I'd Like To Make A Buck In This Industry - Advisor Article 2005

[Tow411]

As we are approaching the next installment of the Advisor, I thought I would add one more thing here to get some input. This letter to the editor came in from a member last quarter and we published it in the last edition of the Advisor. The member reaction has been limited and not what I expected. I would be very interested in the opinions of the Tow411 community...

There are too many times I hear guys griping about smaller towing companies or motor clubs keeping rates so low we can't make any money. This is America! You have got to convince your customers that hiring you for the job is better than hiring the other guy. Bottom line: the cheap fly-by-nights will always be around… quit griping and do something about it!

You have two choices: strip your company of its overhead or create value from your overhead. My insurance is high because I have a larger fleet than most of the other local towing operations. We have city contracts that require higher limits than companies have who charge $25 a hook. What do I do? I have started asking my customers why they don't ask for this insurance. What happens to them if I can't cover their butt if their customer's freight or car gets damaged? Or worse, their employee or customer gets hurt by me?

I have a lot of trucks and therefore either high repair bills, shop costs or high debt service. There are lots of reasons to hire a company with a larger fleet. The local public bus company knows this all too well. They generally use a few companies that charge low flat-rate pricing. I have begged them to try our service for their account many times. No way are they paying $10 more per tow. Along came a bad storm. They called because their normal providers are giving them a two-day ETA. We told them they would need to fill out an account application and we would review it and get back to them the following week… we were taking care of our existing customers that day!

It takes a strong back-office to manage a high volume operation. This takes good, well-paid folks with good equipment. There is no way you can pay for this with a $25 hook-up rate. You don't have to if you can convince your customers that your service is worth a little more. Does your customer want their statements or invoices e-mailed to them? Do they want to enter their own calls to your dispatch system or be able to search their calls with your company online when they have a question? Do they want to be able to call anytime, get a warm body and ask questions about invoices? Do they want to know there will be someone answering the calls that understand what they need instead of just an answering service? Do they want someone to send the right equipment to their stranded customer or driver rather than have him wait an additional 60 minutes because you have to send a different truck? Do they want terms rather than have to give your driver cash or a check? I may be worth it then!

It's the rule of common sense:

It's unwise to pay too much, but it's worse to pay too little.
When you pay too much, you lose a little money - that's all.
When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was supposed to do.
The common law of business balance prohibits paying a little and getting a lot.
It can't be done.
If you deal with the lowest bidder, it is well to add a little for the risk you run.
And if you do that, you will have enough money to pay for something better.

John Ruskin (1819-1900)
English art critic and writer

The basic rule is that you get what you pay for. This then is what we need to communicate to our current and potential customers. There will always be customers for the low-ball guys. Hopefully they will learn without it costing them too much. Historically, my problem has been that I have wanted to compete with price so we lower our prices and try to offer the same quality standards. This just makes for miserable times because the bottom line gets way too small. Other companies who charge way too little are not to blame. We are! We need to have the guts to sell what we know is a fair price, provide service that is far superior and ask customers of other cheaper towers why they are risking so much for $10 - $15 a tow. If we act like we are worth it, the perception will be that we are. We will then have the additional cash to provide better service and our customers will be more loyal. We will gain business and then have even more cash to provide even better service… Hopefully, this translates into a little more for us!

We have got to quit blaming the road services. They need us. They have sold us on the idea that we need them. The heck we do! The biggest problem is that it has taken us way too long to figure out how to compete with them. I think our national and state associations should redeem their purpose with this golden opportunity. Lets flood the media with a public campaign…maybe with a sign on the back of every one of our trucks is all we can afford: "Why call a road service and get second rate service? Ask your insurance company why they use non-certified tow truck operators? Want your car towed by someone who cares about your car? Use a professional." Then we need to give them an option that cuts out the middle man…

You have options. It's your choice - be wise.

Let's quit griping and do something about it. Let's sell our value and give the public a better option…for all of us! It is time to add strength to our industry, our individual operations and our bottom lines.


This letter was submitted by the owner of a towPartners member company. The company name has not been published at their request but they did ask that we share the letter with our membership. The thoughts and opinions expressed herein are not necessarily those of the towPartners organization.
-Jeffrey Godwin
 

@FTI Groups

 

@Heffy004 said:

Good article, Jeff.......

And, that Tow Partner member is so right.

JUST THINK FOLKS........

A part of every invoice should include the funds for up-grading equipment, training & certifying drivers, PROFIT, and most importantly.........

The value of service to the customer & the readiness of /and availability to complete every component of any job function.

Catch ya & C'ya
HEFFY

 

Mark Trueblood said:

I couldn't agree more. It's frustrating to compete around and thru the "low-ball" companies, but this article is right on-target!

We've had to adjust our rates for any new accounts concerning various services and equipment so that we can start seeing a better return for our quality of service and equipment we utilize for such.

We're professionals. It's our job to convince the general public of this fact.

Good article, thanks.

 

@Interstow said:

Great Article!!! Unfortunately it is tough to get the consumer to understand that they get what they pay for, and frankly most people don't care. I quote prices all the time for high dollar vehicles, and loose most because other people will move the vehicle for considerably less than I will. It takes alot to get the customer to see over the pricing and look at the quality of service. I know if I can get them over the dollars and have them try my service, I will continue to do business with them in the future.

It needs to be harder to get into the industry than just having a truck and a butt to put on the seat. When new people enter the business they have no idea what it costs to operate and when they start running out of start up money they start to cut prices just to have the cash flow. Then they don't have the testicular fortitude to close the business and do something else.

 

In Memory of DNDTWOINGCOM who said:

We agree with your outlook on this.Our outlook for the most part, is that the accounts that use these low rate/cut rate get what they pay for and are usually more trouble than any amount of work they may send our way. We picked up a dealer body shop account from an older established low rate company due to the shops customers wouldn't open their front door much less let them tow their cars once they got a look at the drivers and the trucks. these guys looked like they lived under an overpass and didn't know what a bar of soap was and the trucks were just as bad. so if the company doesn't care about their public image, why are they going to care for your car??

~Dann - D&D Towing, Inc.

 

@InTowMan said:

As always Jeff, great reading....

Den...

 

Devin Straits said:

Now let's all implement this idea...

Devin

 

@Steve Catlett said:

I don't feel sorry for those that run there trucks for low rates. I have been in this business for 37 years, I got into the towing business to make a living for my family not to lose money. Over the course of my company's history I have seen many of these lowball company's come and go. But you know what I am still here and still working and so are my employees. I love this industry And yes I am a towing professional. And you know what I am Still here and still making a profit. Steve A Catlett Owner Steve's Towing Inc Indpls In