Trucks at Work

Selling all of your value

Thought, like all potent weapons, is exceedingly dangerous if mishandled. Clear thinking is therefore desirable not only in order to develop the full potentialities of the mind, but also to avoid disaster.” -Giles St. Aubyn

Beware becoming a commodity - that‘s a critical piece of advice many transportation experts tell me truckers must internalize. I‘ve heard this warning for years and it‘s spot-on. Just look around this industry today - it‘s littered with bankrupt fleets and owner-operators not so much because diesel prices set new records earlier this year (above $5 a gallon in many parts of the U.S.) but because truckers could not get shippers to pay adequate fuel surcharges to cover the increased cost of fuel.

The reason for that is simple - many shippers believe a truck is a truck is a truck, for freight capacity is a commodity to them, like sacks of wheat. One sack will do just as well as another, especially when they think cheaper is better. That‘s why truckers need to re-think how they communicate with their freight customers, especially in terms of communicating the value they provide shippers and receivers.

[Helping truckers -- especially small carriers -- demonstrate that value to their customers while charging enough to be profitable is what our stalwart Contributing Editor Tim Brady does all the time. He's a great resource and should be on your short list of contacts when you have business issues to deal with.]

It‘s not just about having a truck and trailer in the right freight lane at the right time. It‘s about recognizing the value of providing safe, damage-free, and consistent delivery of freight on time, almost every time. It‘s about providing shippers with drivers that are polite, knowledgeable, and above all safety conscious. It‘s about maintaining safe equipment that passes inspection and doesn‘t break down. It‘s about being a leader in all facets of the business - able to use FAST lanes at the border, offer Internet-based updates due to tracking and tracing technology, and being paperless.

All of these qualities are valuable to a shipper - and shippers must learn to recognize and appreciate them for what they provide in terms of improving their own business and service to their customers.

Mike McCarron, a managing partner at the MSM Group of Companies that specializes in transportation and logistics service between Canada and the U.S., touched on these very same issues his excellent July column “Stick to your Guns” (which he writes for the print edition of FleetOwner) so you should check it out for his perspective.

Also, as usual, Professor Jerry Osteryoung from the college of business at Florida State University has some thoughts on this topic that I‘d like to share. Professor Osteryoung, the floor is yours:

“Deciding what a customer needs in terms of products and services is by no means easy. Clearly, every business is capable of providing many more services than a customer might need. In a like manner, a business can give a customer less than what they really need as well. Finding the balance between what the customer needs and what they can afford lies at the heart of a business‘ profitability as well as its ability to meet the needs of its customers.

One client we worked with was struggling with profitability. They were having trouble increasing profits. After extensive discussion, we ascertained that this firm was giving the customer what they thought was a competitive price for a number of additional services. While in theory this sounds good, the firm was incurring the cost of these additional services in a market that just did not value them. Consequently, their profits suffered simply because they were not really aware of what their customer really needed.

The idea of cutting back on their services was particularly difficult for this firm to accept. They felt that this was who they were and their integrity would be at stake if they were to discontinue providing the services that they thought the customer needed.

After repeatedly beating them over the heads [figuratively, of course!] we were able get them to understand, and they came around. The firm has now aligned its service offerings with its prices, and its profits are doing very well.

As illustrated by this example, knowing what customers need is critical to profitability, and one of the best ways to find out is to talk to them frequently. I know one bank CEO that keeps his office very close to the lobby so that he can meet and talk to his customers as much as possible in order to ascertain what their real needs are. Other CEOs periodically go out and visit both large and small customers to find out how their firm is doing and to make sure that the firm is really servicing its customers.

A great way to make sure that you are not under or over-servicing customers is to send out a questionnaire asking them to comment on the products or services that you provide. The more input you can get about your customers‘ needs, the better you will be able to develop products to service them.”

As always, you can reach Professor Osteryoung by e-mail at [email protected] .