Sales, Miles and PayMay 19, 2015
In any trucking company, drivers are supported by a number of departments, all of which are necessary to get the job done. One department that is overlooked and in many companies underfunded is sales.
Why is the sales function important? The first and most obvious reason is that we all want freight and we all want miles, none of which happens without a customer. I often tell drivers when stressing the critical aspect of good customer service, that ACT doesn’t give them any miles…the customer does. So it naturally follows that if we want miles, we have to make the customer happy so the customer want to give us miles. We also have to find enough good customers to grow our miles, especially in an economic downturn. If we don’t make the customer happy, that customer can easily give those miles to someone else. If we don’t have miles drivers are unhappy as are our owners. Therefore, it behooves everyone in the company, driver or office, regardless of their function, to see it as their job to make the customer happy. If you are not taking care of your customer, your competitor will.
Are all customers equal? They don’t all pay the same. Some have good rates and some are on a constant search for the cheapest rates. Some have good fuel charge and detention schedules and some have bad ones. Some have fair contracts and some have very one sided, “take it or leave it” attitudes. Some are loyal to their good carriers and others don’t care. These customers engage in annual bids, where carrier put rates in spreadsheets. The customer picks the cheapest ones, which often are brokers who have no trucks. Some customers are more driver friendly than others. Some get drivers loaded on time and some don’t. Some are flexible with appointments and some aren’t. Some require more trailers than others. There are many other factors. Of course, we all want the perfect customer. I don’t know if that exists, but clearly some are better than others.
So how does a trucking company get driver friendly freight and good rates and enough freight? This can only be done by investing in a robust sales organization… and they aren’t cheap! To improve your rates, and the quality of the freight, we need lots of opportunities from lots of customers so we can pick the good ones and replace the worse ones. It’s a lot like culling fish. You have the salespeople bring you lots of opportunities to price. You then make sure your trucks are busy and when they are, start replacing your worst freight with better, thus making constant improvement. Over time your basket of freight improves, your rates improve (which translates into higher driver pay) and you can create density in your lanes. This in turn allows for more engineered lanes and helps get drivers home more often (hopefully with a load!)
Many companies our size and smaller do not invest in sales. They have a dominant customer, usually from their local town, who gives them shotgun freight (no lane discipline). Because the trucking company is dependent on this dominant customer, they do whatever they want. They have no other option because they don’t have a sales team bringing other deals to the table. So now they are spread out over 48 states and brokering their way back. This always translates into live loads at cheap rates and often unfortunate surprises.
ACT has invested in a sales team. We have four full time sale people for 300 trucks. We also have sales support staff to keep those salespeople hunting for new business instead of being bogged down in maintaining existing accounts. We track our freight and rate growth and are always looking for feedback from drivers. If we see driver unfriendly freight trends, we will attack it. That is easy to do when you have options, impossible if you don’t. Many carriers have customers who represent up to 50% of their business. We don’t let any customer get over 10%. That allows us to maintain leverage and protects us from drastic problems if a customer leaves. We do very little broker freight because we don’t have to.
There will always be times of the week, month, year or economic cycles when freight is very strong and when it is very weak. This is true at ALL trucking companies and drivers should plan for this. However, those who do best in slow times or when customers change are those, like ACT, who are forward thinking enough to make the investment in a sales organization.
We are proud of our sales organization. I think the investment has paid off and made us better than most carriers. Help us out by appreciating what they do and taking good care of the customers they bring us.
Thanks and Happy Trucking! Tom