Consultant Advises Limo Industry to Think Big

Posted on January 1, 2005 by LCT Staff - Also by this author

Dr. Michael J. Kami, president of Consultancy in Strategic Management, spoke at the LCT Leadership Summit in Miami on Oct. 19.

The following is his keynote luncheon speech, which many attendees called a highlight of the Summit. Ladies and gentlemen:

Many years ago, I led an organized and disciplined corporate executive life with IBM and Xerox. It was during their early super-growth eras and everything was going great, including the stock options! Yet, I became restless and disenchanted with the big business rules and regulations, creeping bureaucracy and internal politics. I wanted to do “my own thing.”

I quit being an expensive hired hand and became a self-employed management consultant to the corporate world. All the decisions, right or wrong, were mine and mine alone! I loved it ever since. My move to independence started in 1967 - that’s 37 years ago!

I chose to have no partners, no employees and no overhead. I worked out of my home in Lighthouse Point, Fla. As my business phone kept ringing and the demand for my services kept growing, I began to travel extensively, throughout the United States and abroad. The average was two round trips a week. These activities molded my life pattern. It was also the beginning of my love affair with limousines and chauffeured transportation.

For all these years, I used limos and sedans for transportation to and from airports. In addition, there were trips to and from hotels, conference centers, corporate headquarters, convention sites, restaurants, cruiseship docks and wherever else my clients wanted to meet with me, in the U.S. and abroad.

The reason for my “use the limo” policy was not, and still is not, an “ego trip.” It’s pure practicality and good business sense. I don’t want to and cannot afford to become tired, annoyed, upset or distracted before a meeting with a client or before making a presentation. Driving one’s car to and from airports is no fun and no relaxation. Being safely driven in a comfortable motor vehicle - a limo or a spacious town car - I can gain precious time to review my notes, do some last minute thinking or I can just snooze.

Thus, the key words for my policy to use chauffeured services derive from a business necessity: I don’t want and cannot afford any surprises, annoyances, distractions, disturbances, errors or malfunctions.

During these many years, I did have my share of interesting events and unusual circumstances. On an assignment in Germany, I was met at the airport by the CEO of a large global financial institution and was ushered into a Mercedes limo. A similar vehicle was in front and another one in the back. Professional armed bodyguards were seated in all three vehicles. My client explained to me that the Red Brigade, a German terrorist organization, published a list of their intended assassination targets, and until two days before my arrival, my host was number two on the list. Unfortunately, target number one was then killed by a car bomb. I thus had the dubious honor and adventure to ride with the new number one assassination target. Nothing happened during the trip, but it was an interesting experience.

Life of a management consultant can be unpredictable and quite exciting, outside the dull boardroom settings and endless meetings. Working with the Banco de Vizcaya in Bilbao, the Basque part of Spain, I traveled in a bullet–proof limo with bodyguards, because of threats by the Basque separatist movement against anybody associated with world trade and large international banks. Such a bias is quite common abroad and also in U.S., during the World Trade Organization meetings.

A similar situation happened to me in Trinidad and Tobago because of a conflict between two major ethnic groups, resulting in an undeclared civil war and threats to the “guests of the capitalistic establishment.” I faced an even more bizarre scenario at a business meeting held at a beautiful Italian resort, the Villa d’Este on Lake Como, near Milan. The terrorists were threatening to shoot the attending executives in their kneecaps. The arriving and departing limos were protected and surrounded by an armed unit of the Italian army.

Terrorism is not new in this world and it did not start on 9/11. The international market for production, use and sales of bullet-proof limos and similar vehicles should be re-examined as an interesting, specialized and growing niche opportunity on the international scene. I don’t think we need it yet in U.S.

Having told you how I love limos, let me also tell you what I dislike, often intensely, about some of the people who operate them. The size of the service provider doesn’t really matter to me. Most business clients only need one vehicle at a time. The distressing fact and the stark reality is that both large and small limo operators often provide an equally lousy service. One recent example comes to my mind.

