“The quality of your customer service determines how high your rate can be.” –Tim Brady, author, consultant, speaker, and former owner-operator
One of the things I talk with Tim Brady (at right) pretty frequently these days is how customer-services drives everything – and how the level and quality of that service drives pricing. Sure, there’s a lot of “cheap freight” out there, but there are also a lot of shippers willing to pay more to get good customer service, however they define it.
“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,” he explained to me. “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 64-dollar question is, of course, how to do that – and for that matter, which customers should you as a fleet concentrate on, for not all of them are willing to pay more to get more.
Professor Jerry Osteryoung with the college of business at Florida State University has some thoughts on this subject, as well, so I’m going to turn this space over to him so he can share them. Professor Osteryoung, the floor is yours:
“Clearly each and every business has many customers. However, all customers are just not the same. While all customers deserve to be treated well, you really need to treat your best customers even better. I like to think that there are three classes of customers.
The first are the pain in the butt customers. You really should really get rid of them. Then there are the majority of customers who rely on you to service their needs. Finally there are your best customers. These best customers usually make up 10% of your sales, but usually contribute 20% to your profitability. These are very important folks!
As an entrepreneur [and truckers are definitely entrepreneurs] your job is to make sure all customers experience wonderful customer service, but your best customers need to be treated regally. If you should lose one of these customers, the financial cost could be immense.
Just look at big businesses that regularly take their best customers on various exotic sojourns. Some buy sky boxes for different athletic events just to entertain big clients. Clearly, owners of big businesses know the importance of their best customers and go out of their way to insure that they continue to be their best customers. They are willing to invest some extra dollars and time in these premier customers.
In order to ‘operationalize’ this ‘best customer’ plan, you first need to identify the top 10% of your customers. This is normally pretty easy to do. Just look at a sales report that shows the total size of your customers’ purchases. The next step is to ascertain what perks you can offer these customers.
It really is unimportant if your customers take advantage of your offer. What is important is that you offer them something, which communicates quite well that you consider them important. However, if they do accept your invitation and you spend time with your customers in a social setting, you really do develop a relationship with them.
Once you have ascertained your best customers and then what perks you can offer, then it is a matter of just executing the plan. Personally contacting your best customers once a year is a very reasonable thing to do, since you really want to promote a continuing relationship. You really don't want this relationship to be just business driven, but more of a great friendship. This is also a wonderful way of saying, ‘Thank you for your business.’”