BY BILL FAETH
The key to success in any business is being able to grow by acquiring new customers, and this, of course, is no different in the chauffeured transportation industry. In order to grow, you must determine what types of potential clients to seek and understand where to find those target groups.
Before you start prospecting for new clients, one of the most important things you can do is identifying the most profitable customers currently doing business with you. This will help you to develop a profile of your ideal clients and understand where to find them.
IDENTIFYING YOUR MOST PROFITABLE CLIENTS
To begin, review your books over the last three years and identify your top 20 clients based on annual spend. Evaluate each of these accounts to gain a year-over-year perspective. This is important to see if the spend is consistent, declining, or increasing.
If the spend of a particular client is increasing then you need to ascertain why, and then continue to replicate what is working. If a client’s spend is decreasing, then there are opportunities to seek new solutions and recapture lost spend.
Evaluate the strength of your relationship with each of these top 20 accounts on a scale of 1-10. Consider how happy the client is with your service, as well as the personal relationship you have with the individuals on these accounts. (These relationships will come into play when you ask existing clients for introductions to new prospects.)
TAKE VEHICLE USAGE INTO ACCOUNT
Once you have identified your top spending clients, look at the services and vehicles they use most often in order to determine what vehicles in your fleet are the most profitable. Understanding profitability will provide long-term growth opportunities, instead of focusing solely on increasing revenue.
To understand profitability you will need to know:
- costs associated with the types of services you are providing to the client
- the types of vehicles utilized
- whether the client is booking online or via GDS
- insurance and labor cost
- Ultimately, you may be surprised to find that the clients you think are the most profitable may not be. The point of this exercise allows you to focus on profitable customer types as you move forward and mine potential clients for new business.??
Understanding profitability will provide long-term growth opportunities, instead offocusing solely on increasing revenue.”
Most transportation companies will take on any new client, but they may fail to factor in how many phone calls are taken (labor), trip changes (labor), additional stops that may not be billed, profit margin on their out-of-town trips, and so on. These are all important issues to consider when targeting new business.
PROFITABILITY + RELATIONSHIP = GROWTH
Your most profitable and loyal clients are the ones who you want to target for new customer acquisition. These are also the people you’ll want to leverage for warm introductions to other prospects and for data-mining new potential customers.
Once you have identified these clients, you can use this list to develop your “hot list” of new targets, a topic I covered in the September issue of Chauffeur Driven (read it here: bit.ly/1LorYwR).
Your decision to leverage these clients is determined by the client’s profit value combined with the strength of your relationship. You must be 100 percent honest with yourself because fudging this will not benefit you at all—and may actually hurt you. Remember, you never want to harm an existing relationship in the pursuit of new business.
Modeling your prospects after your current profitable clients will keep you focused on growing in the right direction, instead of spending valuable time and resources chasing potential business that does not align with your growth goals. [CD11