The fight not only pits new ways against old, it also reveals modern-day ruptures in the labor market.
The 96-vehicle company has moved to a more expensive high-luxury mix of vehicles, raised its rates 15%, and gets a bit choosy about its bus niche. That approach may seem atypical as transportation network companies (TNCs) like Uber gain market share, but Black Tie now reports some of its highest profits on record.
Owner-operators Bill Wheeler Sr., and his son, Bill Jr., are doubling down on core business and customer service principles to position Black Tie in the affluent, tech-driven San Francisco Bay Area that spawned TNCs. Their fleet philosophy serves as a template for operating in tougher, TNC times. “The best defense for Uber is a good offense,” Wheeler says. “You have to separate yourself out by being a premium provider.”
Finding The Right Fleet
The phase out of the Lincoln Town Car Executive L during the last four years forced Black Tie to rethink its fleet mix. Wheeler tried out all viable chauffeured sedans on the market and surveyed his clients. He said nearly every client and chauffeur was interested in talking about the options. The BMW 740 Li, which entered the limo fleet market two years ago, came out the winner when coupled with its fleet incentive and warranty programs.
“BMW made it fiscally responsible,” says Wheeler, who as of November was running 31 of the BMW sedans. Its long-wheelbase replicates the rear-seat legroom of the retired Town Car sedan. “We know now it was the right decision for our customers and company. I second guessed myself numerous times, but now just a few months in, it’s one of the best decisions I made about acquisition of equipment.”
In addition to the BMWs, Wheeler is reorienting his fleet to one premium vehicle brand for each niche: Cadillac Escalade SUVs, Mercedes-Benz Sprinter Vans, Grech Motors buses, and Temsa TS-35 40-passenger coaches. Using one make and model in each fleet category helps streamline maintenance, mechanical training, parts and supply purchasing, and chauffeur training.
“We wanted to separate ourselves from everyone else with the highest-end vehicles,” Wheeler says. “We also wanted to simplify and standardize for consistent transportation.”
But Wheeler still keeps a couple of stretch limousines for the clients who prefer the closer seating arrangements of a stretch compared to those of a limo bus.
To open up a gap with competitors and TNCs, Wheeler also looked at branding, training and compensation. “We’re now bringing the chauffeur up to the same expectations as those of the vehicle,” he says.
Black Tie Fleet Vehicle Types
BMW 740 Li sedan: 31
Lincoln Town Car sedan: 2
Lincoln MKT Town Car: 2
Krystal Town Car stretch limousine: 2
Lincoln Navigator stretch limousine: 2
Mercedes-Benz Executive Sprinter Van: 12
Mercedes-Benz Executive Limousine Van: 5
Cadillac Escalade SUV: 12
Temsa 40-passenger mid-coach: 5
Grech Motors F550 GM-33: 12
Grech Motors F550 GM-22: 8
Krystal 27-passenger limousine bus: 2
Community Bus: 1
As of Nov. 16, 2015
The BMW sedans help promote the company since each of the 31 vehicles travel 5,000 to 8,000 miles per month on Bay Area roads. Each Black Tie fleet vehicle has a Black Tie-branded license plate holder. “No one else is running a fleet of BMWs,” Wheeler says. “Neighbors get excited because they see our clients going to the airport in a BMW 740Li.”
Wheeler has found in his 30 years as a limousine operator that clients do care what type of vehicle picks them up. “I can’t tell you why some [operators] say clients don’t care. Mine do for sure. The fact that the reception of these cars has been overwhelmingly positive means our clients do care. So we care as a company in that we want to present the best of the best.”
In fact, clients should never be left wondering what type of vehicle they will get picked up in, Wheeler says. They want to be comfortable with plenty of rear seat room in a clean car that offers a smooth ride. “Our clients are connected to each other,” Wheeler says. “They all know each other. We’ve grown business by referral, from one executive to the next.”
Pricing & Profits
To phase in his BMWs, Wheeler adopted a two-pronged strategy: 1) Biweekly and monthly e-mail blasts to his 10,000 clients promoting the BMWs; 2) Raised rates 15% across the board before deploying the BMWs.
Wheeler forgoes discounts and mark-downs on his pricing structure since he aims for service backed by the best vehicles and chauffeurs. He is still figuring out the exact profit margins of his BMWs versus previous vehicles, since this is the first calendar year with the full phase-in of the sedans. Wheeler saved on the purchase price of each BMW by buying them in bulk to qualify for maximum rebates and incentives.
Profits, however, don’t just depend on rates, payments, mileage, and overhead, but are connected to depreciation amounts and the timing of vehicle resale to capitalize on the best auction and sales opportunities. “You never want to be upside down on equipment — always even or right side up,” he says.
