What it Takes to Succeed 2: Affiliate & Farm-Out Work

LCT Magazine
Posted on July 1, 2008

By Jon LeSage

Many American entrepreneurs have started by working out of their home office, garage, or in whatever space they could rent in town. In this industry, large companies are building professional headquarters and impressing visitors, but most operators never build lavish corporate offices. Many stay in basic, functional work environments but still constantly build revenue and profits. What matters is the client’s experience: booking a trip quickly and efficiently online or by phone; a clean, classy vehicle pulling up on time, and a clean, classy chauffeur providing high-level service; the billing and payment process being clear and honest; questions answered and problems solved smoothly.

In the chauffeured transportation industry, affiliate networks have become an essential infrastructure for delivering client service, especially providing ground transportation to business travelers. In other industries, the systems might be called something other than networks, such as alliances, partnerships, franchises, or other something else. In chauffeured transportation, the terms affiliate networks and farm-out are commonly used to describe getting a reservation booked and having another operator fulfill the transportation.

It all boils down to three stages from start-up to expansion: increasing your local farm-out network; starting up and building your own network and recruiting members (or joining others networks); and eventually building a national/international network with lots of operator members and brand marketing.

Local Farm-out Network: There are lots of people in this country who work in chauffeured transportation, but live like truck drivers. They own one vehicle and drive it themselves and are considered IOs – independent operators. And there are many small operators who have one to three vehicles, do some of the driving themselves, and send out jobs to IOs or their own employee drivers. Generally, growing operators have business relationships with IOs and small fleet operators, and add vehicles gradually to their own fleets.

The trick here is making sure your clients have good transportation services whether you or your farm-out operators provide them. How do you find good farm-out operators to add to your network? Ask around – other operators that you know and people that have used these potential farm-out operators for service; members of your local industry association might also give you feedback. Another method is doing regular surveys with your clients and finding out what they thought of the services provided by your farm-out network partners. If things aren’t working out, however you find out, you may need to end the farm-out deal and look at other possible farm-out members.

Building Your Own Network, or Joining a Few: It’s really something to see how many chauffeured transportation companies are building their own affiliate networks now, and sometimes they’re companies that I’ve never heard much about before. I attended the MTC Limousine & Corporate Coach reception during the International LCT Show in Las Vegas in March, and had never met their staff members before. And I had no idea how involved the company is with Limousine Environmental Action Partners (LEAP). Affiliate operators were invited to the party, and other operators considering joining. The suite was packed with people who just kept coming in through the front door – I had no idea it was this popular.

This is becoming a more common occurrence in the industry: operators want to get out and join affiliate networks to increase their revenue and industry presence. Some operators now belong to several affiliate networks – some companies join one or two, and some go up to six or seven affiliate networks that they belong to. You need to tell each network that you belong to others – they usually accept this fact if you handle it professionally. Starting your own network and/or joining other networks is an important part of business growth these days. Your clients don’t need to know about all the of the background details, just that they can count on you to receive great service all the time. And companies that start a network under their brand usually like making revenue on trips that they don’t have to provide chauffeurs and vehicles for – it’s all profit.

National/International Brands: More and more chauffeured transportation bookings are being done through the Internet, as they have been for years in other travel/transportation industries. It’s part of the evolution toward global travel networks. Clients, especially corporate, want to book all the services they need for business trips easily and trust that it will all work out. Chauffeured transportation companies have created alliances with airlines, travel managements companies, and become active in groups such as National Business Travel Association and Meeting Professionals International to effectively network with corporate clients. Technology suppliers in this industry are making the booking tools much better, which affects online booking and operator reservation systems.

Operators are building their international networks. You can see this while attending the International LCT Show, which has more international attendees each year – from Canada, Great Britain, Spain, Italy, France, and Germany mainly, but also from other parts of the world. Operators have learned that – just as they’ve done over the years from local farm-out work and becoming affiliates – networking with people from around the world matters. The largest operators, including Carey International, Dav El, and BostonCoach, have been active in building their international networks for several years, and more operators are now joining them in global growth. Having a solid presence on the Internet is part of this: through a good company website that pops up high on search engines, links to industry sites and ancillary markets, and making sure clients can easily book online with your reservation tools. Global alliances, Internet presence, and excellent brand marketing are top of mind for successful operators in this industry.

Related Topics: Sales & Marketing

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