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Selling a Service

11th January 1963
Page 75
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Page 75, 11th January 1963 — Selling a Service
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Which of the following most accurately describes the problem?

Economic operation and efficient maintenance can ensure low costs per mile, but increased revenue is dependent both on the standard and publicity of the services provided N orninous.ornission from many inquiries received from

readers intending entering into haulage or coach opera tion is any suggestion that they are familiar with the commercial aspects of the business they are about to set up. Whilst training as an engineer should be of special benefit to a transport operator, both as regards the correct selection of vehicles as well as their subsequent economic maintenance, this knowledge and experience would not necessarily provide the right background for bargaining with customers as to rates charged or in making the initial contact with a view to securing new business.

Both maintenance and costing are important aspects of operation, but the prime purpose of a commercial vehicle is that it should carry traffic speedily and cheaply. But because the traffic carried, particularly in the goods field, is so varied, the principles and advice, which can be specifically applied in other departments, seldom have general traffic application.

It is, however, unfortunate that this admitted difficulty should cause some operators to underestimate the importance of the selling side of their business. The fact that a transport operator has a service to sell, as distinct from a commodity, obviously demands a different approach to the advertising and publicity given to his service, but the need, nevertheless, remains.

Previously in this series a list of the -overhead costs which an operator might incur was detailed and discussed. Whilst the actual operating costs of individual vehicles can be said to be made up of five items of standing costs and five items of running costs, there wilt inevitably be other costs incurred in running a business which cannot readily be assigned to any particular vehicle, other than as a proportion of the total.

In these two articles it was suggested that it would be convenient to group the several overhead costs under the following headings: Management, office, garage and stores, warehouse, branch depots, sales, professional services, auxiliary fleet and sundry items. Under the group heading of "sales" five items were listed, namely: (1) Representatives' salaries and commission; (2) representatives' car expenses; (3) advertising; (4) entertaining; and (5) gratuities. Whilst a total a 55 items was included in the list of overhead costs, it is appreciated that many of these may not in fact be incurred by small operators. Similarly, in the respective groups such as "sales ", specific expenditure on any one item may not be necessary. But it is most important for the small operator to appreciate that this aspect of his business still requires careful attention even though he himself may undertake this work along with other duties.

In many cases when a potential operator makes his initial survey as to the likelihood of profitable traffic, he is finally persuaded to go into business by the assurance of a reasonable amount of traffic being available from one or two customers. If this is, in fact, the case, it is natural that he should pay special attention to the source of this traffic. Although it may provide a substantial proportion of his revenue, it should not

be allowed to dominate the development of his business, assuming that it is his intention to operate in general haulage rather than on contract.

If such a dominance were allowed to persist it might too easily predetermine not only the routes on which a regular service could be offered but even the location of depots which in themselves might be economically placed for that particular traffic, but not for handling the traffic of any other customers.

Additionally, the greater the proportion of revenue contributed by the one or two major customers and the rate of profit margin, the greater would be the tendency to discount the value of expenditure in the obtaining of other traffics, especially if they consisted of relatively small lots. But taking a longer view, the build-up of these subsidiary traffics could contribute to the general prosperity of the business.

Such a policy is especially important today with the rapid expansion of many new industries. The corresponding expansion in the traffic they require to be moved must necessarily give an air of prosperity to those operators who are fortunately engaged in this work. But long-established operators with knowledge of conditions between the wars, and particularly in the north west, learnt by bitter experience the folly of being too heavily committed relative to the traffic they carried for one particular industry.

In this context it is significant that many long-established operators are based, or at least have large depots, at the major ports, which almost inevitably provide mixed traffics. Alternatively, areas in which both engineering and agriculture were carried on similarly offered some measure of balanced prosperity to the haulier.

But even when the newcomer to haulage appreciates the value of the basic economic factors, the securing of a prudent balance of traffics is, and will always remain, a difficult task but, nevertheless, an essential one if the business is to continue to be prosperous. It is just at this point that the owner-driver or small operator who himself undertakes driving is unable to progress. Because he is fully engaged either in the conveyance of existing traffics or in the maintenance of vehicles to ensure that these traffics continue to be carried to the customers' satisfaction, he is unable to devote adequate or even any time • ta procuring new customers.

It is an unfortunate fact that the very regularity of traffic provided by the original and principal customers could result in the operator taking this source of revenue for granted. Where such a situation does exist it would be common practice for information relative to the daily consignments to be exchanged by comparatively junior members of the respective staffs.

In such circumstances, even though substantial quantities of traffic may continue to be carried, it would be prudent for the operator to make a courtesy call at regular intervals on such customers. This not only assists in ensuring continuing goodwill between the two parties but avoids the danger of leaving the field open for competitors.

Having set up in haulage, the new operator will have to determine, if it is his intention to expand, whether he is going to specialize in a small range of traffics, possibly involving the employment of vehicles specifically designed for this work.

or whether he intends carrying general haulage on standard platform vehicles. Obviously on this decision will depend to some extent the type of advertising which should prove most profitable to him.

