Operations

Partnering With Your Competitors Can Boost Revenues

Linda M. Jagiela
Posted on January 8, 2010
Operator George Rains reaps the rewards of cooperative arrangements with other operators by having vehicles other operators do not.
Operator George Rains reaps the rewards of cooperative arrangements with other operators by having vehicles other operators do not.

Economic conditions have forced many operators to run lean. Vehicles that once ran regularly often sit idle, not earning any money. In this environment, finding the right fleet size is the priority of every successful operator who needs to cut costs, stay above break-even, and maintain quality service.

Companies that would never have considered cooperative relationships with their competitors now see them as a way to preserve and promote business. Operators are pulling together like never before as they cut fleet sizes and rely more on each other for complementary vehicles when demand exceeds supply.

Local Competitors and Work in Your Market

Tom Miller, owner of Regency Global Transportation Group of Pittsburgh, PA, runs one of the largest luxury transportation providers in the region.

"When big events come to your area, you need to be able to accommodate them regardless of the size of your fleet," Miller says. "We work with four or five competitors locally who assist us. If you are a large company, you must have relationships locally." 

Recently, Regency had to service this year's NFL kickoff event in Pittsburgh, which because it had the winning team in this year's Super Bowl, had to host the event. Regency transported concert performers Black Eyed Peas and Tim McGraw, NFL groups and the Steelers, and all of the VIPs that came in for the event.

Miller says the bands alone needed eight SUVs for the three-day event. It doubled the company's regular ride load with most of the rides as-directed. Help from local competitors was critical for moving so many clients, Miller says.

Major Events

Z-Best Limousine in Glen Burnie, MD., which has worked on many major Baltimore-area events, relies on its retail division which has vehicles that most other operators don't have in their fleets. 

"When there is an event such as the Super Bowl, we will travel and work with other companies to augment their fleet," says George Rains, Z-Best's general manager. "For this to be successful, you must have a clear understanding up front how the process will work all the way through to the end when you get paid. There should be nothing left to chance. Everything should be clearly defined."

Busing Benefits

Since most chauffeured transportation operators do not offer vehicles larger than a mini-bus, contracting for motorcoaches becomes a necessity when transporting large groups. Rains works with two major local bus companies to complement the Z-Best fleet.

"By working with two companies consistently, I am able to get competitive pricing and they provide the service I need because of the volume we use," Rains says. "We don't sell buses outside of our service area though. For example, we wouldn't take a school group to Florida overnight. We let the bus companies handle those types of runs themselves, but we do provide buses locally for our clients and for groups. Having a solid relationship is important if you provide buses."

For Marvin Fisher, vice president at Cooper Atlanta, working with bus companies means training drivers to be chauffeurs. "We work with the drivers so that they understand what we need when we deliver luxury service," he says. "Our partner companies understand this and work to deliver that higher level of service."

Retail Vehicles

George Asseraf, owner of A Family Limousine in Ft. Lauderdale, FL, cautions that operators should have a thorough understanding of cancellation policies. "If you give up the ability to sell your vehicle by assisting an affiliate, they have to understand that there is a cost to cancel the ride," Asseraf says. "We have been burnt in the past from this and now we make it very clear when we are setting up these types of relationships."

Asseraf has a fleet of extreme vehicles, such as SUV stretches, which are popular for retail clients and events. "I am very selective as to who I will take business from in the industry," he says. "I need to be able to trust that they are credit worthy."

For Rains, such relationships pay off when his stretches go out on weeknights. "You need to be very open-minded when you form these types of relationships," he says. "We are down from 50 vehicles to 30. Our clients still want the vehicles we had and we are able to provide them by working with others. It allows us to keep the client happy. We are working with companies who in the past we might not have."

7 Tips to Work Well with Competitors

1. Trust
Work with companies that you trust. If you have to worry that they will solicit your clients, then you should not be working with them.

2. Integrity
Know that your competitor is your client and you are transporting its client. You need to represent the company giving you the work.

3. Training
Make sure that the companies you work with understand your policies and that you and your staff understands theirs. The goal is that you are both providing seamless transportation to the passenger. They shouldn't be able to tell the difference.

4. Representation
Clients should not be able to differentiate from their regular company and the partner company. 

5. Clear Understanding of Terms
Work out credit, payment, and cancellation terms up front.

6. Selection
Tom Miller looks for partners who have similar equipment e.g. late model LTC black sedans and who have similar standards of service. "The company must be used to providing corporate service," he says. "Their standards should be the same as ours on things like training and chauffeur attire. I limit these relationships to a couple of companies and a few who own their own vehicles with a high level of service."

7. Agreement
Tom Miller suggests that the two companies form an agreement that they understand the nature of their competition but that they can never let it affect customers. That is, regardless of whose client is in the back of the vehicle, the service should always be outstanding.

Related Topics: affiliate networks, Limo Networks, surviving the economic downturn

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