After sales service refers to the treatment of customers in the aftermath of a sale. For example, after being sold a bike, after sales service may involve free bike maintenance for a number of weeks.
After sales service is an important part of non-price competition often found in oligopoly. After sales service can be a way to encourage people to buy the product in the first place; it can be used to justify a higher price for the good. It also influences the long-term reputation of the firm and can influence future sales. However, it also imposes costs on firms.
Examples of after sales service
- Warranty. A common example of after sales service is the provision of a warranty for the good. A warranty allows the good to be repaired or replaced if it breaks down within a certain period of time after purchase.
- Free service after six months (e.g. car/bike)
- Advice on how to use the product (Apple care)
- Firms following up with a phone call to the customer asking how the product is working out.
Importance of after-sales service
- Good after sales service helps improve firms long-term brand image and brand loyalty.
- Offering after sales service can help to convince consumers to trust the firm and buy the service in the first place.
- Sales affected by word of mouth recommendation. Good after sales service can make difference. In an era of social media – poor after sales service can be damaging to reviews and reputation of firms.
- After sales service imposes extra cost on firms. For firms, they need to strike a balance between keeping the customer happy and not being burdened with expensive maintenance. For example, a firm may offer one free service, but then have a clearly defined price for future service.
- The provision of after sales service varies in importance depending on the type of good. For example, after sales service and extended warranties are important for goods like electrical goods and new cars.
- After sales service can also become an opportunity to sell related products. For example,