What You Should Do To Thrive In This Market

LABLive host Bill Faeth with state of industry speakers Sara Eastwood-Richardson and Scott Solombrino on Jan. 21, 2019, in Nashville, Tenn. (LCT photo)

NASHVILLE, Tenn. — A conference full of small to medium fleet operators got a strong dose of straight talk Jan. 21 on how to make a good living in a more complex, disrupted ground transportation industry.

Held at the second-annual LABLive in Nashville, an off-the-cuff, straight-up state of the industry Q&A session drew insights from Dav El/BostonCoach Chauffeured Transportation Network CEO Scott Solombrino, and Sara Eastwood-Richardson, the 25-year publisher of LCT Magazine and leading architect of its trade show brand.

LABLive founder and host Bill Faeth steered the session toward business strategies smaller operators can use to improve their business sales, marketing, and customer service efforts, which are recurrent topics at his Limo University events and educational training sessions.

It’s All About The Clients

Solombrino told the audience he spends 70% of his work time focused on clients around the world.

“You have to have great managers, great teams of people working under you, and a great system so you can monitor them,” he said. Dav El/BostonCoach holds a weekly meeting with its 70 managers every Friday at 10:30 a.m. ET, so they can talk about every flaw and mistake from that week, and run through a slew of metrics: Error and recovery ratios, customer losses, company responses, driver retention and hiring rates, and the training success rate.

“Every one of them has to be present,” he said. “No one ever misses a Friday meeting. You cannot have a salesperson from Dav El / BostonCoach see you on a Friday at 10:30 ET, because they're not available, ever. If you're in senior management, you're on that call.”

The panel appeared before an audience of mostly small to medium-fleet sized operators. (Limo U/LAB Live photo)

Clients Crave Relationships

By getting good information on company metrics and managing them through an extensive support staff, Solombrino frees up time to be with customers.

“People want relationships in the world we're in because the internet has ruined the world,” said Solombrino, also a longtime board director and legislative leader of the National Limousine Association. “Everybody wants relationships. They're tired of the internet, tired of texting, emailing, snapchatting, 'chaturbating,' whatever else is going on out there; it's all bad. They're tired, they're overwhelmed with it. They're tired of being voyeurs into somebody else's life. They want real relationships, and they want service.”

Solombrino, who built up his company while attending Suffolk University in 1978, ended up graduating in 1982 with 40 cars and $3 million a year in revenue. He never went to law school as planned.

Ditch The Steering Wheel

Faeth zeroed in on a dilemma small operators routinely face: How do you get out from behind the wheel to go from zero to half a billion dollars in revenue today?

“I knew on day one if I stayed behind the wheel I could never make as much money as I could make if I was outside of the wheel,” Solombrino said. “You have to have people you can depend on, who you trust and can train, and will treat your customer like you would treat them. You driving customers is not getting you any business. You have to be available to go out every day, to go to the rotary, the Chamber of Commerce, to go to every event at night, to take on some charities in your business, and try to develop a network with people every day.

“In this environment you're in, you have to be everything to everybody. You should try to be in as many verticals as you can, because it gives you safety across those verticals. And then you excel at the one you're doing best in. But keep the others there, and don't give up on them.”

Plenty Of Shuttle Potential

Eastwood-Richardson underscored the potential in courtesy shuttle transportation and the need to tap more diverse customer vertical segments that complement traditional for-hire chauffeured transportation.

“Courtesy transportation is your golden ticket for growth,” she said. “Courtesy transportation has its own verticals, such as retirement homes, parking lots, airports, hotels, churches, and schools. You guys have to get out there and have conversations with them. I think there's a big, wide-open world for you in the courtesy transportation marketplace.”

Courtesy transportation is an extension of somebody's core business, she told attendees. “So it's not getting a lot of thought. It's something they have to provide as an extension of their core business. That makes it perfect for you to go in there because it's a hassle factor for them. And they might own the vehicles and just contract the labor, maintenance, and fleet management, or they may want nothing to do with any part of it, hire you, and outsource it all.”

In an industry that has flattened or shrunk slightly with fewer newcomers, operators cannot rely on sedan-based airport and corporate affiliate business as their primary revenue drivers, she said.

“I think people are starting to come full circle to the old ways of trying to monetize and find all those golden nuggets inside their markets. When you have your phones blowing up all day long with farming work, or you're hearing from all the affiliates, you really don't have a big incentive to get out there and go sell locally. You don't have to deal, you can just sit, answer phones, and dispatch cars."

Get Out There And Sell

While some operators who are introverted and don’t like sales can thrive on an affiliate-oriented business model, they need to know what they’re doing, she said.

“My advice would be to watch your book of business and keep it balanced. I’ve seen operators getting into 70 percentiles and worse with affiliate work. It may be falling right into your lap, but you're doing work at a discount. One day my dear friends of the industry started waking up and realizing, they're working their asses off and it's just cash flowing their business. So you have to be really careful about not depending on that work and treading water and really not getting anywhere. You need your own customers. You need rate card business to pull up your margins.”

