3 Ways for Trucking Firms to Increase Profitability
Profits. They ultimately determine if you make a living or go bankrupt. With competition and marketplace challenges running rampant, many trucking and logistics companies are finding it difficult to remain profitable. In these times of challenge, there are still plenty of opportunities to be successful. While that is easy to say, the task of maintaining profitability rests on your tenacity and creativity.
ONE: Efficiency of Operations
Every company has areas that can be improved. It never hurts to examine your processes, from buying to servicing clients and handling billing and cash flow, your operations might need some improvement. One area we are seeing more interest in is outsourcing the accounting, payroll and bookkeeping services of the company. By doing so, the company no longer has to rely upon outdated software, errors from staff or family members that may not be properly trained or have a limited understanding of how books should be structured for quality reporting and efficient data retrieval. Mistakes can be costly. Your outsourced professional can also ensure that quarterly tax filings, as well as state and federal employee filings, are done in order to avoid penalties and unwarranted late fees.
Other operational efficiencies may be found in your purchasing habits and inventory methods. Overhead expenses are another area where economies might be found by alternative sources.
Your accountant can help you move through this process and help you develop repeatable checklists and timetables for routine processes.
TWO: Specialization and Value Pricing Tactics
Value pricing is not a new concept, but many service businesses—especially competitive businesses like trucking and logistics—have been reluctant to see the benefits of this thinking. Perhaps it is fear, or perhaps it is a baked-in dependence on what is proper industry behavior, the time for creative thinking has never been better.
Let’s talk about specialization first. Many industries, even accounting firms, have found that concentrating on particular industries gives them a competitive advantage. By understanding the very unique needs of an industry’s transportation needs, you can develop service behaviors and unique pricing that sets you apart from your competitors. Instead of being one in a hundred people with tires and wheels to rent, you are seen as a careful expert—one of a chosen few—who will deliver the quality and timeliness required of these demanding customers. With specialization, details matter. Dig deep into your client’s businesses. Interview them. What needs do they have that you might be able to deliver for them? Does their business entail unique handling quirks that you might be able to offer as a value-added service? It might be special handling, air conditioning, or some combination of safety and security that you can turn into a process and a value-added service worthy of a premium fee.
The concept of value pricing strategy moves along similar lines. There are a few brave business experts who teach this process. For example, Michelle Golden River, owner of Fore Consulting, is an expert on value pricing, or what she has trademarked as Advanced Pricing Method®, a process that she developed for accounting firms, but one that certainly could be applied to other service firms like trucking and logistics companies. Essentially, firms learn how to explore desired outcomes with buyers before proposing solutions. While her concepts are brilliant and useful, they are not new to the world. You may discover through this mindset that bundled pricing, or retainer-based pricing for some customers creates a more reliable cash flow while delivering better service to a unique clientele. Suddenly, you are no longer a commodity.
THREE: New Customers from New Places
Even if value pricing is not your cup of tea, there are ways to think strategically about attracting new customers. Sales training systems teach us that customers buy from people they like. And, while the industry will tell us that transportation is a commodity, however, that is not necessarily true. The human element is your best differentiator. You have the ability to disrupt the status quo and change the way people think (and buy) your services. Think of recent “disruptors” in other industries, for example. Who would have thought ten or fifteen years ago that people using someone’s car would nearly replace the taxi industry, or that online shopping would topple many retail giants who could not adapt?
The key finding your difference can be learned by examining your customer’s needs and wants and finding new ways to deliver (no pun intended) on their unmet needs. While price and speed are almost always going to be an issue, we know there are other factors that are really important to our customers. It may be special handling due to the fragility of certain items. Perhaps companies that sell sensitive items require security and protection from the elements. There may even be technology applications, such as apps that take a photo of your item in transit and at delivery so the customer can track their package with more confidence. Do drivers look like drivers? What if they looked more like ice cream delivery men, wearing light clothing and a bow tie? That may seem outrageous; however, the point is to find out what inspires confidence in your prospective customers. What problems with delivery remain unmet in their minds? Can you do things better? Can you be a little different? Does your brand reflect these unique characteristics?
A bit of marketing differentiation will set you apart from other companies, make you memorable in a good way, and perhaps give you an edge on return business. Be customer-centric. Always put yourself in the customer’s shoes. Be curious about how things could be better. Above all, ask your customers for honest feedback. Surveys are good, but personal conversations are better. The best time to talk to someone is right after you have concluded your work with them.
A little smart marketing can go a long way in making your business the go-to service.
One last thought on marketing: Don’t try to be everything to everyone. Specialization brings excellence. That may mean narrowing your focus to attract certain types of customers—at the expense of others that don’t fit your profile of an ideal customer. Don’t be reluctant to specialize! It will reward you with customers that appreciate your thoughtful approach. And they may just pay more for the service, too.