For fleets, what defines success? Is it just being able to survive in a business environment with constantly increasing customer and — in many cases — external competitive demands? Or, does it include higher levels of achievement, such as lower costs, or, even better, combined with excellent customer service? Is it being “the best,” or possibly more? Expanding on this further, is there a potential for a fleet to thrive — such as Apple, Amazon, or other similar leading firms? And, if so, what would be involved with this level of achievement?
Following are some strategies that fleets can use not only to become the “best” but, more important, create a win-win atmosphere to thrive.
Going into Survival Mode
For some fleet leaders, these are academic questions, since they find themselves in a constant struggle just to survive. And, particularly with the concept of thriving, this may seem both unrealistic and impossible — being outside their experience. It just doesn’t seem relevant to consider.
Fleets, as with the service industry in general, are typically driven by an overriding requirement to control costs. This is even more of a reality today with constantly increasing energy expenses, competition, and associated customer demands. As a result, most fleets find their primary attention is on managing the bottom line. What few realize is that a sole focus on this often leads to living in a survival mode.
Finding a Point of View
Success and opportunities are all about perspective.
While all fleets recognize they must achieve low costs, those wanting to excel add service excellence to their goals. These are the two elements of service performance. The next level above survival on the service provider “hierarchy of success” is achieving lower costs than their peers. Add excellent service quality, and it takes the fleet to still another level. Combined, these reflect the objective of being “the best” with the services provided — quality services at competitive costs.
While these represent improved service performance, there remain opportunities to achieve more. The next level involves a customer service principle that almost everyone is familiar with.
Making Perception Fit Reality
Despite its familiarity, the implications and resulting requirements of this principle are often under appreciated. Customers define your success. While you may in fact be “the best,” if the customer is unaware of this or chooses to overlook it, you are, by definition, not. It is the customer that determines how well the fleet is doing. And, typically there is a lot more involved in this assessment than just service performance. It involves perceptions of all aspects of the service provider and its staff, including facilities, appearance, behaviors, relationships, communications, customer friendliness, etc.
While posing an intimidating challenge, this also creates opportunity. All fleets manage service performance with goals, plans, business tools, etc. How many do the same with managing customer perception? And, yet, this is of comparable importance in determining the fleet’s success.
Managing perception is usually accomplished through a strategic marketing plan. This can include: defining critical customer relationship goals, managing behavior, customer services experience, and managing/leveraging information and communications. All of these marketing elements optimize customer perception. This applies to fleets as well as other service providers.
Associated with this level of success, a fleet’s goal is to be perceived as “the best” and “first-choice” with respect to the fleet’s customer service. In addition to providing exceptional service, its customers recognize and acknowledge this level of performance.
Thriving in the Market
Even with managing perception, there’s still another level of opportunity. It’s the optimum level described by the phrase “to thrive.”
What is thriving? It basically describes those recognized as being “in a-class-by-themselves.” They set the standard for their industry; consistently being viewed as “best-in-class.” Their distinguishing competency is providing products and services that produce “win-win” results with their customers — beyond the scope of normal expectations.
In regard to the reference to Apple and Amazon, these firms are often innovating emerging technologies. To thrive requires levels of innovation, change, and leadership that are simply uncommon. This is particularly true for most traditional organizations. To achieve this level of success, organizations must be inherently different.
The reality is, “to thrive” a fleet must embrace the inherent challenges and associated risks with breaking-out-of-the-mold. Doing business the way it has always been done in the past, simply won’t get a fleet to this level.
Achieving ‘Win-Win’ Results
A question at this point might be: What can fleets do to exceed their customers’ normal expectations? What are “win-win” opportunities?
The following are examples from NV Energy that I was able to benefit from, and they serve as useful examples of what is possible.
The first example occurred following extensive fleet cost savings and improvements to the fleet chargeback system’s pricing accuracy. These resulted in our largest operating customer being more competitive than our competition’s contract crews. The labor and overhead costs were comparable, but its fleet equipment costs were lower. This was at a time when our internal customers were under increasing pressure to outsource their internally provided customer support services. The fleet, through accurate internal pricing and lower costs, made our customer more competitive — a wholly unanticipated “win-win” result outside of anyone’s expectations.
Another opportunity occurred when we discovered the profound benefits of transitioning to leasing, from previously purchasing all equipment. As a utility fleet, we’d never really explored this option. Our finance group always strictly prohibited this option. As a result of an executive direction, we found support to explore leasing as a viable alternative to previously purchasing all of our equipment. The more we investigated this direction, the more the benefits became evident. We were able to achieve this transition by partnering with our overall organization’s finance group — producing a win-win for both groups.
The third example was also the result of leasing. Its implementation had an immediate and long-lasting game-changing impact on both the company’s customers and its fleet by improving all aspects of fleet effectiveness and management. It was the final solution to fleet issues involving a labor intensive/non-value-added procurement process, inordinately long equipment lifecycles, and on-again/off-again budget authorization cycles that were disruptive to all fleet stakeholders.
