Provide them with what they need, but give them what they want. Sound easy? When it comes to shippers, this is one of the most difficult tasks to achieve. Ours seems to be a discount-driven world of ‘the lower the price, the more customers come pounding at your door.’ While price is a factor when shippers determine which carrier to use, the most important concern any shipper has is, “Are we getting the best value for our transport dollar?” The greater the value you create in your logistics services, the easier it is to garner the needed hauling rate.
What determines the value in a load? The obvious is on-time pickup and delivery of a customer's shipment. However, if that's all a motor carrier provides in service, he will find his customers going with another trucking company that promises either lower shipping costs or provides additional services. With so many trucking companies failing today, this can be a very tenuous time to own a company, but it is also a time of great opportunity. Trucking companies that have been relying on price alone are finding it exceedingly difficult to stay in business; the ones providing exceptional services are positioning themselves to grow and prosper.
The first step to creating value for your customers is to know your company's break-even points. (This includes each truck, trailer and driver in your operation, as each truck in your operation is a mini-division of your company, and each driver is the division's manager.) A trucking company can't be profitable without first knowing what it costs to operate. In other words, the best thing you can do for your shippers and your company's bottom line is to know that ever-elusive break-even point.
Once you know where expenses are covered and profit begins, you have the tools needed to set your hauling rates. Now comes the challenge, the one which requires ingenuity, assertiveness and a bit of tenacity. Keep coming up with ideas and techniques that provide a higher level of service to your shippers, receivers and brokers than your competition. To make this work, you have to stay ahead of others vying for the same customers. Keep your imagination in overdrive by constantly inventing new ways to give shippers and receivers reasons to use your trucks, even though your rates may be higher. Become the expert in your niche; know who else is hauling similar tonnage in your area; and know what your shippers need, then offer more than your rival motor carriers.
Here's how to create value by exceeding customer expectations:
Listen to what they're looking for in a trucking company.
Ask them what they're not receiving from other haulers, then provide it.
Ask yourself what additional service would make the shippers' or receivers' job easier.
Help your customers cut costs without lowering your hauling rates.
Increase communication with shippers, receivers or brokers to keep them better informed about their shipments and unpredictable changes.
Be aware of what services your competition is providing, then be sure you're doing more.
Make sure your customers can reach you or a person in your company on the first phone call. If you have to rely on voice mail, return their call as quickly as possible.
Go beyond the call of duty.
Your customers will remember when you provide service that is unexpected. But if you provide only what is expected, then that will be forgotten. Inferior service will be remembered in a negative light. So do you want to be forgotten? Or remembered? And how? The choice is yours.
Think of it this way: if you were purchasing a service or product for your company, and Company A has a price 30% lower than Company B, naturally you would check out Company A first. But what will determine if you go with Company A or Company B? The answer is the one which provides you with the greatest value. What actually determines value? Price is one factor.
There are other important considerations. Can the company provide all the service you require at the time you need it? Does one company provide add-ons that create greater benefits? Does the company communicate with you, keeping you updated every step of the way? What kind of reputation does the company have in providing the product or service? Are you going to feel you made the right decision once the product is delivered or the service completed? The cheaper price may not permit Company A to deliver the quality you require, but Company B could be charging a higher price without providing the value you need. Each customer goes through a similar evaluation of your hauling services.
Creating and maintaining value in the logistics services you provide is a challenging task. But when the alternative is to compete on price alone, the choice is simple.
The most important item to remember is the greater the value your services have for your customers, the higher your hauling rates can be set. When you go shopping for a product or service, are you looking for the lowest price or the highest value for your dollar? What do you think your customers are looking for when they're shopping for a hauler? Perceived and actual value will trump price. Spend your time creating value in your service; know what it costs you to provide the services, than charge a rate that creates a fair profit above those costs. Now you've created value-driven customers.
Contact Tim Brady at [email protected] or 731-749-8567.