Corporate Ownership Allows Access to Capital, Focuses on Customer Service

Posted on May 1, 1996 by LCT staff

What began as a bumpy ride home from the airport for a tired executive 11 years ago has turned into one of the fastest growing livery companies in this country today. Ned Johnson, chairman of Fidelity Investments, believed there was more to offer from a livery company than the poorly maintained vehicle he was sitting in. Consequently, BostonCoach was staffed to offer affordable chauffeur-driven transportation in clean, comfortable vehicles.

What makes this company stand apart is that it is only one of a number of different companies owned and operated by a large corporation – Fidelity Investments. These roots are radically different from the seeds of the traditional mom-and-pop livery company. For bet a run by Boston Coach’s president Perry Solomon has a financial, sales, and high-tech back-ground. He worked for Fidelity for about six months before beginning his tenure at BostonCoach.

By concentrating on the corporate market, BostonCoach has been able to acquire a fleet of more than 600 vehicles in five cities. Other keys to success include using the most current technology, extensive driver training, and concentrating on the needs of customers. One of the ways the company is satisfying clients is through the creation of an affiliate network.

Former Limousine & Chauffeur managing editor Donna Englander recently had the chance to speak with Solomon to discuss the details of BostonCoach’s success. 

L&C: What is BostonCoach’s background?

Solomon: The company was started in 1985. It is owned by Fidelity Investments, a privately owned company, and was started to find an efficient way to provide productive time for people who travel frequently. For the first two years, the company was run just for Fidelity. We spent a lot of time developing systems for training, reservations, and dispatch. We wanted to do high volumes of runs at rates that allow people to use us on multiple legs of their trips.

Where the traditional limousine com­pany is more for just the high-level executive, we wanted all corporate travellers to use us. After the first few years of just servicing the staff at Fidelity, we spent the next couple of years selling only to Boston-area clients. About five years ago we started to expand. We are now ill Philadelphia, Washington, DC, New York, New Jersey, and we opened in Chicago in March. We opened in Philadelphia five years ago, Washington about four years ago, and New York and New Jersey about three years ago.

L & C: What is Fidelity Investments’ involvement in Boston- Coach? What does Fidelity expect from your company?

Solomon: Fidelity has a group called Fidelity Capital that is made up of 16 different companies that it owns in different industries. We are one of those companies. Fidelity also makes some venture capital investments in other businesses. This year, in fact, we won the Fidelity Capital Company of the Year award, which was a nice honor.

We have budgets and our performance is measured against those budgets. We are measured on the results we deliver and those results are financial ones — profitability and return on investment. We are also measured on if we meet our quality numbers. This ensures we provide a great service to our customers.

L&C: How is the quality of your service measured?

Solomon: We measure our error rate. We make sure we keep that very low. We do customer satisfaction surveys to gauge error rate.

L&C: Does Fidelity have total control over your budgets or do you have any input into those types of decisions?

Solomon: We set up our own budgets and present them to the board for approval.

L&C: What do you see as the differences between running this type of corporate-owned livery business vs a standard owner-operated company?

Solomon: With Fidelity behind us, if we can prove we can make money, we have access to expan­sion capital. That makes it a little easier for us. I think Fidelity brings a lot to the table from the technical side. It is one of the technological leaders in the U.S. because it does such high volumes. I think Fidelity provides us with a great deal of assistance in those areas. Fidelity’s presence also creates a very professional environment since we are con­stantly monitored.

L&C: How much day-to-day involvement does Fidelity have in BostonCoach?

Solomon: Fidelity’s involvement is similar to the involvement of a board of directors. Management runs the day-to-day operations, and Fidelity’s involvement is to ensure the financial return, growth plan, and customer satisfaction levels meet its goals.

L&C: What do Fidelity and BostonCoach hope to achieve in the livery industry?

Solomon: I think the key ingredient the hospitality industry-airlines, hotels, rental cars, etc. The chauffer-driven industry is still a very small piece of the pie. What we hope Fidelity is that we are going to promote the whole industry. We believe that, especially in congested titles, rental cars are just one alternative. We feel chauffeur driven transportation is a touch better alternative. There is a lot of opportunity in the marketplace.

That is why technology is so important — because the hospitality industry is a technologically proficient industry. Both the hospitality industry and the rental car companies are technologically proficient. I guess my message, if there is one, is we at BostonCoach are in this business to not only make our company grow, but to increase the acceptance of chauffeur-driven transportation. We think there is; a real big market out there.

L & C: What is your breakdown of business?

Solomon: Mainly corporate. Probably about 80 percent of our business is corporate. We also provide shuttles for corporations where we use vans and minibuses to provide service throughout the day for employees going from one building or site to another. That is a smaller part of our business. We also do same group transportation work. But the lion’s share of our business is from executive sedan work. A smaller segment of our operation comes from leisure—our corporate clients who use us for leisure business.

L&C: What is the breakdown of your fleet?

Solomon: Between all of the cities we are in, we have about 600 sedans, 5 limousines, and about 50 minibuses and vans.