Leasing resulted in immediate equipment cost savings with eliminated maintenance, reduced downtime, and lower operating costs — to say nothing of improved customer satisfaction at all levels. It achieved our decades-old holy-grail goal of adopting a lowest lifecycle cost approach to operating the fleet. It furthermore eliminated the previous laborious capital budget process. It was a win-win for the fleet, our internal customers, as well as the corporation, and even external customers.
The last example was another long-term goal. This involved a transition from the fleet previously having to dictate to customers what they “had” to do/or could “not” do to manage equipment costs. By providing the critical information infrastructure, incentives, and associated policies and procedures, we enabled our customers to manage their own equipment through effective decision making.
This had two win-win results: First, customer perception improved with the change in our relationship and behavior. Second, it enabled fleet to effectively meet the expectation of our executive leaders to manage the total fleet operation and cost.
As with many organizations, our fleet had no direct control over fleet operations management, since this function was performed by the customer groups operating their equipment. With our integrated strategies, we were able to partner with these customers to manage these costs effectively. Another win-win result benefitting all parties involved.
Formulating a Plan
How were these win-win results accomplished? It started with a back-to-basics review of fleet services identifying a customer-driven approach using proven modern business best practices. This, combined with the desire to excel, produced a new break-out business model, leading to new directions producing opportunities for the fleet, its staff, customers, the overall organization, and even external customers.
Being customer driven, the first step was to redefine the term “customer” to be more inclusive of all of the diverse recipients of a fleet’s services. This enabled their needs, wants, and expectations to be identified, which defined both: the services provided, and determined our success. Often this critical step is completely overlooked.
The search for excellence led to the recognition of a “Hierarchy of Success” and with these levels being identified goals leading to the development of a triple-strategy. This is composed of: service performance excellence, managing customer perception through an effective marketing plan, and achieving win-win results beyond expectations.
Seven integrated strategic elements support this overall direction. The first two and the last are primarily focused on service performance. The remaining four are similarly aimed at managing customer perception. All of these are interrelated, with win-win results greater than the sum of the individual elements.
Managing the Process
The first element is a return to equipment management fundamentals. While based on a lowest lifecycle cost approach, this also involves minimizing fleet size and maximizing utilization. Fleet leasing supports this direction, along with a number of other business tools, including: an accurate inventory, accounting instruments, information/cost reports, similar benchmarking, fuel management/utilization capabilities, and associated supporting equipment policies and procedures.
The second is the services element of the business plan, which reviews a fleet’s support from the perspective of its customers. It is about how effectively a fleet provides those services; the related decision making typically involved with their different options, and how you manage those with external alternative providers.
Since customer perception is as important to success as service performance, here is where this business model may begin to differ from many fleet plans. Specifically, this direction involves employing similar efforts and business tools to ensure customers’ fleet experience is optimized by managing their perception. This is a comprehensive approach from making all services customer friendly to providing specific customer-driven staff/team member guidance and performance measures.
The Relationship/Behavior Management strategy also supports customers’ perception to be “the best” and “first choice” by taking the lead in defining relationship and behavior goals. As with the previous customer experience management direction, this aspect of fleet performance is similarly managed.
An information and communications strategy reflects what most think of when it comes to a marketing strategy. In this case, it’s recognizing the importance of being your customers’ preferred source of information, combined with the realization that this function is an opportunity.
“Teaming-with-Customers” is another case where definition plays an important role. Teaming-with-customers here involves customer-assigned, self-directed individuals/teams that are managed based on specific customer-driven performance measures.
One of the direct benefits of redefining the term “customer” is the identification of the executive/owner(s) role in defining a fleet’s requirements. Specifically, in this case, many executive leaders or owners expect the fleet to manage the “total fleet.” For some fleets, this function is self perceived as being beyond their scope, since their operating customers define how the equipment is used.
Here, the solution is two-fold. One is to recognize that, with the previous strategic elements, a fleet now possesses the ability to effectively “manage” the total fleet. This is accomplished with these, and, by providing their operating customers with the information and incentives to make effective decisions on their own.
Reaching the Goal
I wouldn’t pretend that we reached the point of thriving. However, we far surpassed both our and our customers’ expectations — achieving a level of success previously unimagined. It’s a matter of perspective. Sometimes there are hidden opportunities if you’re willing to get-out-of-the-box. Admittedly, this wasn’t either easy or simple, and it took a long time. But, it’s an approach available to any fleet. And, it may open the door to levels of success that are similarly unanticipated. By adopting these, fleets can unlock opportunities that remain largely unidentified within our industry.
Tim King retired in 2008 after almost 30 years with what is now NV Energy, an electric utility serving northern and southern Nevada. Prior to this, he worked at Ford Motor Co. and Lyon Manufacturing, among other companies. This article is excerpted from King’s new book "Fleet Services – Redefining Success." He can be reached at [email protected]