repair instructions and more.

De Lange also noted additional dealer service investments Caterpillar is making, including:

  • An enhanced service information system (CIS 2.0) with remote troubleshooting capabilities for dealer technicians working in the field
  • A system called Pick, which uses AI and data to make inventory recommendations to maximize dealer parts availability

De Lange was a presenter at Caterpillar's 2022 Investor Day