Knowledge · Machine builders
Does a customer portal pay off?
By Gerd Bart, Founder and Managing Director · Updated
The short answer
On saved phone calls alone, a customer portal does not pay off for a machine builder. It pays off through spare parts, service and obligations you have to meet anyway. No clean measurement exists, so you work backward: How little has to change? In Transaction-Network's example, a portal with a parts shop pays for itself in three years if parts revenue grows 4.6% at $100M in company revenue, 9.2% at $50M and 16.9% at $20M. Individual cases show 3 to 10%. From about $100M in revenue the math realistically works; below that you need another reason.
Why there is no reliable percentage
We read McKinsey, BCG, Bain, Deloitte, Roland Berger, Gartner and Forrester and found no clean measurement for machine builders. Fraunhofer even sees no relevant revenue effect from pure sales portals (2018 survey). The customer also gets the benefit first, and on your side it mostly shows up as something that no longer happens. The call that never comes appears on no invoice.
How to run the numbers anyway
Turn the question around. Instead of estimating what the portal brings, work out when it pays for itself. The example: $100M in revenue, 3,200 machines in the field, three years.
| Company revenue | Portal with shop needs | That is about |
|---|---|---|
| $20M | 16.9% more parts revenue | Parts for about 110 of 640 machines |
| $50M | 9.2% | Parts for about 150 of 1,600 machines |
| $100M | 4.6% | Parts for about 150 of 3,200 machines |
| $200M | 2.3% |
An information portal earns no money, it only has to carry itself. In the example, $33 per machine per year is enough. Without added revenue, the portal with a shop does not pay off at any of these sizes.
The money is not at the hotline
Companies spend a median of 0.7% of revenue on customer service (Gartner, across industries). Of 100 requests, about 26 reach the portal in the first years, and about 7 are fully resolved there, between 3 and 11 depending on the company. If you calculate with 50, you lose your CFO in the first minute.
About 10% of a machine builder's revenue is spare parts, at about 50% gross margin (BCG). That is where the math is decided. Added revenue needs a reason, though, such as the right part for the serial number. If you only open another ordering channel, you just shift orders.
If it doesn't pay off for you
That's not yet a no. Below about $100M in revenue you need another reason.
Costs that go away.
What do you pay today for catalog software, printing, shipping and an old portal? Every dollar lowers the threshold right away.
Obligations you have anyway.
If you sell into the EU, the Machinery Regulation, the Cyber Resilience Act and the Data Act require information and access. That work exists with or without a portal. The only question is the cheapest way.
A smaller start.
Begin with the machines of the last ten years, for example.
What doing nothing costs
Most calculations compare the portal with a today that stays the way it is. That is the most comfortable assumption. Turn the threshold around and doing nothing costs more as soon as about the same share of parts revenue drifts away. As far as we could find, nobody has measured that, so it is in none of these numbers. You can check it yourself: How many of your machines bought no spare parts from you last year?
Who is doing the math
Transaction-Network offers customer portals for machine builders, so we are not neutral. That is why the math, the assumptions and all sources are open, in our 17-page paper, no sign-up.
Questions
Frequently asked questions
What is the ROI of a customer portal?
There is no reliable percentage for machine builders. Calculate a threshold instead of a forecast: In our example, a portal with a parts shop needs 4.6% more parts revenue at $100M in company revenue to pay for itself in three years.
How many service requests does a customer portal save?
Plan on about 7 of 100, between 3 and 11 depending on the company. In the first years about one request in four reaches the portal, and about one in four of those is fully resolved.
Is a customer portal worth it for smaller machine builders?
Below about $100M in revenue, rarely through spare parts alone. Then costs that go away, obligations or a smaller start have to carry the math.
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