Revenue is Vanity – Margin is Sanity

Revenue is Vanity – Margin is Sanity

As an executive coach, I hear from my clients on a host of issues they experience. Sometimes those issues are external, while others are internal within the company. For example, one of my clients, a 3PL owner, found it difficult to get his employees to care about the company’s profitability. They pay their people well and have a nice, friendly company culture. However, he struggled to get the employees to care more about the bottom line.

It is smart to focus on profitability, rather than just revenue. At TSP, our philosophy is “revenue is vanity and margin is sanity.” After all, it’s not what you make, it’s what goes to the bottom line.
Focusing on revenue AND MARGIN is smart, but getting your employees aligned to your profitability goals is even smarter.

As the owner, your job is to set the goals (financial and others) and get the right people and resources necessary to reach the goal. In my experience, the owners of 3PLs and freight brokerage businesses try to do all the work themselves, which leads to burnout and frustration. Learn to delegate and hold your team responsible for meeting business goals including profitability.

You have created a nice place to work, which is very important. Now, you want to add ownership of business results to the culture.

To reach your profitability goal, you will need to enlist the help of your team. The following four-step plan will help you and your team set and reach your profitability goals:

1. Share your profitability goals. Once you have set your profitability goals, meet with your team to communicate your goals. As the leader, you must make it clear where you want to take the company. Be very specific and use SMART goals so there is no ambiguity about your profitability targets. Your people can’t reach the profitability goal if they don’t know what it is.

2. Communicate your expectations. Once you have set your profitability goals, communicate exactly what you need each team member to do to reach the goal. Be very specific about each team member’s roles and responsibilities in regards to the goal. The sales manager is tasked with getting higher margin business, the operations manager is going after cost savings opportunities, while the head of finance investigates refinancing equipment and provides progress reports to the team. By documenting your expectations for each employee, you are communicating that the profitability goal is important to you.

3. Measure progress. If you have set a significant goal, you will not reach it overnight, therefore it is important to measure progress to the goal. Provide your people with regular updates. Also, help your team develop plans and strategies that will enable the company to reach the profitability goal. As the boss, encourage, teach, but avoid taking responsibility for the work. When you do the work instead of the employee, you send a mixed message.

4. Reward and recognize. As your team meets your expectations on the profitability goal, you should acknowledge and encourage them for exhibiting the desired behavior and getting positive results. At TSP, we recommend the following three levels of acknowledgement: 1.) Review (lowest level) is non-formal, verbal praise for delivering on expectations. 2.) Recognize (second highest) is a formal recognition for meeting expectations. The praise could be part of a meeting or recognition presentation. 3.) Reward (highest level) is praise reinforced with a gift, bonus or a plaque. Be careful and consistent in your use of review, recognition and rewards for meeting expectations. Going overboard or being stingy with your praise can lead to negative consequences.

Styles in Profiles: Connecting across Psychological Dimensions

Styles in Profiles: Connecting across Psychological Dimensions

When approaching customers, it is essential to understand their buying styles – how they make decisions and how they interpret data to inform those decisions. While every person is unique, there are four basic buying styles from which one can establish sales communication and protocols: Decisive/Dominant; Influencing/Informational; Stable/Steady and Conscientious/Cautious. Understanding your own style (from a selling perspective), in conjunction with others (from a buying perspective), helps to act as a catalyst in the conversation and builds trust.

Dominant and Decisive Buyers

Decisive buyers are driven by the impact of new challenges and the authority to make decisions. They are often dominant in group situations and challenge the status quo. Innovation plays a keep role in developing ideas, but they are also distracted by the ‘shiny new object’ within the market. Decisive buyers focus on the bottom line and will look for a quick, impactful decision so they can move onto the next opportunity. They are often over aggressive and prone to confrontation to protect themselves from being taken advantage of.

When working with the Decisive buyer, be clear, concise and focus on the bottom line. Avoid overly complex explanations of features and benefits and comparative tactics. Focus on success and importance and the ‘rightness’ of the solution.

Influencing and Informational Buyers

Influencing buyer are driven by the acceptance in a collaborative environment. They are trusting and enthusiastic in their approach to new solutions. They look to broker deals, motivate their team and creatively solve problems. The influencing buyer may be more focused on fit and form over function. They are focused on creating an environment of trust and acceptance, but may ignore the details and specifics of what any change truly entails.

When working with an Influencing buyer, it is important to find the shared connections to build bonds and trust. Show how they will be the integrator of any solution. Avoid pressure and immediacy in the decision, but, instead, focus on praise and how the decision will satisfy their need for an environment free of friction and stress.

