Five Simple Truths to Developing Profitable Fleet Accounts
If you have been thinking about diving into fleet accounts, here are some things to consider.
What could more fleet account business do for your business? Most service bay operators already have a few commercial accounts and realize just how significant they can be. For instance, your local plumber, electrician and heating and air conditioning companies with a fleet of light trucks, pickups, vans and cars are constantly making trips. While consumers may put 12,000 to 15,000 miles on their vehicles annually, typical commercial vehicles put on 20,000 to 30,000 miles per year or more. Commercial vehicles are only productive when they are in use, so business owners and fleet managers like to keep them running. Since they get used more, they also require more maintenance and repair.
Here are five simple truths to develop profitable fleet accounts:
Simple Truth No. 1.
Let’s do the math. Take a typical fleet vehicle such as a Ford E-250 or a Chevy Express cargo van. Vehicle operating costs vary, depending on driving patterns and conditions. According to government figures, AAA, fleet management studies, industry publications and personal experience, projected national average operating costs for maintenance, tires and oil will be 4 to 6 cents per mile during the first six years of operation. Using conservative numbers, multiply 5 cents per mile times 25,000 miles, and you get $1,250 in vehicle maintenance costs per year. This number only goes up as the vehicle ages.
If a commercial account has 15 vehicles, this means the account will spend at least $18,750 per year to maintain the whole fleet. If you have 10 of these accounts coming to your shop, it quickly adds up to $187,500 per year in sales. If you operate your business well, at 15 percent net profit these 10 commercial accounts will put more than $28,000 in net profit in your pocket in a year.
This estimate doesn’t even include the strong probability that you will be working on the personal vehicles of many of the employees from these companies. If these 10 accounts each have 30 employees and you acquire 10 percent of these 300 employees, you can add 30 more customers to your business. Don’t forget that you can keep all these customers coming back to you for years!
The truth is, one large account can spend $50,000 or more with you annually.
Simple Truth No. 2.
Over the years, I have observed several barriers to going after this type of business. One of the biggest challenges is effectively marketing to these busy customers. Direct mail doesn’t always work very well. Try telemarketing and you can get beat up “smilin’ and dialin.’” Sometimes you can make an appointment with the decision maker only to find he or she isn’t available when you get there. If you are bold enough to conduct a professional sales and marketing campaign to win this business, you can expect to take a few lumps. But the hairiest hurdle may be the time it takes to get operationally ready to serve these customers properly and then get out of your shop to see the people. We either have reasons or results. Your commitment is more important than the reasons. You can find the time for the things that are important to you.
Simple Truth No. 3.
Despite the strong potential for increased sales and profits with these types of customers, I have heard many different opinions about the value of fleet accounts. Some people have told me that fleet customers are not loyal, want discounts and they can be too demanding. They complain that fleet vehicle drivers are frequently in a hurry and decision makers can be impersonal, overly pragmatic and even cold. However, in a recent survey, 84 percent of automotive shop owners and managers say they want more fleet accounts, especially local fleet accounts. Is it possible that we can learn to overcome these obstacles? I’m here to tell you that you can win their loyalty, sell them profitably and manage their expectations.
In the 17 years that I have been helping automotive repair shops develop fleet accounts, I’ve never seen a better time to develop this very profitable type of business. Contraction in the construction industry is offset by the fact that fleet managers have been slower to replace their aging fleet vehicles, opting instead to fix them, and leasing new fleet vehicles is less popular than it used to be.
Consider this case study
An established automotive service center with six bays and doing more than $750,000 in sales annually hired a part-time sales person to work 10 hours per week. They developed 12 accounts in eight months that generated $25,000 in sales. In the next seven months they had 28 active fleet accounts with an average of 8.6 vehicles per account doing $138,700, averaging $4,954 per fleet account and $186 per work order. As the shop added accounts, average work orders and sales grew exponentially as everyone at the shop gained more confidence working with this type of customer. They recently reported to me that after five years expanding the program they expect to do more than $750,000 in fleet sales this year across their three stores.
What did it take to achieve this level of success?
It’s a numbers game: Using a 33 percent sales presentation to closing ratio, it took 225 hours of selling to close 25 accounts over 45 weeks. Add 2.5 hours per week for account management and 2.5 hours per week for administration. Plan on making about 15 dials to get an appointment.
“Choosing a goal and sticking to it changes everything.” – Scott Reed
Simple Truth No. 4.
Besides having great goals and an action plan, I also recommend you equip yourself with a professionally designed marketing piece to use in the sales presentation, a list of qualified prospective accounts and clear benefits and advantages that are not just competitive but unique breakthrough solutions that make a difference. Go big or stay home!
“The doors of opportunity won’t open unless you do some pushing and pulling.”
Simple Truth No. 5.
Decision makers at fleet accounts will tell you they’re happy with who they’re using for service. Even if they could be happier, prospective fleet accounts will tell you they’re satisfied with their current providers. They may even tell you they’ll “keep you in mind” and send you on your way or promise to “give you a try” just to get rid of you. This is where a professional sales approach is vital. You must establish rapport and ask consultative questions that uncover what’s missing for them, how they rate their current providers, and under what circumstances they might change their minds. Let them know how you can help them. Let your light shine! Be persistent. If you keep up your sales calls activity level and ask enough of the right questions, you will gain more of this business.
If you can’t do it yourself, you might consider hiring an outside salesperson. It will take someone who can sell consultatively, hunt, close a sale and build relationships. To manage your fleet sales person, give them activity and performance goals, set a positive tone and high expectations. He or she must schedule time on the calendar for field, phone and administrative work. Hold accountability meetings with all staff, to get buy-in, communicate goals, clarify roles, build teamwork, solve problems and resolve conflicts.
So what are you waiting for? Go out and get ‘em!
“Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it!” – Goethe
Editor's Note: This article is one of several management articles that will be contributed to AutoInc. this year by Automotive Management Institute (AMI) instructors. In 2011, AMI's knowledgeable instructors will continue covering a variety of topics designed to educate and train today's service and repair professional in AutoInc. To learn more about AMI, its courses and instructors, visit www.AMIonline.org. AMI administers the distinguished Accredited Automotive Manager (AAM) program.
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