Balance With Big Networks

Solombrino advised operators while they need to build a local business, they should also be part of a bigger network. “The corporations in the Fortune 1000 want to deal with one, two companies. They’re done with 100 operators. So you have to be in those ecosystems. The industry's definitely shrinking, because I see less people in business than I've seen in the last 42 years. It’s fewer companies, not more. So what does that mean? It means we [major companies] don't have enough people to circulate the supply to meet the demand.”

That’s good news for smaller operators, since the big networks can’t afford to run 100,000-vehicle fleets. “What I would say to you is every piece of an organization you can be a part of, you should be. There is a reason for these things, and you have to do it to remain competitive in this environment. If you're an island unto yourself, you will end up dead. I'm sorry, it's a different time. You can't be alone anymore. It’s too dangerous.”

Stand Out Service

Operators should stand out and take service approaches that are unique and tailored to individual clients, he said.

“You have to be something no one else is being in that market to get that customer to be sticky with you,” Solombrino said. “So every day when you wake up, you have to say to yourself, ‘How do I reinvent what I'm doing?’ Anybody can drive somebody to an airport. It's how you execute that determines how sticky the customer stays.”

As part of Dav El/Boston Coach’s core standards, the company provides the Wall Street Journal and New York Post, a nationally recognized water brand, specialty wipes, and fine candies, he said.

“We use one brand of water and it has to be a recognized brand. Don't put water from your local town with a label on it, and never put your company name on the water. Anybody who tells you that in marketing is stupid, because people like me would never drink that water, never. You want to brand in other ways to be unique.

“We put things in our vehicles we think make us different, and then we execute it with ‘richey’ standards, with the chauffeur saying the exact same thing every time you get in one of our vehicles. And people say, ‘I know exactly what I'm going to get for a product line.’ So you have to find that sweet spot for your business, because if you're not different, why am I going to call you?”

Don’t Get Hung Up On Price

All that service also has to be backed up with a firm grasp and follow-through on the matter of price, Solombrino said.

“It's never about the price. If I'm wealthy enough to use a chauffeured car every day, price is not my issue. I got bigger problems. My airline ticket cost $20,000. So no one cares about the $200 to spend to go to the airport. People don't care about price as much as people think they do. If you've attracted the right end user customer, you have to find where your sweet spot is with your customer. And once you get one, never let him or her go.”

Know Your Market

Eastwood-Richardson recounted how she has fielded countless questions over the years from small fleet operators and start-up services.

“This [issue] comes up all the time: Know your market. I can't tell you how many people buy a product and get themselves into the wrong vehicles. They go out and put their fleet together first. Know who your customers are and what they want. Do your research. It’s the difference between surviving and not.”

She cited an industry colleague who runs a small operation in the Midwest who bought a vehicle for which they had no customers.

“They're sitting on a very expensive mortgage payment trying to figure out how to get the customers in the vehicle. So if I could say one thing that comes across my desk that's scary and happens to a lot of operators, it’s they rush out and decide what they want to put in their fleet first, and then they figure out what their market will bear second.”

Scott Solombrino always has more than one point to make.

Market Ready To Monetize

While transportation network companies (TNCs) have turned ground transportation into a more competitive market, they are facing a more unforgiving landscape themselves, Solombrino said.  

“Uber and Lyft will go public in a tough environment; if they don’t, Uber will run out of private equity and can’t raise more.” Lyft, which is better financed with more resources, is more of a long-term threat than Uber in the corporate market, he warned.

The Carlyle Group, owner of Addison Lee Group, will attempt to go public because they need to monetize the company, which owns Tristar Worldwide Chauffeured Services and Flyte Tyme Worldwide Transportation, he predicted. Carey International, owned by Highland Capital, has big, deep pockets, he said.

“With all of them trying to monetize, what you all should be doing with your partners is be in a network,” he said, citing the Limo Anywhere software platform, Carey, Dav El/BostonCoach, Empire CLS, and Addison Lee as examples [Limo Anywhere and Dav El/BostonCoach are owned by Marcou Transportation].

“You need partners everywhere because the world is too complex to go alone anymore,” Solombrino said. “Even I have partners with my big competitors. Why? Because we have to.”

Solombrino compared the luxury transportation sector to the waste hauling, airline, and rental car industries; they all have only three major players.

“There's not enough of a need in the public markets for four, five, or six publicly held chauffeured car companies,” he said. “So what happens is the industries consolidate very quickly. One of them will monetize, and I don't know how it ends for the other four or five, because I don't see the market supporting all of them.”

Getting Sticky With It

All of which redounds to the bottom line of the presentation: Staying close to your clients. If you do, they have less reason to go to another provider, whether larger or small.

“You have to be out there making yourself more relevant to the customer,” Solombrino said.  “Nobody can take the customer away from you if the customer loves you. No matter how much money they have or how big they get, it's not relevant. This is a personal services business, which people get attached to."

“They want to be sticky with people they trust who are delivering a personal service to them. And you don't have to be big—just be good every day.”

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