HOW TO OPTIMIZE YOUR FLEET TRACKING BUSINESS. A RacoWireless ebook Powering Your Success
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1 HOW TO OPTIMIZE YOUR FLEET TRACKING BUSINESS A RacoWireless ebook Powering Your Success
2 Table of Contents Have a Plan 4 Customers: New and renew 9 Exceptional Implementations 13 Employees 17 Healthy Margins 19 Technology 22 Conclusion 26
3 Opportunity is knocking in the fleet telematics market It s estimated that currently only 20% of the North American fleet market has some form of telematics solution, but over the next four years the number of fleet telematics units is projected to double. Globally, the market is projected to flourish to almost $27 billion by 2018*. Is your business prepared to ride the wave and capture a portion of the growth? As fleet telematics become more of a necessity for modern fleets to remain efficient and competitive, the telematics industry has been growing increasingly competitive and fragmented with players attempting to fulfill that need. With some sound strategy, there is potential to seize market share in this lucrative subscription-based industry. In order to be successful, your fleet tracking business needs to establish a defensible competitive advantage and execute an optimized operating model that allows you to maximize growth in an efficient manner and deploy a successful technology to accomplish your goals. Whether you are starting a new business from scratch, or looking to grow your current business, this ebook provides some solid pointers on how you can optimize your fleet tracking business for success. 3
4 Have a Plan Before you set out to conquer the world of fleet tracking, it helps to take the time to do some basic business planning in order to establish focus and position your company for success. Your plan should address several key questions: Target Market Who is your target customer? Many business owners fall into the trap of believing that their products are for everyone, and that they must provide fleet tracking services to every potential customer, or any business with a vehicle. However, this broad approach often leaves a small companies resources spread too thin without really ever capturing a large portion of any market segment. Pick an area that you have experience with or a niche that is underserved and focus on that customer group. For example, you may choose to focus on larger fleets, which have shown higher adoption rates and bigger potential contracts with longer sales cycles. Conversely, you may choose to target smaller 4
5 When defining your competitive advantage, you should consider what assets, skills or knowledge are unique to your company. fleets, of which an estimated 80% have yet to adopt a solution providing a larger number of potential customers with smaller contracts and shorter sales cycles. Either focus would bring with it unique challenges and opportunities. Competitive Advantage Once you have established who your customer will be, what will your business will do better than your competitors that will allow you to beat them? You should consider what assets, skills or knowledge are unique to your company. A part of this analysis includes determining in what areas you do not have strengths and need to seek strategic partnerships. As an independent fleet tracking business you may offer advantages such as: Owner/operator advantage Business owners have more flexibility with pricing and deal terms than most of the sales people from bigger companies you ll be competing against. Also, you ll be selling to business owners and fleet managers, who undoubtedly prefer to work with someone with decision-making authority. 5
6 An experienced technology partner By partnering with a superb technology partner like RacoWireless and Position Logic you will be able to provide the industry leading GPS tracking software and network connectivity, and you will have the technical experience and support to provide the technological backbone of your business. Sales/service focus Leveraging a technology partnership allows you to divert time otherwise spent in development and troubleshooting towards customer service and support to ensure the success of your clients. Additionally, a small business is capable of having more personal interaction with local prospects and clients that your large competitors will not be able to match. Low overhead Another advantage of being in the business of selling fleet tracking services built on an outsourced technology platform is that your overhead will be much lower than that of your competitors. Without the technical infrastructure to maintain or employee and office expenses, you will be capable of being more competitive on price or strengthening your margins. 6
7 Positioning What will your business offer your customers that will be valuable to them? At the surface, the answer to this question may seem simple, but the ability to clearly articulate a strong value proposition will be crucial in helping win and retain customers. Strong positioning can shift the perception of a product from optional to essential in the minds of a fleet owner. Creating a value proposition should include: A concise view of what your product/service is the key features or elements that make it special. Answering the question of what problem are you solving. In the fleet tracking world, this may be something akin to lending visibility to the complexities of managing a large network of assets. Demonstration of how your product/service is solves the problem in an effective and cost efficient manner How it saves money for your customers, or how it makes managing their business easier or more effective. You should also consider how you will position your product in the market whether you 7