Stable and Steady Buyers

Steady buyers are driven by appreciation of their dependability and consistency. They are predictable and steadfast in their commitment to execution of work. Steady buyers are reliable and work well within the team structure along defined roles and responsibilities. They are resistant to change and will take longer to accept new processes or solutions. Driven by the sense of security, change should appear more incremental than disruptive for the Steady buyer.

When working with the Steady buyer, position your solution as a logical extension of the current process – one that fulfills current expectations and increases value. Avoid pressure and criticism on any current behavior, but show how the change is both clear (visually) and better (operationally).

Conscientious and Compliant Buyers

Conscientious buyers are driven by standards of high quality and logic. They are highly analytical and focused on precision. They heavily dependent on data, information and structure in making decisions. They are not swayed by emotion or innovation without the requisite research and study to support.

When working with the Conscientious buyer, focus on the details and provide the data, case studies and testimonials of others who have found success in your solutions. Avoid broad stroke statements and implications and never criticize the buyer or their current procedures. Focus on exploring possibilities that logically arise from your solutions and align them to the buyer’s methodology.

Each buyer is different. As such, your approach to each buyer must assert the correct information and communication styles to reach them. Preparation though knowledge of the buyer will help you to deliver a greater impact on their business success and your own.

Breaking Down Success – Simplify to Multiply

Breaking Down Success – Simplify to Multiply

How are you developing your relevance in a crowded marketplace?

Disruption of the marketplace happens when someone has the insight to question the status quo – the vision of what is possible in working out the solution to the challenges within a current process or business model. However, while the idea for change is important, it is truly the proper execution of that idea which defines success into this new paradigm.

Brokerage, as an intermediary business, in its simplest form, is the profitable connection between those with freight to move and those with the capacity to move it. How you make those connections and where you exert energies become your differentiation – your ‘secret sauce’. Some focus heavily on the freight owners, while others focus primarily on the carriers and others still on the technology portals. Ultimately, it is the service provided that makes the controllers of freight and capacity choose to work with a third party. It is the ease of use and the value of such service that makes them choose an option that costs more than connecting directly.

It is less about what you offer than about how your offering satisfies a need (or multiple needs). As a broker you provide access – to freight, to capacity, to information, to solutions. By knowing what the freight and capacity controllers need and how they can improve (financially or otherwise) through your options, you can create a long-term relationship that benefits all parties.

Information and its use are key components to making your business successful. Listening to podcasts, reading books, keeping up with trends and networking with your colleagues all play a part in growing your knowledge and information base. This knowledge allows you to speak directly to the prospects in their own language and with an empathy or their concerns, beliefs and challenges.

What you do differently is less important than how you do it and how you do it well in serving others. Be an expert in your field, but don’t limit your options by that expertise. Keep learning. Keep your people learning. Don’t limit your knowledge confined to transportation, but in other areas where service, connection and relationships play pivotal roles in growth.

Enabling Success

Enabling Success

When you look at your team, across sales, operations and administration, are you confident that they have all of the tools necessary to succeed? Do they have the systems (both technological and organizational) that enable them to be effective? Do they have the requisite training and development to be productive and grow? Do they have the right leadership and vision to keep them motivated and moving in the right direction?

As a leader of your company, it is your responsibility to provide the necessary resources to your team and to foster the best cultural elements for success.

Process Systems

The work that is done, from accounting to dispatch to lead generation, requires a repeatable and cohesive process. Manuals, documents or workflows are important to explain how deposits are made, how documents are scanned or how claims are filed. Setting metrics that are tied to the work processes will guide employees toward efficiency and improvement. Technology and innovation can rapidly increase productivity across the processes and allow the team to focus their energy on more important activities.

People Systems

Recruiting, Hiring and Training your team are the three pillars of the people system. Target the right people. Find those that understand the true nature of customer service and have the fortitude to make proper decisions in alignment to your company’s values. Don’t be limited by the need for industry experience. Ours is an industry that can be taught and trained. The softer skills of empathy, collaboration and self-motivation are much more valuable.

Support and compliment these inherent skills with a training program that outlines tasks and expectations within the context of a larger goal set. Take the time necessary to build competence and confidence and allow the freedom to develop mastery and expertise, which can be further leveraged in support of new customer needs.

Culture Systems

With the right people and processes in place, it is vitally important to guide them under a cohesive and powerful vision. This vision should incorporate the financial and character drivers of the company. It should be the lens through which each decision can be clearly seen and made. It should be bold, yet it should not be impossible to attain. It should include a certain amount of slack and resiliency to weather changes in the regulatory and market environment. It should embrace change as a necessary component to growth. And how you communicate any change and how you relate to each member of the team sets the tone of your business.

As the leader and/or owner of the business, it is your duty to all stakeholders (employees, customers and carriers) to express the strongest organization possible. Review your business processes, your people and your culture to locate gaps or deficiencies. Partner with the right people, both internally and externally, to fill those gaps and provide the greatest impact for your profitability and sustainability.

