Industry publications have featured a number of articles over the years that advise fleet managers to “benchmark” their vendors. The experts say establishing a standard for performance is the best way to hold your partners accountable and compare them with all the other vendors who are competing for your business.
It’s a good argument and a time-honored process, but it is far from foolproof. If your fleet services providers aren’t willing to guarantee results and promise to compensate you for any performance that does not reach guaranteed results, they might not be as confident as they appear to be in conversation.
Let’s take a closer look at how traditional benchmarking falls short and why your fleet could benefit from partnering with vendors who aren’t afraid to guarantee results in writing.
Breaking Down the Numbers
Benchmarking has long been the accepted procedure for evaluating a current or future provider of fleet services. Your goal is to establish expectations for your current vendor or justify a change in services or a switch to a new vendor. The decision typically comes down to cost savings. With the results in hand, you have projected paper numbers that either make you feel good about your current vendor’s performance or feel good about switching.
But the benchmarking process suffers from a number of inherent flaws, particularly in today’s marketplace. For example:
- Projected numbers are subject to interpretation, which can lead to false results.
- Vendors offering bundled services — including the vehicle lease — can bury specific program results in the reams of data that comprise a bundled report.
- The reports often fail to establish the key performance indicators (KPIs) you need to monitor performance.
The underlying problem is that paper numbers are just that. All that expensive and time-consuming work will be worth it if your company saves money and the fleet is more productive. But that is not always the case. Vendors sometimes fail to deliver the savings they promised. Now what?
Improving the Process
Forward-thinking fleet services providers are moving away from the traditional benchmarking process. Instead, they are establishing KPIs, promising to meet them, and backing them up with a written guarantee.
You might wonder how a paper guarantee is any better than a paper number. It isn’t, unless your vendor plans to write a check to cover any cost overruns resulting from a failure to meet their KPIs. If that sounds too good to be true, you should raise your expectations. The days when a vendor can promise a paper number of “20% savings” on accident management or maintenance are long gone.
As a fleet services provider myself, I can tell you the biggest obstacle we encounter is the fear of change. Three years ago, we decided to put those fears to rest by issuing written guarantees for those changes. If we say we can promise $165,000 in savings in Year One, we guarantee that, if we fall short, we will write a check for the difference. Having no business model or desire to write such checks, if we don’t believe we can save a client that $165,000 in savings, we say so.
There is nothing easy about projecting results or switching vendors. That’s as true today as it was for the fleet managers of yesteryear. But your job is more complicated than theirs was. You are under constant pressure to reduce costs, and every dollar you spend has to be accounted for.
Written guarantees actually are easy. It’s a simple promise that takes the guesswork out of budgeting and forecasting. And if you need to impress your bosses, go ahead. Tell them you demanded that we guarantee the savings we promised and put it in writing. We don’t mind. We are glad to have you as a client and confident there will be no shortfall to cover.
Fear of change constrains us. It forces us to stay in bad partnerships. Put your own fears aside and insist or at least discuss written guarantees with your fleet services providers.
Rich Tillotson is vice president of sales and business development for CCM Services and a 30+ year veteran of the automotive fleet industry. Contact him at firstname.lastname@example.org.