8 will be a low-cost provider or whether you will offer a premium-priced product. How you will express this value to your customers. This will frame your sales and marketing strategy, and the messaging you want to convey about who your business is. No matter how detailed or thorough your plan is when starting a business, the realities of the market and the variables of your employees, customers, and partners will inevitably cause you to adjust course as you go. However, having a plan as a starting point and road map will allow you to be prepared to make better decisions along the way and will guide you through the early stages of growth and optimization. NEXT: Learn how to get and keep customers. 8
9 Customers: New & Renew Once you have your fleet tracking business up and running, you will need to focus on gaining and keeping customers, while maintaining operational and technological efficiency in order to grow the business successfully. New Customers Because you have taken the time to articulate a clear and focused product/service and value proposition, formulating a powerful sales pitch will be much easier. Highly effective sales conversations should be focused on demonstrating for a fleet operator how your solution will solve their problems and improve their bottom line. Develop a sales pitch that clearly illustrates the ROI (Return on Investment) for your potential customer. That is, help them understand how utilizing your product or service will help them generate more revenue or decrease their cost above and beyond the expense they will incur for paying for your product. The savings opportunities will be obvious to the more savvy fleet managers. Others, however, 9
10 In a subscription business, true success is found in retaining a large renewable customer base. will need help navigating through the math calculating the gallons of gas saved monthly, savings through reduced insurance premiums, and extra revenue opportunities that comes from techs being able to complete more jobs in a day. Depending on the size and activity of a fleet, these savings can easily reach into the thousands or tens of thousands per month. When you are able to clearly articulate your value proposition and demonstrate a strong ROI, you should begin to be able to shorten your sales cycle and capture more customers, more quickly. Customer Retention In a subscription business, capturing new customers is only half the battle. True success is found in developing and retaining a large renewable customer base. Fortunately, for those using a RacoWireless system, when renewal time rolls around, you ll have collected data from a year or even more that you can leverage to show them the benefits of the system. Below are some ideas of how you can make it easy for your clients to choose to renew. 10
11 Set up your clients for success. Even when bringing on new clients, renewals should always be in the back of your mind. Take the necessary time with new clients to ensure everything is working the way they expect, as well as with their staff to ensure they use the software effectively. Remember that success for your clients will lead to success for your company. Stay front of mind. Develop a system for frequent and consistent follow up with customers in order to provide exceptional customer service. During these check-ins, offer suggestions or tips for ways your clients can better use the software to reduce fuel consumption or maintenance costs. Also, you can host webinars or in-person training sessions. All these personal touch points throughout the year will help remind your clients of the value of the fleet tracking solution you sold them as well as why they chose you as their vendor. Numbers don t lie. The most effective way to sell renewals of GPS tracking software is by showing the data the amount of money saved in fuel and 11
12 maintenance costs, the improved efficiency from better vehicle routing, and money saved on labor costs. If you have a client that has been using the system throughout the year, there should be enough data and empirical evidence concluding that it would be more expensive for them to let their contract lapse than it would be to renew. Offer flexible terms. If your clients are hesitant to renew their contracts, don t panic. If they don t want to commit to another one or twoyear contract, you can offer month-to-month payment or offer discount pricing on additional subscriptions. You could also offer terms to provide tracking services for additional vehicles added throughout the year for little additional cost. NEXT: You ve closed the deal. Now the real work begins. 12
13 Exceptional Implementations In your fleet tracking business, your work isn t finished after you ve closed the sale with the fleet manager or owner. Your new client will be counting on your business for help with installing the GPS hardware, training staff to interpret GPS analytics, and maximizing the ROI of their new technology investment as well as continued support thereafter. All of this should be spelled out in your implementation plan. Some ways to ensure a successful implementation are to: Write Out The Implementation Plan Deliver a written plan to your client that clarifies the goals, time-lines, and milestones toward full implementation. This plan will be different for each of your clients, but should include the basics of timeline, process and support procedure that will be similar for all customers. By identifying the results your client wants to achieve (such as reduced idle time, lower fuel consumption, less scheduling gaps, etc.) you can customize the plan accordingly. In order to motivate their employees to help hit those goals, your client ought to provide some 13
