Fractured markets need imaginative service providers
Even before the COVID-19 pandemic struck, transport market transformation was beginning to accelerate. Challengers were bringing new digitised technologies to the market. Markets were internationalising. Outsourcing was growing fast. The imperative of decarbonisation was increasing. Competition from existing and new players was intensifying.
Then it happened.
While the impact of the virus on different segments of the commercial and corporate transport market is variable – it has fractured existing structures and certainties. On the one hand, operators are trying to survive; on the other, they are seeking to emerge leaner, fitter and with new, resilient business models. That implies they will buy in different ways, and impose different demands on their service providers.
What will all that mean? One thing is for sure: many transport operators will no longer have the time, patience or will to deal with numerous individual suppliers. They will expect and demand intelligent, integrated solutions which make their businesses more efficient and easier to run.
Is the transport services industry ready to respond? That is the million dollar question.
It isn’t bundling – it’s synthesis
We’ve led, advised and worked with many companies who have focused on extending their service offer. Broadening their palette of services, diversifying, developing new income streams, and extending their offer footprint to cover a wider range of transport customer needs. All those are – normally -noble and valid strategic marketing aims.
But the 2021 realities are these:
- concerned shareholders have little patience with in-house product development timetables;
- product development budgets are being tightened or removed altogether;
- internal capital costs are rising and payback timescales are shortening.
This is no environment for expansive in-house innovation.
This is an environment which demands intelligent evaluation of potential partners with real synergy, and with the potential to co-create synthesised, high-value propositions.
This is an environment in which strategic alliance and channel partnership are critical.
Is selling direct an unaffordable luxury?
Build a great transport service product. Figure out a winning sales proposition. Hire and train fantastic salespeople. Target the right customers. Manage sales performance. That’s a winning formula, isn’t it?
It can be. But only so long as your customers see real value in working directly with you.
Salesforces are expensive. And 2021 is not the right time for expensive salesforces unless you are 100% certain that direct representation gives both you and your transport customer value. Does it?
As commercial and corporate transport firms increasingly, and aggressively, look for integrated, simplified solutions – does it not make more strategic sense to seek out sales channel partners who can:
- build on and amplify your message?
- absorb your service into a broader, higher value sales proposition at far lower cost-to-serve than you can ever achieve directly?
- break new markets open for you without the cost or risk of setting up new sales operations?
- share the risks always associated with market development and diversification?
Customer ownership: is it a “sacred cow”?
Look – we know this isn’t going to be easy. But here’s a question for you: do you need to “own” your customer?
A working group we set up for a super-major fuel card issuer looked in detail at the full service leasing channel. It concluded, after extensive and extremely detailed research, that “allowing” a leasing company to “own” the customer increased fuel card channel margins by around 20%.
Why? It was clear. By absorbing fuel management into a far broader and more powerful, integrated mobility proposition for the transport company, the leasing company didn’t diminish the value of fuel management in the chain, but actually added value to it. And at far lower channel sales cost to the fuel card issuer.
It can pay to be less precious about “customer ownership”. If you genuinely believe you can innovate new offers, and sell then to a proprietary customer list to generate extra shareholder value – go for it.
In 2021, though, a more agile and effective bet is almost certainly to seek out a partner with access to the customers you want, and a value proposition which works with and actually enhances yours
Data: one plus one equals three
Service providers to transport sectors understand the value of data. If they are beginning to figure out that customer ownership isn’t everything (and may be a sacred cow), then they are at the same time realising that “data is the new currency”.
However, as we’ve described, transport customers are changing. A single dataset is worth little – and its currency, on its own, is worth next to nothing.
Vehicles in every transport segment are now rolling off production lines with ever-advancing connectivity. After-market telematics boxes will be redundant very soon. The mileage data captured by manual driver input on a fuel card transaction is already irrelevant. Toll payment data is worth nothing without route optimisation and effective backload optimisation data.
So it’s time for individual service providers to be less precious about the single data streams they command, and both more intelligent and more imaginative about the power and impact of blending those data streams with those generated by vehicles themselves, and those generated and held by potential partner service providers.
If it’s not going to work – change it now
To go back to where we started: the old certainties have gone, markets are fractured, and shareholders are going to expect new, more imaginative, faster-to-market and less capital-intensive approaches to transport sector growth.
The key is channel partnership. No ifs. No buts.
PHC’s specialists have built, led and transformed sales and marketing operations for some of the world’s leading transport service providers. Get in touch with us now to discuss how our expert practitioners can help you restructure and grow indirect channel sales.