In post-War years the advertising industry has grown to large proportions so that it is becoming increasingly possible for amateur efforls, such as may be attempted by small businesses, to be so misdirected as to be virtually useless.

Whilst the most likely result of such advertising would be a lack of response, the small operator is also in danger of not being able to fulfil the services offered if publicity had been given on either too wide a scale or in areas where geographically it was uneconomic to operate.

More than with the sale of consumer goods, publicity in connection with a service, and particularly transport, must be directed to specific groups of customers and, moreover, must reassure such customers by its content that the operator is fully acquainted with the difficulties and problems connected with their particular trade or industry. Any special features of the operator's service, such as the availability of bulk vehicles for the carriage of certain traffics or regular services between centres of direct interest to such customers, should be emphasized. Similarly, the proximity of an operator's depot to any particular industry should be highlighted in any such publicity. Vague claims to carry anything anywhere are virtually valueless.

A decision which may seem of relatively small importance when a new haulage business is being set up is the choice of name. If it is intended from the outset to expand as soon as it is prudent to do so, possibly with extension into longdistance operation, the choice Of a name with a clearly local connotation could subsequently prove a liability by continuing to imply a limited sphere of operation when, in fact, it no longer applied. •

IT has recently been pointed out that whilst manufacturers are in a position to produce, lest and experiment with their products behind closed doors, transport operators are not so fortunate,. because their, whole productive process takes place before the customer. Provided, however, that a good service is being maintained, this apparent disadvantage can be turned to advantage if pains are taken to ensure, for example, that vehicles are always in a, clean and attractive condition. In this connection, a minimum of words painted on a vehicle has the most direct effect on the passer-by, and it is significant that almost without exception the large national concerns, with ample resources to afford the best advice on such matters, follow this policy. Conversely, the smaller the operator the more he seems inclined to inscribe quite irrelevant' details on the sides of his vehicles, despite the relatively high cost of signwriting.

In many instances the only direct contact between a trader and his customer is via the driver of the delivery yan,. whether operating under C or A licence. In keeping with the smart appearance of the van it is important that the driver is similarly presentable, especially in those trades where it is' necessary for him to enter premises where customers are being dealt with and where he has transactions with the trader such as the handling of cash. The increasing provision of uniforms is an indication of the importance attached to this aspect pt publicity by large transport operators.

As with the lettering of vehicles, some small operators unwittingly give an outdated impression of their business, however obliquely, by the use of antiquated letterheads on notepaper and accounts. A small point which can be remedied at little or no extra cost when reprinting of stationery becomes due.

'TRADERS and industrialists are busy men arid, when an operator is canvassing a new customer, pictorial evidence of the vehicles he can provide could rapidly confirm any verbal claim. Thus, in a similar manner to the album of photographs which chassis manufacturers and bodybuilders provide for their representatives, a transport operator could build up pictorial evidence of the .range of vehicles he operates and possibly some of the types of jobs he has already undertaken.

With the exception of the largest operators, the incorporation of a publicity department within the organization would be uneconomic. Nevertheless, if it is desired to give wider publicity to a transport service, either by inserting advertisements or by editorial mention in the Press, expert advice is • imperative if the right message is to reach the right people. The amount of rate charged for an advertisement, for example, is not necessarily an indication of the extent to which it will be read. Thus the circulation of any particular paper may be high, thereby justifying relatively expensive advertising rates.

But the advantage of such wide coverage will be entirely lost, along with the substantial charges, if the advertisement has been placed in a completely wrong sphere. Though having only -relatively small circulation, the local weekly papers and the specialized journals of trades and industries served by the operator would profitably offer him a better medium and more profitable returns for his expenditure. •

Negotiation of haulage rates is probably the most difficult task which faces the new operator because so many factors are involved relative to each individual transaction. Although there must Obviously he the need in the initial stages to obtain ali the traffic which is available.' it must not be overlooked that, in addition 'to the economic factors involved, bad publicity to the business as a• whole might result from the injudicious fixing of a rate for a particular, job heeatise of the urgent need for traffic at that particular time.

If, for examjale, a rate has been reduced as i result of competition from another haulier, the standard of service may well tend to deteriorate. In such circumstances it is. possible that not only the customer directly concerned becomes dissatisfied, -but this lowering of standards becomes more generally known.

However great the need to secure a particular traffic, it may be an unfortunate fact that a prospective customer has either no loads to offer or else is perfectly satisfied with the haulier he at present employs. In such circumstances it is a shortsighted policy to decry a competitor,, and one which would in all probability rebound to the -haulier's disadvantage as well as, undoubtedly, making an unfortunate impression on the customer. A positive statement as to the services which he can provide and guarantee to maintain when the customer chooses to use them will be of much more lasting benefit. S.B.

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