There’s been a rumor or two that truckers are making money again. Really. The capacity crunch has swung buying power back trucking’s way, and after sitting on the sidelines these last couple of years you want your sales team to go in and save you a seat on the raise-your-rates bandwagon, right? But while you always knew pulling the customer onside was going to be laborious, you never thought you’d have to engage in a tug-of-war with some of your salespeople, too.

For many carriers in the past, sales were tied more to gross revenue than to net profit. Sales and marketing types were usually asked to be more like ambassadors — initiating, maintaining, and nurturing relationships — and the more of them the better. So, in this new era, where the term “demarketing” is no longer the heresy it once was, how do you convince the sales rep still tied to volume that quality freight trumps quantity every time?

Back to School:

Tired of years of not making good money, Julie Tanguay, president of St. Thomas, Ont.-based L.E. Walker Transport, decided it was time her sales department underwent this metamorphosis.

Salespeople love pulling out their reports and seeing that $3 million account, but many don’t realize that it may cost $3.1 million to service it, Tanguay says. “We always hear people say that we have to go out and educate the customer,” she says. “But before we can do that, we have to educate salespeople so they understand all the factors that go into rating a lane.”

The process required a true marriage between the operations and sales departments, where the latter learned of all the factors that can chew profit right out of a rate: Turn-around times at loading docks; trailer pools; redeliveries; transit times too short or too long; off-route miles, and so on. “In the past, it was the customer dictating what the rate should be,” Tanguay says. “The new role of the salesperson is to truly understand what goes into making us [successful] as a company, and then be able to sell that to the customer.”

Eliminate Excuses:

Was it an easy lesson to teach? “No, it was a rough road for the salespeople to get used to — especially when it came to long-term business,” she says. That’s when the excuses absolving the customer from paying his share of all the rising new costs of transportation started rolling in.

“There were days where I wondered, ‘who does the salesperson work for? Do they work for Walker Transport who signs their cheques, or do they work for the shipper?'” she asks rhetorically. “The excuses were endless: ‘The customer doesn’t believe in paying detention; their terms are 60 days, not 30.’ And of course, ‘but this is how it’s always been for years. We’ll lose business.'”

Precisely. Tanguay was fully prepared to demarket unprofitable business-unprofitable to everyone but the customer and some of her own salespeople, that is. But she didn’t want to act without giving her staff one more chance to see the toll some of their “best” customers were having on the company.

ABCs and Even Es:

To remove the emotion out of long-standing, unprofitable, accounts, Walker Transport drew up a rating chart for their biggest customers, and began to grade each account. The grades, ranging from A to E, measured customers not only on rate-per-mile or the willingness to pay accessorial charges, but also on the intangibles that pinched the bottom line. High-maintenance and low-maintenance accounts were compared side by side in several categories.

Invoices outstanding: “Are we a trucking company or a bank?” Tanguay asked her staff before answering her own question by marking up the chart.

Customer service: “Are we data clerks for the shipper, plugging in Excel spreadsheets for the shippers to take to their management meetings?”

Driver appreciation: “How do they treat our drivers? If a customer cannot respect the role of a truck driver,” says Tanguay, “I have a difficult time doing business with them no matter how they rate on everything else.

“It was amazing when we saw it laid out in front of us that some of the people we classified as top customers, as A or B accounts, were actually rated C or D,” Tanguay says.

Customer rating is a growing trend in the trucking industry. Mark Seymour, president of Prescott, Ont.-based Kriska Transportation, has had an informal system for a few years. While Kriska’s isn’t directly tied to pricing, Seymour says it definitely impacts levels of service customers receive. “It’s certainly not very sophisticated, but the concept of customer segmentation is a healthy process for any organization to go through,” he says. “It’s not correct to think that all customers need to be treated equally, because not all customers behave equally.”

Seymour says the process encouraged customers to behave the way they too want to be treated. “Especially when capacity is such a concern, there will come a day when you can’t do everything for everybody,” says Seymour, “and the last thing you want to do is leave an A customer in the lurch at [the expense] of servicing someone who isn’t graded as favourably.”

Follow the leader:

At just about every small- to medium-sized carrier, the owner still likes to cradle a handful of long-standing business relationships. It was no different at Tanguay’s 200-truck fleet where it was essential she herself drop some of her own D- and E-rated business in order to establish credibility with her staff. “If I didn’t have the courage to go out and do what I was asking them to do, then I’m giving them every reason in the book not to carry out the new directive I set forth,” she says.

In the end a few customers were “demarketed,” says Tanguay, including one of her own 15-year accounts that could not be convinced to accept a rate increase. A salesperson or two also followed. “I think that this process really separated the good salespeople from the weaker ones,” she says. “After all this was done, if the salesperson still couldn’t accept this and convey it back to the customer, it was evident that they weren’t going to make it in the new role of what a salesperson needs to be these days.”

Seymour says the time has come for the industry to properly rate quality of revenue and stop linking the success of a sales team strictly to the volumes it brings in. People — those in sales included — have different needs and they’ll innately measure things based on those needs, he says. “It’s our job to teach our salespeople that our success, and [in turn] theirs as well, has to be based on sustained profit.”