The Key Is In The DripAugust 23, 2018
ChangeAugust 23, 2018
Let’s Raise Our Prices
Yep, you heard me…on three…go! OK. Prices raised. See you next month!
If only it was that easy! I was recently asked to address a group regarding the shortage of drivers in our industry. As many of you know from my time on the road, I don’t really believe that we have a driver shortage; I believe we have a career crisis. The way I see it, in our efforts to cut costs and keep our prices low (or profit margins high), we’ve created an environment where it is difficult for full-time motorcoach drivers to call their jobs a career. It seems that we have created more of a “retiree side hustle,” as it were, than a viable career opportunity for the working-class family.
If your feathers are ruffled a bit here, please stick with me. I promise this ends in a marketing conversation.
You see, I know that dramatically raising your prices isn’t easy, and I also know that saying you are going to pay your drivers $30 an hour plus benefits is even more of a stretch for most companies. (Besides, in order to even give consideration to the latter point, you’d have to raise your prices.) So, here we are, stuck in the middle of a conundrum, a driver shortage sandwich which seems like an endless loop of “no can do’s” .
I frequently get calls from operators asking me if I can share what other local competitors in the motorcoach industry are paying their drivers. While this course of research is logical, I’m afraid it’s about as useful as asking what size cannon balls the enemy is using in modern warfare.
Why? Well, motorcoach companies aren’t really competing with each other for drivers. We’re actually competing with public transportation authorities, school bus operations, trucking companies, UPS, FEDEX, and others who are all looking for CDL-licensed drivers. Truth is, these companies pay more, have better schedules, offer remarkable benefits, and they’re looking to hire the same drivers that we are.
So, I want you to put yourself in the shoes of the latest batch of new hires that have joined your team. You brought them in, gave them jobs, and helped train them. You even got their passenger endorsements, and they’re now ready and willing to work. Now you start to get these types of questions: “When will I work next? How often can I expect to work? How many hours will I get a week? What about benefits? Is there a slow time? When can I expect a raise?” While they’re all important questions, they can, in some cases, be difficult to answer.
If you are like many companies I speak with, you’re interested in limiting your full-time employee exposure. This means that even though you may need drivers, you prefer to staff your driver pool with part-timers who keep the conversations about medical, dental, and vision insurance, paid time off, and other benefits at a minimum. This is good for the bottom line and feels like a win.
But let’s go back to those new hires with their fresh and shiny CDLs. What are they going to do? Are they going to be able to make rent this month? What about next? How about during the slow season? Is dispatch keeping them as busy as the regulars and passing the work around evenly, or do the new guys get whatever is left over after the “regulars” have their 40 hours?
That type of situation puts our new drivers in this quandary: Do I stay here and hope that I get enough work to make ends meet, or would it be better for me to take my new CDL and find work that will guarantee my family is taken care of? It’s kind of a no-brainer; in most cases, they will choose the latter. Wouldn’t you?
So, motorcoach operators keep bringing in younger millennials, baby-boomers, and everyone in-between. But here’s the thing: even if we train until we’re blue in the face, we’ll still suffer from a “shortage”. And honestly, this cycle will continue until we go from “side hustle” (as Uber puts it) to real career choice.
How do we make that jump? On the surface, it’s easy: pay more and offer good, year-round benefits.
But how do we do that?
Yes, that’s right. We do it with marketing. We do it by stepping out of the commoditized transportation market and increasing demand for our product. This increase in demand will inevitably allow us to raise our prices and fill in the holes left by the customers who refuse to pay more for the quality we provide.
The most frequent concern brought up by operators when we talk about raising prices is the fear that there’s going to be that one operator in the market who will keep their prices soft by not raising them. What then?
Well, if we were selling a barrel of oil or a ton of wheat, I would share that concern. But we’re not. We’re selling a service with a lot of differentiators that warrant varying prices from one company to another.
We know that not all companies are created equal, not all fleets are maintained to the same level, not all drivers are trained in the same way, and not all sales staff are punched out of the same rubber mold. Even though we know this about our businesses, we are often too willing to allow low-end operators to control our price sheets.
If a customer is sensitive enough that a 10%, 20%, or even 30% increase in price causes them to immediately leave and go with another provider, they were never your customer. (You had wooed them with your prices, but they saw you as a commodity that could be replaced by another provider.)
Marketing is important if you want to open new markets, but in the grand scheme of things, it’s a crucial component of educating your existing customers about what you do, what you stand for, and what sets you apart. You must be able to clearly communicate what it is that you're doing to make yourself the best motorcoach provider in the area, and it’s important to tell your customers why you value their business. They need to see how hard you work to keep them safe, comfortable, and served.
Without this as a marketing objective, you are just another provider. And in that case, it’s true: you probably can’t raise your prices, hire more drivers, or protect your profit margins. With it, however, you can do all of those things. Marketing is not just about filling dispatch holes; it’s about creating demand for what you have.
I have been helping my 4th grader with a lot of story problems, so let’s talk about marketing using the following analogy:
Bill is trying to sell 4 bananas. He is in a famers’ market with lots of other people who are also selling bananas. He would like to sell his bananas for $1.00 each, but some idiot down the row is selling his bananas for less than it costs Bill to grow his bananas. What should Bill do?
It’s easy to feel bad for Bill because, let’s face it, we’ve all been in his spot. But basically, Bill has a few choices. He can close up shop, eat his bananas, and take up basket weaving. He can discount his bananas to match the price of the other guy, or even drop the price a bit further and be the cheapest guy on the block! Or, he can decide that he’s been selling bananas for a long time, he’s good at it, and being in
"If a customer is sensitive enough that a 10%, 20%, or even 30% increase in price causes them to immediately leave and go with another provider, they were never your customer."
business with a pricing model that loses money with every sale is a bad plan (cash flow or not). For the sake of our story, let’s say Bill goes with the third option.
So then, what does Bill do next? He decides to raise his prices. He comes back the next week with more bananas than he’s ever had and sells them for $3.00 apiece!
But here’s the catch: Bill did something different this week. He peeled the bananas, froze them, dunked them in chocolate, and rolled them in nuts. He made a couple of posters, stood in front of his booth, and offered free samples to all the passersby. And guess what? He sold all of his bananas and landed a contract with a local restaurant. How smart is Bill?
Moral of the story? Let’s be like Bill and think outside the box, stretching ourselves to be something other than a transportation-shaped commodity. Let’s show our customers (and potential customers) that we don’t sell green bananas in the bottom of a cardboard box. What we offer is a delicious frozen treat, hand-dipped in chocolate and rolled in nuts. Let’s demonstrate that because we are different (better, even), we won’t be held to the price sheet of the guy selling green bananas.
Let’s build a new world where the customers we work with are loyal to us, not our prices, and create enough demand that when someone really wants a green banana, we can send them on their way with a smile and say, “Come on back when you want a better banana!”
We need more drivers, and we’ll continue to need them until we make driving a viable, full-time career opportunity that provides regular work and enough pay to comfortably support a family of 4.
We won’t get to that place until we can sell more bananas, to more people, for more money. Marketing isn’t easy, and it isn’t something you can do just in a moment of need. It’s a journey, not a destination, and it’s something that deserves your attention and focus. It will never be regulated, mandated, or enforced by a DOT audit, but it determines the outcome of your business just as much as those things that are tracked.
When you are ready to get started or grow your efforts, we are here to help.