Team Techniques for Reducing Costs & Retaining Revenue

Posted on February 5, 2009 by LCT Magazine

NOTHING'S EASY: As revenue cash flows in the chauffeured transportation industry have dropped off dramatically since November/December, managing operations efficiently has become a top priority. This may mean rapid downsizing in fleet, staff, and other operating expenses. It can also mean renegotiating corporate contracts and working with staff to cut costs.
Tom Mazza, president of Tom Mazza Consulting, gave this example in his February newsletter of how an operator dealt with a 20% rate reduction requirement from a corporate client:

"My advice to my (operator) client, in this instance, was to agree to the discount. We presented the following proposal back to the (corporate) client which was accepted: 

  • Conversion to on-line booking with agreement to pay $5 per reservation for phone reservations after 90 days.
  • Net 15 days on all invoices with penalty after 30 days. All payments submitted electronically.
  • Agreement from client to take 'any vehicle available' other than stretch when necessary.
  • Re-evaluation of pricing in 12 months."
Management met with chauffeurs and explained the situation, and chauffeurs agreed to a reduction of $5 per trip. Renegotiating with clients and chauffeurs didn't create a perfect solution, but accepting reduced rates and lowering operating costs on this account was much better than losing all this revenue, Mazza says. The staff was satisfied with how it was all handled: "The chauffeurs and the office staff were tremendous. Full disclosure from management made them feel respected and they responded in kind."  -- J.L.

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