Private corporate jet operators usually have a contract with a specific chauffeured limousine provider to drive their clients to and from their private plane airport facilities. Some of my clients provide me with private jet transportation. I experienced a ridiculous situation just a few weeks ago.

The limo driver who picked me up works for one of the largest limo providers in U.S. They, in turn, have an exclusive contract with the private jet provider company to pick up and deliver their passengers. Yet, my driver did not know anything about private aviation. He got lost and could not find the right hangar facility, namely Banyan Aviation, at the Fort Lauderdale Executive airport. The driver was also not aware that a plane’s tail number was required to be able to open a gate, so he could drive the car right to the aircraft waiting on the tarmac. I was not impressed with either the limo management or the jet provider. Both should have trained their pick-up and deliver chauffeurs in the fundamentals and the details of their specialty business.

Let’s examine the probable process for an individual trying to find and hire a limo service. The first obvious step would be to look in the local Yellow Pages. The Fort Lauderdale, Fla. directory lists four pages of ads, some large, some small. They all say basically the same thing, promise the same experience, claim the same ability, offer the same services, all have the lowest prices and all use the same equipment. I couldn’t make an intelligent or even a remotely valid decision from reading either the big or the small ads. Throwing darts into the Yellow Pages would probably yield better and faster results than trying to make a reasonable and objective choice.

So let’s try the Internet and the Web services! Use the Google search program and type “Limousine Service.” Result: 1,120,000 hits or entries. Try “Limo Service” and you get only 696,000 hits. Reduce it to “Airport Limo Service” and 485,000 opportunities pop out. Let’s get more specific and type “Fort Lauderdale Limo Service” and you only get 44,000 options. Let’s be cheap and type “Fort Lauderdale Sedan Airport Service” and you are fnally down to 7,380 possibilities to explore! Is that a viable marketing option? Is that the best each of you can do to promote your services on the Internet? No wonder that only 17 percent of your industry’s confirmed reservations are made through the Internet.

What is then the answer? Besides the Yellow Pages and the Internet, there are, obviously many other ways of advertising and marketing your services. What marketing direction is best to expand one’s market and to procure new clients? I asked myself the question of how do I, personally, choose my limo service, unless it’s provided or specified by my client.

The answer is simple and immediate: I rely on personal recommendations of other satisfied users. These are my travel agent, who is also a trusted friend, the executive secretary of a CEO whom I know personally, a neighbor who happily announces that he had a great experience: timeliness, courtesy, safe driving, and friendly help with the luggage.

Direct, closely targeted, personal, individual marketing, one-on-one, seems to me a better approach than any mass usage of mass media. Many operators have contracts with the internal travel departments of larger corporations. One lousy personal experience of a high executive or, worse an important client will terminate such an exclusive business arrangement very fast.

I calculated for you the following gem of bizarre and troubling information. During the past 37 years, I took, conservatively, around 15,000 or more limo rides. Yet, I was never contacted, never approached, never solicited, never written to, never phoned about a limo service! Not a single limo operator ever tried to offer me personally the use of his or her service. Please understand that I don’t mean to offend or mock anyone with my remarks or impose my personal experiences as broadly valid. I genuinely want to help those of you who may lend a sympathetic ear to my plea for better understanding of each individual customer’s needs, wants and wishes.

The essential services as perceived by each client are of prime priority. If you do believe it, you may want to try new, different, personalized, tailor-made and eventually more profitable approaches. You may save a lot of time and money by minimizing the traditional ways of advertising that don’t seem to work very well anymore.

The best marketing results for procuring new clients will be achieved, in my opinion, from planned, directed, concentrated and continuous personal networking efforts in each of your geographical use areas. It basically means finding and personally approaching one prospect at a time!

I read some very good advice in your excellent LCT Magazine.