Wheeler adds that his previous Town Car sedans were durable, lasting 300,000 to 400,000 miles over four years.
“BMWs are not going to get the same type of mileage,” he says. “We’re on a two to three year maximum turnover. We’ll just keep a close look on it and figure out at what point it’s best financially and get out of it and replace it.”
One mitigating factor on vehicle usage may be a small decline in the number of overall vehicle trips, although the company is making more money. “Our trip count is slightly down but the profits are up,” Wheeler says. “We’ve reorganized the business and focused on meeting every need of every client and customer. We’re doing more charter rides [on buses] and doing everything we can to save clients time.”
The Wheelers’ strategy is to be a diversified chauffeured service, with specific niches they can excel in, but not have one client or revenue segment make up more than 10% of the overall stream.
No Betting On Farms
Wheeler also declines to take large amounts of farm-in business, since he wants to preserve his customer service quality. He’s also cautious of eventually building up a competitor in his backyard on the theory that once farm-ins from an outside company reach a certain level, that company could create a local operation.
“Your relationship with your customer is more important than your relationship with the farm company,” Wheeler says. “When I’m doing work for others, that client belongs to them. They control them.”
When farming out, Wheeler simply looks for the best chauffeured operation in the farm-out location and pays for the run. He passes the cost on to his clients. “I don’t pound for discounts. Just give me the best chauffeur, the best car, the best service. I want the best vehicles, insurance, and training. The rate is the last thing we talk about. I’ll mark my [farm-out] job up 30% [to my client] and track it from beginning to end.”
Wheeler researches companies in every city his clients travel to. “We look for the ‘Black Tie” in every market and aggressively survey the customer for feedback.”
FASTFACTS: Black Tie Transportation
This year, Black Tie found that its shuttle business, while healthy and profitable, was pulling the operation away from its core focus of providing “quality over quantity” executive-level service. Regularly running, high-volume shuttles in the San Francisco to Silicon Valley corridor as an East Bay-based company takes a lot of time and resources, given the geographical challenge of a major metro area split by a wide bay.
“If you want to run the commuter shuttle service at the level we run the rest of the business, then it’s extremely demanding on operations,” Bill Jr. says. “It was driving how we did everything. Other avenues of business were suffering somewhat for it. We were presented the opportunity to downsize and took it, and it was the right move. We just do the home runs for shuttle work now.”
The Wheelers use their Temsa TS-35s and Grech buses for more geographically compatible charter runs and routes with limited stops. They find clients are willing to pay for the high-end shuttle services those brands provide.
“If you are in the East Bay and have a route that works, and you don’t want to make 30 stops, we’ll consider that business,” Bill Sr. says. “Now we choose to be selective on relationships with companies that want to provide that type of service.”
As part of their bus strategy, the Wheelers prefer the Temsa TS-35 mid-coaches and Grech Motors cutaway buses.
“We don’t want to be in full-size coaches,” Bill Sr. says. “We’re not competing with 55-passenger buses. We still give chauffeured limo-style service as a coach operator.
“We’re not a school bus type shuttle service,” he adds. “We value time, experience and lifestyle, and those are the kind of companies we do business with. You can’t be all things to all people.”
To support his operations, Wheeler has uses reliable, easy-to-use technology for employees and customers. Bill Sr. has worked closely with a programmer who has consistently adapted the software to his needs for the past 25 years. All chauffeurs are supplied with the latest smartphones and use an app to communicate with dispatch, which reduces phone calls. Fleet tracking software has been optimized and linked with maintenance software to manage all aspects of the fleet.
“Most of my clients probably have the Uber app and use it,” Bill Sr. says. “‘Car service’ was exclusive years ago for the rich of the rich. Now everyone uses it. It’s great for the masses.”
On-demand doesn’t seem to define the typical Black Tie customer, he adds. “Generally, with our clients, their companies are paying for the consistency, safety and service we offer. They want a relationship with a company like ours they can depend on.”
Wheeler stresses that clients have their own technology solutions they are comfortable using with multiple smartphones, tablets and laptops. How we choose to communicate with those tools dictates the response we get and customer satisfaction. That’s why Black Tie communicates mostly with texts instead of emails or a proprietary app. Their clients are inundated with all types of emails all day long and email from a limo company will likely get overlooked. “No one can resist looking at a text.”
Related Article: Bay Area Operator Brings New Bus Breed To Market
Bill Wheeler’s B2B Tip Sheet
California operator Bill Wheeler banks on three decades of time-and fleet-tested tactics for running a successful operation:
Related Topics: Bill Wheeler, BMW 7 series, California operators, customer service, fleet management, Fleet Vehicles, Grech Motors, operator profiles, premium luxury sedans, San Francisco operators, TEMSA Global, VIP service
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