Romancing the Truck

Romancing the Truck

While the shipper customer drives the top line revenue number of any brokerage operation, it is the ability to source capacity efficiently that drives the profitability of the company. Throughout the industry, the focus on capacity (retention and transactional coverage) is market driven and reactionary.

Building a strong core carrier network is essential regardless of the market situation. While there appears to be a general shortage of trucks (aging population of drivers, ELD compliance, market pressures), it is often just a shortage of trucks available to you. Your network is balanced when the market is balanced, but when the pendulum swings either direction too much, the carriers will depart for more profitable freight elsewhere.

You must understand the carrier’s needs (take the time to ask questions and learn about what drives them and what they are trying to accomplish):

1) Due to the high cost of their operations and assets, carriers are often driven by cash flow needs. (how quickly do you pay? Do you have multiple payment options?)

2) Carriers are comfortable moving within a particular zone of operation. (Does your freight regularly keep them within that zone? If you move them out of the zone, do you provide options to get them back to the zone?)

3) Carriers work with companies that they trust and show them respect. (How do you communicate with carriers? Do you thank them? Do you recognize their efforts? Do you work with them to solve problems or just blame them?)

4) Carriers want consistent utilization for their equipment. (Do you provide regular freight opportunities to the carriers? Do you work with them to identify opportunities that serve you both well?)

Of the thousands of carriers in your network, how many move more than 1 load per month, per week, per day? Having 10000 carriers in your network has little value if they only move your freight when it suits them or when you provide the highest rate.

Leverage your stronger carrier relationships by showing that you are interested in helping them achieve their goals. Report to them how they work with you (metrics, volume, payment history). Learn from them how your company fits their plan and how well you are positioned to retain and expand that relationship.

Often, brokers are the de facto sales force for the carrier so treat the relationship accordingly. Communicate regularly about plans and activities designed to find new freight for their fleet(s). Work in tandem to identify shippers and customers that will support your shared goals.

As pressure from automated brokerage programs continue to undermine the transactional business model, brokers must strengthen their relationships with carriers to compete. Share the love and commitment to your carriers to position your own company for success. Carriers are true partners in growing your brokerage.

More Sales – Less Cold Calling

More Sales – Less Cold Calling

At TranStrategy Partners, we have worked with hundreds of transportation and logistics companies over the years. Sales, or more precisely, a lack of sales, is why many of these companies come to us for assistance.

Sales for 3PLs and freight brokerage companies don’t come easily. The market is crowded; the competition is intense and most companies haven’t differentiated themselves in their prospect’s eyes.

Many 3PLs use cold calling as their main prospecting tool. Smiling and dialing is not efficient or fun, but it is a necessary evil. The equation is simple, grow your sales by hiring more salespeople and pushing them to make lots of phone calls.

There really isn’t any viable alternative – or is there?

“93% of B2B buyers begin their buying process using Internet search.” According to research conducted by Marketo

There is a better way!

Yep, this crazy internet thing might really be here to stay.

93% seems like a huge number, but it passes the sniff test. Think about your last big purchase (home, car, vacation, college, etc.). I bet you began your research online, well before reaching out to an actual person.

Apparently, your potential customer is doing the same thing. They are conducting online research, getting the expert take and then reaching out to the person or company who can best solve their problem.

What a great way to sell, unless of course you aren’t online.

Selling Online Requires a Different Mindset

Once, you have decided to go after the online sales, you quickly realize that it requires a completely different mindset and different skills.

To be successful online, do the following:

  1. Specialize. You must decide on a niche or specialization. Getting some love from Google and Bing is even harder than cold calling. To be found by the search engines, companies must specialize – be known for something. Being found for your specialty will be much easier than being found for something generic like “freight broker” or “truckload.”
  2. Get a great website. Your 10-year old website designed by your niece isn’t going to cut it anymore. To get web traffic, your company is going to need a professional website with good original content. If you are starting from scratch, shoot for at least 30 pages with 300 plus words per page. From there, continue to add pages every month. Size does matter in this case. Google and Bing reward great (big) websites and ignore the rest.
  3. Content marketing. Content marketing like webinars, email marketing, articles, blog posts, white papers, and case studies puts your expertise on display and drives traffic to your website. Remember, people are searching online for experts – not salespeople. Share great content and develop an online following.

The internet offers a great new way to connect with prospective customers and showcase your company’s expertise – embrace it.

Let Us Help You Build the Company You Want

At TranStrategy Partners, we help business owners build the companies they want. Our proven approach helps freight brokerage and 3PL business owners develop their competitive advantage, hone their message and grow their sales.