This is how you can, as an individual, personally get involved in finding new clients. Join and volunteer time at your local business organization. Speak or write publicly about your business. Sponsor or co-sponsor a charity event. Get involved with civic groups and committees. Voice your opinion in print for name recognition, as long as you don’t alienate everybody. Send an interesting newsletter to clients and prospective clients. Give free workshops and seminars for special interest groups. Cooperate with other organizations to achieve name recognition. Form alliances with your suppliers, colleagues and even competitors to offer combo packages.

It doesn’t matter how big or small you are, the limo service is a personal service and must be marketed “personally.” I say this with conviction for business travel to the airport. Obviously, it becomes even more essential for the weddings and proms market and the “night-on-the-town” adventures.

This direct, personal involvement type of “name and service recognition” marketing is time consuming and obviously cannot be performed by the 48 percent of owners/operators working from their home 24 hours a day. That’s why I see a potential wave of consolidations and mergers in the near future. There are also other changes looming on the limo horizon.

Last month, my wife and I took our son and daughter and their three teenagers on a tour of Hawaii. Obviously, we could not fit all seven of us into one regular sedan. We needed a limo service. We discovered, however, that the Waikiki beach avenues are full of cruising white stretch limousines in visually impeccable condition, with a large painted phone number on the vehicle’s body. We called one to go sightseeing and got a very pleasant and unexpected surprise. The stretch limo, which arrived at the hotel within 10 minutes, without prior reservations, had a taximeter and the total fare for the seven of us was not only less than the price of two taxis, but equal to the price of one taxi! I am still astounded and can’t understand the economics of such an inexpensive service.

Is it a new development, will it expand and catch on, profitably, and by whom? The longer-range overall market for chauffeured service to and from airports will, in my opinion, increase because of the security and parking hassles that will not abate, but worsen. Seeking protection from global and growing terrorism, this will become a permanent condition of our society. It will create continuous disruption and fear in the daily lives of innocent individuals. It will also create new living patterns and new potential markets, impacting the established routines of the past.

The conduct of our personal lives will change in many respects. It may seem like a dark and pessimistic prediction, but unfortunately it’s our new reality. In this transformation, the limo industry will not lose, but gain potential additional market and additional revenue prospects from new clients, different from the past.

I would like to share with you now my definition of what I personally consider a very satisfactory, residence-to-airport service, in a Town Car or a small limo.

Punctuality and Service: The driver should be in place five minutes before agreed upon departure time. He or she (11 percent of chauffeurs are women) should use a cell phone to call the client and announce the car’s arrival, inquiring if help is needed with any luggage. This is particularly important with high-rise condo dwellers using elevators.

Dress Code: My personal preference for business transportation is a regular dark suit – no uniform, unless it’s a black-tie gala performance at the opera. A jacket is preferable to just a white shirt, but should not be mandatory in Florida, for instance. T-shirts with Harley-Davidson explicit logos are a definite no-no, except in one case. I know a Milwaukee limo owner who also regularly drives the former CEO and Board Chairman of Harley-Davidson. He better wear Harley attire!

Essential Goodies: A bottle of cold water in a small cooler; one most recent, local newspaper; one current edition of Time or Newsweek magazine. Avoid clutter of two-year-old Architectural Digests and Sports Illustrated. A limo is not a doctor’s office!

Radio: The chauffer should keep it off unless the passenger asks for a specific program on a specific channel or, even better, has a back-seat control of stations and volume.

Driver’s Cell Phone Manners: There is nothing more infuriating, more irritating and more exasperating than to be subjected to a constant ringing, talking and dialing of a cell phone by the driver. Particularly, when his left hand holds the phone, his right hand tries to scribble notes with a broken pencil and the vehicle is driven with his knees. The driver’s communications on personal or business matters during the trip should be silent! No excuses, no exceptions, no explanations: Chatter is nerve racking, annoying, dangerous, exasperating! It must become an absolute no-no unless initiated by the passenger!