14 Getting drivers to embrace fleet tracking is critical in making the investment pay off for your client. Showing drivers what s in it for them is just one thing you can do to make this happen. rewards or incentives so that everyone can share in the benefits of lowered costs and improved efficiency. Another part of the implementation plan should lay out how the GPS data is shared and used across the company. To hit goals, such as reducing idle time, drivers need to see how they are doing compared to their peers. Get Employees On Board Getting drivers to accept GPS tracking as one of the critical tools in their fleet s management is an important component in making the investment pay off for your client. That means you need to do everything you can to help your client get his whole company behind the GPS implementation. For drivers in a business to come to accept and embrace fleet tracking, they have to see what s in it for them. For one, it means less driving time, especially since there will be more efficient scheduling and routes between jobs. They can spend less time behind the wheel, and more time serving customers. This is especially valuable for employees with compensation tied to sales 14
15 or customer service goals. They will have more opportunities to makes sales and help clients if they are not spending so much time behind the wheel. Ensure that your clients are comfortable addressing any privacy concerns their employees bring up about the GPS tracking. Your client should assure his employees that the system is not in place because of a lack of trust (a bad reason to implement GPS) or a desire to spy on their behavior, but rather as an effective way to improve the efficiency and effectiveness of the business, making it a more prosperous place for employees and owners alike. Train Employees To Use The System With your client s employees buy-in for the program, and a written implementation plan in hand, it will be time to train all the key stakeholders to use the GPS tracking system so they can successfully implement it. Although the system is user-friendly and intuitive, employees should be trained to use the parts of the software that will be most relevant to them 15
16 achieving their goals and their responsibilities outlined in the written implementation plan. For example, dispatchers should be especially familiar with the routing and scheduling features so they can quickly solve the biggest scheduling issues. Drivers should be familiar with the mapping features so they can move from job to job by the most efficient route. They should also be familiarized with the time tracking features so they can provide accurate billing to their customers and make good use of their time during the day. Throughout the training, continually remind the employees about the ways the system will make them more effective at doing their jobs. NEXT: Learn how to scale your team as your business grows. 16
17 Employees As you gain traction signing up new customers and find success in getting them to renew, the size of your business will begin to grow, and the need to support your customer base will grow in importance. It is critical that you have the internal human capital infrastructure to support your customers. This means having the right number of employees and instilling a sense of culture and buy-in with these employees. While a fast growing business may instill an urge to hire additional help quickly, you should consider all the costs associated with doing so The salary, benefits, time lost to training, and administrative costs of having employees are high, and could be burdensome for a young business. However, contrast the cost of hiring new employees with the cost of negative customer experiences, which can be difficult to overcome. Before hiring, consider what tasks could be outsourced. For example, instead of hiring an employee to set up and manage your website and online marketing efforts, hire a web-marketing consultant to launch your online presence. Or you 17
18 can partner with local auto-shops to perform the hardware installations. You can get help with administrative work, recurring billing, and even sales and marketing, until that day does come when serving your clients effectively will become a bigger job than you can handle well on your own. Whether you are adding new employees, or running a lean operation, ensure that everyone in your organization is well trained and understands the importance of their role in ensuring the company s success. NEXT: Make the most of your margins. 18
19 Healthy Margins Understanding margins and all the profit levers at your disposal is critical for optimizing your business for success. Margin is a measure of profitability the percentage of the selling price of your products and services that becomes profit. So increasing margins means increasing profit per dollar of revenue. There are several options for improving your margins, including: Reducing costs, especially unnecessary expenditures. This could be reducing costs of goods sold like GPS hardware units, decreasing operating expenses by decreasing employee overhead, or eliminating items like unnecessary office space. However, cutting costs sometimes leads to lower quality in products of service. Raising prices on the products and services you sell. You could either position your product as a premium product in the marketplace and charge more than your competitors, or you could charge for extra services like support or implementation. However, it can be challenging 19
