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The keynote address at the 2011 TEANA conference, this presentation details the forward expectations of manufacturers and distributors, as well as the operating and commercial activities those in the transportation industry will need to master to remain competitive in a highly fragmented market space.
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Growing Your BusinessIn A Hyper-Competitive Market
Prepared for TEANA16 July 2011
Simplicity PartnersInventiveness
“If we worked on the assumption that what is accepted as true really is, then there would be little hope
for advance”
Inquisitiveness“Curiosity has its own reason for
being”
Lightheartedness“Humor is the good natured side of
truth”
Persistence“Failure is not an
option”
“We are an elite team of practitioners who make businesses sustainable.”
•Our Mission:•To be the premier business growth firm•To provide the best value in the marketplace•To create and share a culture of learning
Profit/ PractitionerDrives Our Economic
Engine
Our Hedgehog
We Can Be The Best In The World At Helping
Companies Work Efficiently and Effectively
We Have A Passion For
Making Things Work Right
A Well Managed Business
Goals
Objectives ObjectivesObjectives
Action/ Behavior
Action/ Behavior
Action/ Behavior
Action/ Behavior
Action/ Behavior
Directi
on Feedback
Broad Client Base
KNOW YOUR PROSPECTIVE CUSTOMER WELL
Growing Your Business In A Hyper-Competitive Market
We Did Our Homework on TEANA
• 83 member companies• Represents elite expediting firms• Select invitation and vetting• 3 units – 350• Small revenue to VERY large
I Bet You Know This• Some things help– Revenue up 28% YOY– Revenue/mile up 15%– Historically strong load
demand– Net fleet size down 14%
since 2007– CSA driving out some
competitors
• Others don’t– Fuel continues to be a
headache– Higher fixed investment
needed for efficiency– As many as 400,000
fewer drivers by 2012– Changing DOT rules– FMCSA compliance
But Do You Know This?
Manufacturing77%
Component/product assembly
3%
Distribution6%
Other14%
What Is Your Firm's Primary Role
Less t
han $5 m
illion
$5 milli
on to $24 m
illion
$25 milli
on to $99 m
illion
$100 milli
on to $249 m
illion
$250 milli
on to $500 m
illion
Greater
than
$500 milli
on0%
10%
20%
30%
40%
50%
60%
3%
23%
60%
9%3% 3%
What are Your Company's Anticipated 2011 Revenues?
Daily26%
Weekly40%
Monthly26%
Annually9%
How frequently does expedited freight - either inbound or outbound - support your company's manufacturing and/or distribution systems?
It's still just a commod-ity: if one guy can't carry
it, another will.14%
Expedited freight is a little more important: we won't pay much more for it, but we'll use it when
need to be sure we get things out on time.63%
Even with a pronounced pricing premium, expe-dited freight is a cost ef-fective way to meet our
commitments.14%
Given the short lead time in our business, we've built in the high cost of premium freight and pass
it along to our customers.6%
We'll pay anything to get it there on time: premium freight doesn't matter to us!
3%
Compared to standard freight options, what is the relative value of expedited freight to your organization?
An expedited freight company with consid-erably lower cost but a weak record of on time
delivery9%
An expedited freight company with absolutely perfect delivery
records but a higher than av-
erage price91%
All other things being equal, which would you choose?
Higher commodity prices
Sales volume High energy/gas prices Skilled labor availability Reduced inventories Shortage of trucks & drivers
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
4.494.29
3.543.17 3.09
2.43
Please rank the following business issues in order of concern to you: (1=Least, 6=Most)
Not at all20%
Grudgingly accept
74%
Accept6%
Given high fleet utilization, lower numbers of power units on the road, and a shortage of truck drivers, freight rates per mile have increased 14% in the last year. How willing do you believe the market will be in
supporting future rate increases?
Decline >25% Decline by 11% to 25%
Decline by up to 10%
Stay flat Increase up to 10% Increase 11% to 25%
Increase more than 25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Compared to last year, your firm's usage of expedited freight services will do which of the following in the next six months?