What’s the alternative to the chauffeur’s constant cell phone chatter? The latest wireless equipment and mobile electronic systems should and eventually will be installed in every car or limo for hire. A GPS map system helps with finding addresses and best routes. A laptop-size screen can display the latest communications from home base, including new or modified bookings, itineraries and schedules, financial transactions, credit card payments, receipts and return bookings. All of this can be taken care of with small, lightweight, wireless computing and printing equipment, electronically connected to the homebase.

I am personally convinced that any service provider without the latest wireless computer with GPS, satellite and cell phone connections and sophisticated computer programs will not survive in the near future. There are many automated systems available today. They cover the entire spectrum of limo service, scheduling, maintenance, finance, personnel and feedback. I looked at various specifications and equipment available today. I was impressed with several systems, ready to go.

In preparation for this event, I also read the past 14 latest monthly issues of Limousine and Chauffeured Transportation, the LCT Magazine. I liked very much the content, depth of analysis, freshness of data, detailed statistics, overall layout and the editorial competence. This publication is a very valuable source of information. Some of the data, though, were really amazing to me. Remember that I am a very interested outside observer and user of your services, but not an expert in your industry and your individual business practices.

First: Out of a total of some 11,000-plus separately owned and operating companies in U.S. chauffeured transportation, 67 percent have revenues of less than $500,000 a year! About 48 percent of the operators work from their homes! My immediate gut reaction is: merge, sell, buy, combine, joint venture, but don’t operate under a logically minimum success rate in today’s and particularly tomorrow’s new world, new circumstances and new requirements. Second: The industry’s marketing expenses of 14 percent of total expense budget seem extremely small, particularly that much of it may be misdirected and bring minimal results. Good, original, continuous, researched and individually targeted marketing is the key to any business, particularly in personal service.

Third: Your top industry concern, confirmed by over 55 percent of respondents, is the rising cost of insurance. That’s a very tough problem, mostly out of your control. I am not really knowledgeable in this field. You probably examined and studied the possibility and feasibility of pooling all your insurance policies under a single LCT industry policy umbrella, using and partnering with one worldwide insurance and re-insurance resource. It basically means creating an ownership of an insurance company for the limo industry.

Fourth: You are all concerned about the fluctuating and mainly rising cost of fuel. Many of you, over 55 percent of operators, already collect surcharges above a certain level of fuel cost. In my opinion, the customer will adapt to and accept without dire consequences, your reasonable, honest and clearly explained additional fuel charges.

You probably noticed that all my remarks were about business travel. That’s where I had most personal experience and can relate to most easily. Business travel accounts for 51 percent of all your revenues and does represent the largest single income factor in your industry. It’s growing and will continue to grow during the foreseeable future.

I am not ignoring the importance of the 22 percent volume sector of “weddings and proms” and the 16 percent volume sector of “nights on the town.” I strongly recommend that growth in these sectors also requires, even more so, targeted and personal approaches in marketing.

Looking again at your industry’s overall statistics of size, volume and allocation of funds, proper, personal, individual and innovative marketing becomes, in my judgment, the biggest problem and the biggest opportunity for every owner and every operator.

I also believe that there is a lot of room for innovative improvement in all areas of your operations: capital procurement, insurance, maintenance, computerization and transmission of data and, of course, hiring, training, motivating and keeping the best people available.

The future of the industry and of its market looks good because the fundamentals of your business are good. But customers and consumers will increasingly want and demand individual attention, individual service and individual approach.

There is a growing desire for a better, smarter, more pleasant, hassle-free degree of differentiation from the mass-produced ordinary, boring sameness. The key word for the future is individual differentiation.

If you take it seriously, research it thoroughly and personally work hard on it, you’ll come out with innovative solutions for each and every potential user of your services. You must truly believe and live by the motto: ”Customer is King, nay, the Emperor.” Acting on it is your challenge. Start on it tomorrow morning!

Thank you for your attention.



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