20 As you run your business you ll learn the profit levers you can influence -- factors like pricing and payment terms; operational efficiency and employee retention. to convince a client to pay you more for the same services, and higher prices can make it more challenging to close new business. As you run your business, you ll discover that you don t need to achieve the same margin for each sale. With some clients, you ll run on a much lower margin, making up the profit through volume. For smaller or more demanding clients, you ll want to make sure to maintain a higher margin to make it worthwhile. Become Familiar With Your Profit Levers To maximize and maintain control over the profit margins in your business familiarize yourself with some of the common profit levers you can influence. Some of these factors include pricing and payment terms; brand recognition and reputation; operational efficiency; manage suppliers to minimize cost of goods sold; customer service and retention; employee training and retention. For example you could negotiate more favorable payment terms for your payable and receivable accounts, to collect money more 20
21 quickly from clients, and defer paying liabilities, thereby improving your cash flow. As you learn which profit levers you have the most control over, you will know which to adjust and when so you can maximize your margins with each client. NEXT: Your platform is everything. Make smart technology decisions. 21
22 Technology Delivering and maintaining the best GPS tracking solutions in the industry will improve your client relationships by providing them with the robust tools and support they need to succeed thereby making it easier for you to sell your services. But, as is common for technology businesses, you must consider the buy vs. build decision. White Labeled Solutions Developing software from scratch is timeconsuming and costly, and will require dedicated support throughout the life of the software. Although you may save money initially, the long-term costs and time lost developing and supporting a proprietary system is often not a worthwhile endeavor for small businesses. Conversely, a customizable solution from RacoWireless means you can start the work of acquiring clients and subscribers right away without the overhead of designing your own system and hiring developers who will have to 22
23 code for months (or even years) before there will be a product ready to deliver to a customer. A white-labeled GPS tracking platform enables GPS tracking companies to deliver a professional system without sacrificing any of their branding or customer experience they have established. Additionally, it facilitates transitioning clients to a new system for an existing business. The efficiency that comes from partnering with an established tracking platform and the clever division of labor should not be underestimated. Reducing Technological Overhead Aside from the initial cost of developing a GPS tracking solution, there are also significant costs associated with hosting and maintaining a system. Using a hosted, cloud-based GPS tracking platform means you don t need to worry about scaling. When you don t have to worry about scaling infrastructure, you can be confident that you are providing reliable service to your clients whether you are serving 100, 1000, or 10,000 subscriptions. This means that your company can focus on customer acquisition 23
24 and providing great service, instead of software development, infrastructure, performance, and scaling. The only scaling issue you should worry about is how you will provide great customer service to your ever-growing client base. Another key benefit of using a hosted GPS solution is that your business only pays for what its clients use. If you were to develop your own software or host GPS software on your own equipment, then you would end up paying for much more unused capacity -- and when you sign up enough new customers to utilize capacity, you will have to then consider if you need to add more servers, storage, or computing power to your system so that the new customer doesn t create a negative experience for the rest of your customers by slowing down your system. A hosted solution thus makes it much easier to project how your business s costs will increase as you bring on new clients. Running your fleet tracking business with cloud software means you don t need to hire 24
25 a large IT staff to manage servers, do custom development, or perform technical support and you will not have to disrupt your clients with software patches and upgrades. You can instead focus on the tasks that will help your business grow and make you more money, mainly finding new clients and servicing existing clients so they will maintain their subscriptions and recommend your services. A good cloud provider of GPS tracking services will have your back to take care of developing software and will help with technical support for your clients. 25
26 Conclusion While there are many factors that will affect the success of your business, this paper has brought to light several of the major components in optimizing a fleet tracking business. It may not be possible to delineate all of the possible challenges you will face, nor create a checklist of things that can guarantee success, but it is possible to increase your chances by adhering to some of the basic principles we have addressed: planning for proper positioning and pricing, focusing on the success of your customers and finding good technology partners (Int l) sales@positionlogic.com 26
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