L&C: You have a rather large amount of sedans. Does this go back to your theory of providing affordable transportation?

Solomon: It is not low cost. Unfortunately, you can’t offer low- cost transportation due to the large number of variables. But our market is more for the individual corporate traveller, and we find the sedan best suits that market.

L &C: To what do you attribute you company’s growth?

Solomon: We really have done very well. In the past five years, we have doubled our business each year I think there is a real market for our products and services. In 1995, we did almost 600,000 trips. I think this is due to our focus on the corporate marketplace and the ability to deliver a large number of trips to a total employee population at a reasonable rate. That is really the whole strategy.

L&C: When pitching a corporate account, do you offer a guaranteed low rate if the client can promise you a certain amount of total business?

Solomon: No. What I’ve found, and I think this is true for our whole industry, is because the costs in ground transportation vary so much, it is very difficult to discount. Therefore, we can’t offer discounts like hotels or airlines. With hotels and airlines, you invest so much in planes and buildings that the cost of selling one more seat or renting out one more room is low.

Whereas in our business, every time you have another job, you have another driver and another car. So it really doesn’t pay for us to offer discounts. Again, it is just a matter of coming to the marketplace with reasonable rates and hopefully delivering clean, courteous, and dependable service so the corporate traveller can gain time in his day. And if he can gain time in his day, he is going to use you.

L&C: What are some of the secrets to your success? I notice that you use remote data terminals in all of your vehicles and that you concentrate heavily on chauffeur training. Do these things help make your company more successful?

Solomon: First of all, the key is that we are satisfied with what exists. We are always pushing to be better. It is that philosophy of incremental improvement that is probably the biggest key to our success. The other factor is technology. We try to get the most out of technology. We also do a lot of work on the selection and training of drivers and try to stay focused on what the customer wants vs what we want to give the customer.

L&C: What is involved in your driver training program?

Solomon: We have a very extensive driver training program. It is almost two weeks of classroom training and an apprenticeship with an experienced driver. We bond our drivers, do pre-employment drug testing, and have them fill out all sorts of applications. There are tests during the training process. Then, depending on how well they do, they normally are apprenticed for about a week.

L&C: What are some of the specifics you cover in the driver training?

Solomon: We call our training “Coach College.” We cover the mechanics of doing the trip, which includes radio and data terminal methods. We cover location training. We have an extensive safe driver module and we actually have an incentive program where we pay drivers a bonus based on achieving so many miles incident-free. We have drivers who are up to 15,000 miles without an incident of any kind. Then we have modules on things like billing and receipts, customer courtesy, and “Coach” methods.

L&C: What are some of the marketing strategies you utilize to garner your corporate business?

Solomon: We identify large corporations that are doing a lot of travel and introduce them to the concept that they can get their travellers increased productivity and relaxation time if they use our services. We also point out the safety that comes with our services. Other than that, it is just getting out there and talking to potential clients.

L&C: What are some of the selling points your sales staff employs?

Solomon: Some of our selling points are centralized reservations, the technology of the company, and safety — we have all new cars. We have drivers who are trained very well. We mention the productive time we can add to their travelling.

We also opened in Chicago in March. For the first time we are going to refer customers to mem­bers of what we call the BostonCoach Connection, which is going to be like a referral network We’ve done that because customers want to be able to use us when they travel in multiple cities.

L&C: Are you a member of one of the organized affiliate networks or will you be forming your own network?

Solomon: We are organizing our own. We have lined up suppliers in London, Atlanta, San Francisco, and Los Angeles. We have actually visited all of the companies and looked at their procedures, fleet, staff, training, insurance, and talked about what we are trying to achieve. We are now doing another round for a number of other cities. Then we will work out how we will get the reservations to them.

We are going to have 100 percent quality. It is the company’s objective for everybody to be satisfied with their transportation. We want to make sure we pay our affiliates in a timely manner. We want to pay them within 30 days. The company is working on the internal procedures to make sure the checks get to them on time. The company has really done a lot of homework. We have someone who has been with us for six years, Mike Fogarty, who is focused on this full-time.

L&C: How many cities do you ultimately hope to be in?

Solomon: It is hard to say. Again, we want to respond to our customers, but we think the number of cities we will affiliate with will be substantial. I think the four cities we are introducing are the most heavily travelled cities. But hopefully within the next few years, we will be able to offer service in all the major travel cities.

L&C: What is some advice you would give to another operator either looking to expand or start up?

Solomon: I think there are basically three pieces of advice. First, you are only as good as your last ride. In a service business like ours, quality is everything. Second, look at the whole industry as a very serious business with budgeting, planning, measuring results, and really knowing all of the particular budgeting concerns of your company. Knowing what those budget items are, such as driver labor, how much vehicles cost as a percent of revenue, etc., and setting goals for them is important.

Lastly, focus on your niche of the business. Our niche is corporate travel. And while we do other things, we really focus on that niche. There may be someone else focused on weddings or leisure work. You can do everything, but I think that having a focus for the majority of your time is what makes people successful.

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