Price
Reputation
Payment Terms
Consistent Availability
Vehicle Appearance and Maintenance
Safety and Compliance
0% 20% 40% 60% 80% 100%
3%
0%
26%
0%
23%
17%
0%
9%
31%
11%
31%
17%
26%
20%
23%
29%
23%
29%
57%
49%
17%
31%
20%
31%
14%
23%
3%
29%
3%
6%
When choosing an expedited freight carrier, how do the following impact your firm's decision making process?
Does not impactImpacts somewhatImportantVery importantThe highest importance
Price
Reputati
on
Consisten
t ava
ilabilit
y
Safet
y and co
mpliance
certificati
ons and ra
tings
Vehicle
appea
rance
and m
ainten
ance
Paymen
t term
s0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
When choosing an expedited freight carrier, how does your firm weigh the following elements of value?
What Does This Mean To You?
• You’ve positioned in a segment which will pay better rates for better service
• Volume expectations are flat to up 10%• Your customers aren’t worried about your
industry• You’ve got to tell your story
HOW DOES YOUR BUSINESS COMPETE?
Growing Your Business In A Hyper-Competitive Market
The 45 Second MBA in Marketing
• Three ways your company can compete1 – Best total cost = Operational Leadership– Best product = Product Leadership– Best total solution= Customer Intimacy
• World class organizations choose one to drive their business
• Which model describes your company?
1. Treacy and Weirsema: The Discipline of Market Leaders. 1997, Perseus.
Awareness
Considerati
on
Compariso
n Hit0%
10%
20%
30%
40%
50%
60%
70%
Marketing Vs. Sales• The ACCH Model– Mathematical approach
to business development– Methodical system to
increase sales– Lets you differentiate
between relationship building and sales results
– Now focus on the sale!
Cost
Price
CustomerValue
SupplierProfit
CustomerBenefits {Zone
ofPossibleAgreement
Driving Force For CustomerTo Buy
Driving Force For SupplierTo Sell
Source: Frank Cespedes, Harvard University. November 2008, YPO MI West
Maximizing Pricing and Value
Success and FailureSuccess:
Solution Marketing SolutionProgram and Resources Opportunities
Transaction Marketing TransactionProgram and Resources Opportunities
Failure:Solution Marketing Solution
Program and Resources Opportunities
Transaction Marketing TransactionProgram and Resources Opportunities
Source: Frank Cespedes, Harvard University. November 2008, YPO MI West
Total Customer Benefits: How Is Value Delivered? Roles of Product, Sales, Services, Other? (example)
1. Price
2. Paperwork cost
3. Shopping time
4. Expediting cost
5. Cost of mistakes
in order
6. Pre-purchase product
evaluation costs
7. Interest cost
8. Storage cost
9. Quality control
10. Taxes and insurance
11. Shrinkage and
obsolescence
12. General internal
handling costs
13. Field defects
14. Training cost
15. User labor cost
16. Product longevity
17. Replacement costs
18. Disposal costs
Acquisition Costs + Possession Costs + Usage Costs =Total Customer Cost
Source: Frank Cespedes, Harvard University. November 2008, YPO MI West
Total Customer Benefits: How Is Value Delivered? Roles of Product, Sales, Services, Other? (example)
1. Price
2. Paperwork cost
3. Shopping time
4. Expediting cost
5. Cost of mistakes
in order
6. Pre-purchase product
evaluation costs
7. Interest cost
8. Storage cost
9. Quality control
10. Taxes and insurance
11. Shrinkage and
obsolescence
12. General internal
handling costs
13. Field defects
14. Training cost
15. User labor cost
16. Product longevity
17. Replacement costs
18. Disposal costs
Acquisition Costs + Possession Costs + Usage Costs =Total Customer Cost
Source: Frank Cespedes, Harvard University. November 2008, YPO MI West
INCREASING YOUR SALES VOLUMEGrowing Your Business In A Hyper-Competitive Market
Pick How You LeadExpediters enjoy a luxury most carriers do not: the customer’s sense of urgency.
