I hope some of you checked out the recent RER 100 webinar with Michael Kneeland of United Rentals, Mike Watts of Sunstate Equipment, Brendan Horgan of Sunbelt Rentals and Andy Studdert of NES Rental. The main topic was rental penetration and their thoughts were extremely interesting on how the rental option is growing and why it will continue to progress.
They also discussed the fact that for rental to continue to grow, performance of rental companies needs to be topnotch, to gain and keep the respect and confidence of rental customers. In other words, a lot of companies will embrace rental when times are tough and capital is not available, but whether or not they'll continue to rent rather than purchase their own equipment when times are better will depend to a great degree on whether or not the performance of the rental providers they use inspires their confidence. These gentlemen certainly believe that the service rental companies are offering is helping to keep the trust of the customer base, and they offered some pretty strong evidence by talking about some of the programs their companies are developing.
You can access the webinar from RER's website — www.rermag.com — and listen to it, and I highly recommend that you do.
Can we measure rental penetration? It's an inexact science but Dan Kaplan, who more than anyone pioneered the metrics by which the rental industry now measures itself, is also widely quoted on the question of rental penetration and gives a pretty strong stab at it in his article on page 26, with the help of some numbers provided by Yengst Associates. While it may not be plausible to exactly measure rental penetration, these numbers are certainly ones I'd take to the bank, and you might be able to use them for that purpose as well.
Kaplan, in his article, talks about how — when he first began in the rental industry back in the 1980s — some companies would send two pieces along on a jobsite so that if one broke down there would be another unit right there waiting for them. Two wheel loaders for the price of one, what a deal! But not the most efficient way of running a rental business.
There may be some companies out there still doing that — and certain exceptional situations might call for it — but it's no longer common practice. Why? Because rental companies nowadays are far more efficient. They have a computerized maintenance schedule that tells them when a machine needs to be serviced and the level of service is far more efficient than it was three decades ago. So rental personnel can be far more confident that the rented machine won't break down. And if it does, and of course machines do break down, the speed with which the company can repair or replace it is far faster and the diagnostic tools and precision that enables them to determine what's needed are far better than ever, and will continue to evolve.
It's not only these big companies that are experiencing an increase in demand and efficiency improvements. It's on all levels of the rental industry as large and small companies offer a degree of professionalism that is bringing this industry to new heights.
These leaders also embody strong leadership within their companies. Kneeland, for example, took over United Rentals when the company was at a low point, when its acquisition by a private equity buyer fell through and the company's stock price plummeted and the economy was on a downward spiral. Kneeland had a quiet confidence that better days were ahead and he kept everybody focused on the core principles of the rental business, eventually leading United to new heights. Watts grew Sunstate from a single-location homeowner-oriented rental center to more than 50 branches and has provided widely respected innovative leadership for more than 40 years, always on the cutting edge with service and programs that are watched and admired by so many in this industry.
There are a lot of great leaders in the rental industry today, with large companies and small independent rental centers, who have refined and improved the efficiency with which the industry serves its customers, developing the trust and confidence that keeps the customers coming back and continuing to choose the rental option. Every time your company does the job efficiently, provides well-running equipment with on-time delivery, bills the customer correctly and creates a satisfied customer, you are contributing to grow that rental penetration. Every time you can provide the right equipment for the job with the latest attachments and newest performance capability and fuel efficiency, that percentage continues to tick upward, slowly but surely.