Cross-Sell and Upsell Opportunities Most Manufacturers Never Capture
A manufacturer sells a piece of equipment once. The parts, service, upgrades, and consumables that machine will need for the next ten or twenty years get sold, if they get sold at all, to whoever happens to ask first. Often that’s a third-party parts supplier or independent service provider with no relationship to the original sale, simply because nobody at the manufacturer ever built a system to claim that revenue.
This gap has a name in industrial circles, and real research behind it: the difference between what a manufacturer’s installed base could generate in aftermarket revenue and what it actually captures.
How Much Revenue Are Manufacturers Actually Leaving on the Table?
More than most manufacturers assume. According to BCG’s most recent industrial aftermarket services benchmark study, aftermarket services already account for a third or more of total revenue at leading machinery manufacturers, and that revenue is growing faster than new equipment sales: up 10% year-over-year in 2023, with survey participants expecting another 8% increase in 2024. The margins are also structurally better, roughly double the 15-25% typically earned on equipment sales.
BCG’s research also found a meaningful gap between manufacturers who maintain direct relationships with their end customers and those who sell primarily through distributors: direct-relationship equipment manufacturers captured around 33% of revenue from services, compared to about 17% for makers of components and subsystems who are further removed from the end customer. The closer a manufacturer sits to the actual buyer relationship, the more of this revenue it tends to capture, which points directly at the mechanism: this is a relationship and visibility problem as much as a product one.
Why Do Manufacturers Miss Their Own Cross-Sell Opportunities?
They know less about their installed base than they think. A manufacturer that sold a machine five years ago often has fragmented, incomplete records of which customer has which configuration, what maintenance it’s likely due for, and which upgrade paths are even compatible. Without that information organized in one place, a service or upsell conversation can’t happen at the right moment, because nobody knows the moment has arrived.
The sales team stops thinking about an account after the sale closes. Once equipment ships, ownership of the relationship in many manufacturers shifts to a service department focused on fulfilling requests rather than proactively surfacing opportunities. Nobody’s job is explicitly to notice that a customer is approaching the point where a part typically wears out, or that a software update could measurably improve their output.
Real, documented recovery is possible once this gets fixed. McKinsey’s research on industrial aftermarket services describes a real example: an aircraft-equipment provider that increased its long-term service-contract penetration rate from about 15% to over 50% across five years, in large part by using deeper customer insight to improve its cross-selling and upselling. The same research notes that parts sales at these companies typically carry margins over 30%, more than triple the roughly 10% margin common on maintenance services, which is exactly why capturing the full aftermarket relationship, not just the service call, matters so much to the bottom line.
What Does This Look Like in Practice?
Maintenance and wear-part timing. If a manufacturer knows the typical service life of a component it sold, it can reach out proactively before failure rather than waiting for a reactive call, which is also the moment a competitor’s part or service provider is most likely to intercept the relationship instead.
Upgrade and expansion paths. A customer running an older configuration of an existing machine is a candidate for an upgrade module or expansion, but only if someone at the manufacturer is tracking which customers have which configuration and which upgrades are compatible.
Consumables and recurring-use items. Items a customer needs repeatedly, rather than once, are natural candidates for a more systematic ordering relationship, whether that’s a standing reorder arrangement or simply a proactive check-in timed to typical usage patterns.
Common Questions
Is this only relevant to large machinery manufacturers? The scale of the numbers above comes from research on machinery and industrial equipment makers specifically, but the underlying mechanism, an installed base of existing customers whose future needs are knowable in advance, applies to any manufacturer selling durable equipment or components with a genuine service life.
Does this require new software to fix? Not necessarily as a first step. The starting point is simply consolidating what’s already known about the installed base, which customer has which equipment, when it was sold, what it typically needs, into a single place someone is responsible for watching. The tooling question comes after the ownership question is settled.
How is this different from a standard referral or retention program? Retention keeps an existing relationship intact. This is about actively selling more into a relationship that’s already there, using knowledge the manufacturer already possesses about that specific customer’s equipment and likely future needs.
Where This Fits in a Bigger System
Uncaptured cross-sell and upsell revenue is a leak that hides in plain sight, since the customer relationship isn’t at risk, the additional revenue simply never gets asked for. Finding and closing these gaps across sales, marketing, and operations is the core discipline behind TPG’s Predictable Revenue Framework.
If you don’t have a clear, current picture of your own installed base and what it’s likely to need next, that’s a reasonable place to start looking.
Schedule a Discovery Call and we’ll walk through what a revenue leak assessment would actually surface in your existing customer base.