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Today, everything about your fleet is costing more. CAP cost, interest, insurance, it all seems to be on the rise which is causing owners and management to spend more time than ever trying to rein in the cost of your fleet. If you’ve read our past articles you know that we constantly preach balance in our industry. That is, the company that does ‘pretty well’ in all areas of the business is destined to be successful. So, while you’re dedicating more resources on fleet planning and controlling costs, a daily and weekly plan still needs to be executed on how your company will continue to grow the top line. When Auto Rental News asked us to write articles on fleet planning and the changing landscape we face, it gave us the opportunity to not just discuss the fleet side, but also what we’re all doing on the revenue generation side of the business. After all, it’s difficult to be successful in this industry if your company performs admirably in one area (fleet), but poorly in another (acquiring new renters). Think of it like this, if in 2004 you invested $10,000 in Sunoco at $32 per share that investment is worth $19,503 as of this writing, a pretty good return in just over two years. That same $10,000 investment in Dell Computer in late 2004 is worth $5761 today, greatly reducing your gains and the amount of money that was going toward your nest egg. The point is that planning and execution to constantly improve all areas of your business is vital to your long-term success and profitability. When you decide to focus on only one area of your business, next year that focus will have to shift to the area you’re currently neglecting. First, when looking back at the last year, ask yourself these questions: 1. Do I know where my revenue came from for the year, or better put, how well do I source my business? 2. Did my top 10 referral sources spend more or less this year over last? Once I know the answer, what do I do with the information? 3. What was my return on investment (ROI) on advertising dollars? Yellow pages? Internet? Local paper? Networking organizations? 4. Try and find the goals you set at the beginning of 2006. When looking back, how many of them did you accomplish and how many of those goals included names of specific accounts? 5. What and who are my targets for revenue growth in 2007? If you answered “I don’t know” to at least two of the five questions, then you’ve answered my next question, which is “Are you executing properly on your marketing and revenue generation plan?” Let’s look at these questions one-by-one 1. Sourcing - Virtually all car rental software has the ability to source how your customer ended up at your counter spending money with your company. But, if your team does not understand the importance of properly utilizing this piece of the software, there isn’t any benefit. We encountered a company where one of their bigger accounts has their employees pay for rentals on a credit card and then get reimbursed. At the end of the year the client was unhappy that the owner of the rental company didn’t acknowledge the amount of business generated – never received letters of appreciation, a visit, consideration for a rate reduction. It turns out that due to improper tracking, the rental company’s numbers showed approximately $9,000 in rentals, when the true number was closer to $23,000. 2. Top 10 Referral Sources - Having your finger constantly on the pulse of your referral sources is vital to the growth of the amount of business they do with you. When was the last time you paid a visit to the decision maker at each of your top ten accounts? What has changed at their company that could affect your business with them going into 2007? If you’re not visiting these folks, rest assured your competition is doing what they can to get them as an audience and take all those referrals away from you. 3. Return on Investment - You probably know within $50 how much you spent on advertising in 2006, but how much did you benefit from this investment? If sourcing of your customers is not accurate, there is probably a false sense of how much business is truly generated from areas like yellow page advertising, your web site or local radio ads. I have witnessed numerous companies where the default source for the majority of retail customers is ‘yellow pages’, without even inquiring from the renter how they were referred to your company. The result is bad information forever locked in your rental reports. Have you ever found yourself blindly placing a fixed amount of money in a mutual fund year after year and never looked at the returns your money generated? Probably not, so don’t do it with your advertising dollars either. 4. 2006 Goals - Goals and forecasts have a tendency to be set aside and never looked at again once they’re established. This is especially true if you’re aware that you haven’t reached your goals. After all, who wants to look at something in writing that you said you would accomplish…and now haven’t. It’s the same as 401k statements that come in the mail when the stock market is going down…you never want to open the envelope! If your team is required to create forecasts for a fiscal year, at minimum you should be working with them at least twice per month to review progress and provide coaching and training on how to attain the desired monthly forecast results. However, if you don’t look at the plan until the year is over to see how your team did, well….save everyone some time and don’t worry about the forecasting exercise in the future. The magic comes not in setting the goal, but having a plan in advance on how you will accomplish the goal. 5. 2007 Targets - A person who has been in the industry for a number of years told me recently – “our revenue is down this year”, when I dug deeper I discovered that other than this person knowing how many less rental agreements they’ve written and how many more/less rentals they’ve generated through the Internet, they couldn’t put their finger on specifically why revenues were down. They had some gut instincts, but no real facts. When we probed further to find out how this trend was going to be reversed moving forward, you guessed it, no real plan. Most of you have a plan on what your fleet will look like not only next month, but months in advance. Sure, you tweak the plan as you go, but you have the framework. However, when it comes to target marketing and what we will do to land new business, too often, it is simply a seat of the pants plan. That is, we’ll get to it, when we get to it. If that kind of thinking describes your company, a change is urgently needed. As more companies recognize the need to have ownership and management get passionately involved in the marketing and sales effort of their company, those that don’t make the commitment will fall further behind in the market share game. Let’s
continue with the investment analogies – maybe you have heard
these before: Both
of the above statements can apply to car rental - take a look: Knowledge. Planning. Discipline. Execution. Persistence. When these words truly describe your efforts to grow the top line of your business, you will experience increased success. After all, when is the last time you heard Warren Buffet quoted that he made his fortune by sheer luck and with no execution?
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