The value derived from the last minute save, recovery, or ease of use allows the expediter to claim each of the three options for market leadership.
Where the balance of freight companies are forced to compete on the basis of price (Operational Leadership) you have the option to choose your own path.
Does your team agree with your understanding of the firm’s position?
• “House Carrier #1”– Freight carrier of choice for hundreds
of manufacturers– Embraced low prices, beating the
market in sales• How they did it
– Tied all activities back to total useful time on road
– Automated maintenance plans to reduce unplanned downtime
– GPS update of unit locations to reduce unplanned delays
– Linked electronic logbooks, safety, and HR to identify and eliminate bad drivers
Listen to Your CustomersAnswer this: how different is your coverage map than anyone else’s? Beyond that, how much does your customer care about your coverage map?
Understanding the specific companywide, departmental, and individual needs of your customer/prospect can help you sell more, for more money.
Does your firm complete regular, methodical market intelligence gathering?
If so, does it drive your service offering?
• The Sanair story– $9 million niche provider to
aerospace– The go-to for Honeywell suppliers
• How they did it– Listened to needs of buy deck– Kept reasonable prices– Constantly found sources for parts
customers don’t need– Strong customer connection
through consistent outbound calls– Ownership “rounds” with key
customers
Completely Ignore Your CustomersSometimes your current customers don’t know what they’re going to need.
Other times, your current customers needs don’t correlate with the broader market space.
In either case, the competitive company develops an alternative model that supports the “other” market opportunities.
Caution: failure to differentiate between the two can lead to failure in both!
• The Rapid Response story– Roughly $0 revenue in 2003– $26 million 2004
• How they did it– Logistics, technology assisted– Ignored “current” ask for lower
prices– Focused on future need:
guaranteed availability– High price, customer intimacy
model– People-centric approach– Increased profit for carriers
Un – Sell!Becoming comfortable with the Un – Sell can seem a bit daunting.
Why would you want to waste your time - or your sales team’s time – by specifically not asking for the order?
The problem we all face is that decision makers and gatekeepers have been conditioned to ignore the sales pitch.
At the same time, people want to be heard. We want to matter. And we want to connect with a compelling story.
• The “Customer X” story– $11mm expediter– Consignee control was destroying
revenue stream• How they did it
– Utilized focus group Un – Sell – Invited 6 target prospects to participate– 15 minute pitch, 3 hour dinner– Involved prospect’s senior leadership in
development of market position and message
– Responded with new prospect-defined sales model
– 100% invitation to pitch
MANAGING YOUR SALES TEAMGrowing Your Business In A Hyper-Competitive Market
A Tale of Two Sales Guys
Charlie, the Finder
• Sets aggressive goals• Communicates progress• Asks for field support• Works with ops to improve• Consistently beats
expectations
Bob, the Minder
• Accepts your targets• A black hole• Hides “His” customers• Lets ops figure it out• Consistently tells you why
he missed expectations
Who’s Vacation Will You Fund?
• Put Bob into work-out!• 90 day program of measured activity• Successful adherence to plan will generate
significant new volume• Measures are irrefutable• Outcome speaks for itself
Your Methodical Approach
• Focus on behaviors and activities first• Monitor and measure output• Tie outcomes to outputs• Every able bodied salesperson will succeed!
Begin With Annual Expectations
Break It Into Quarterly Activities
Then Drive Monthly Activities
THE BIG FINISH!Growing Your Business In A Hyper-Competitive Market
In Summary
• Determine your market leadership position• Listen to your customers’ needs• Listen to the marketplace for new direction• Un-sell your way into new opportunities• Manage your sales force• Let us know your story!
THAT’S THE PRESENTATION:WHAT SHOULD WE DISCUSS?
Growing Your Business In A Hyper-Competitive Market
CONTACT CHARLIE FREDERICK FOR MORE INFORMATION:[email protected] 616.890.5676 (M)616.635.2920 (O)
Growing Your Business In A Hyper-Competitive Market
