Contractors are repeat rental customers who often spend millions each year renting equipment. With 35 percent of all construction equipment being rented today, and estimates that nearly 50 percent of all construction equipment will be rented by 2010, there's good reason for rental businesses to focus heavily on contractor customers. The service and equipment rental companies provide to contractors help them do their day-to-day jobs more easily. Also key are the relationships developed between rental people and their customers, which build trust and loyalty between them.
Sean Saunders, director of equipment rental for Tempe, Ariz.-based FNF Construction, the No. 1 heavy highway contractor in Arizona, says, “We partner with our job owners, the state, the city, the county, whoever we're working for, but we also insist on a real vested partnership with our vendors. We want them to understand our business and be a partner in our success. One of the things that we offer in return is an equal partnership. We want them to be successful. I don't begrudge anybody a reasonable profit. It's never about price, but it pays off big in other ways.”
Saunders, who estimates that his company spends $4.5 to $5 million annually on rental equipment, requires that the rental companies he works with know not only who he is when he calls on them for equipment, but also that his company is one of their top accounts.
“Sunstate actually readjusted its entire phone system to make sure I never get put on hold,” Saunders says. “And it's not because I'm a jerk, it's because I just don't have time. I've told them, ‘Hey, if I get put on hold, I'm hanging up and going on to the next guy on the list.’ So it's worth it to them to answer the phone.”
The fact is contractors appreciate being called by name by a representative from their rental company who knows their business and equipment preferences. Successful rental companies understand that and strive to provide personalized service to their contractor customers based on well-cultivated business relationships. Once popular frequent-renter and loyalty programs today have become more of an expectation than a reward for contractors, according to Nick Mavrick, vice president of marketing for Asheville, N.C.-based Volvo Rents.
Sixty-two percent of Volvo Rents' customers are contractors, and overall about 15 percent of the company's customers account for more than 80 percent of its annual revenue. To better serve them, the company developed its VIP program to provide customized service to its owner/operator contractor customers who are involved in day-to-day business operations and who spend between $50,000 and $100,000 with Volvo Rents annually.
Rather than spreading its marketing dollars out to a broad base of potential customers, Volvo Rents instead chooses to identify prospective VIP customers and target them specifically.
“Our premise is to pick your customers before they pick you,” Mavrick says. “We believe we can pick the customer base that will generate more than 80 percent of our revenue. For those customers there are no rules. Those customers are always right; we're very flexible with them.”
Mark Killingsworth, president of Pflugerville, Texas-based concrete subcontractor HR Marc Co. says that being a Volvo Rents VIP customer means that the company will go out of its way to get him any piece of equipment or tool he needs, even if it's not currently in its inventory and needs to be special-ordered.
“I needed a bucket for a telelift for a particular job that we were doing at the University of Texas, and they bought a new one so I would have it to use,” says Killingsworth. “And I didn't use it long enough for them to even pay for it.”
Will Pitts, president and owner of Austin, Texas-based Pitts Construction, also benefits from Volvo Rents' VIP service. Pitts Construction specializes in underground dry utility work and on occasion finds itself in need of equipment in the middle of the night. Pitts says he can count on Volvo Rents 24/7 to answer his call, and deliver the piece of equipment needed to the jobsite in a timely manner.
“The service itself is what sells us on their behalf,” says Pitts. “Trust and building relationships are most important in any successful business.”
Charlotte, N.C.-based Sunbelt Rentals also provides personalized service to its contractor customers based on the relationships developed at jobsite sales calls between contractors and their Sunbelt salesperson. Sunbelt also offers the Sunbelt Guarantee, which it introduced in 2005 to ensure it meets the highest level of service needs of its customers. The Sunbelt Guarantee consists of five service points based on customer surveys, which concluded that overall satisfaction, on-time delivery, service, availability and after-hours response were some of the most important issues to rental customers.
For instance, if a customer finds that a guaranteed in-stock item is unavailable at the nearest Sunbelt location, the company will provide free delivery of that item from another location directly to the customer's jobsite. If an after-hours delivery or service call isn't answered within one hour, then the customer receives one day's rental of that item free. Sunbelt also guarantees it will supply the right equipment, on time, serviced and ready to go, or the rental that day is free. If the equipment isn't delivered within 45 minutes of the quoted delivery time, then the rental that day is free. And Sunbelt guarantees it will repair or replace down equipment within four hours of the service call or the rental that day is free.
“Sunbelt has promoted the Guarantee internally as much as externally, emphasizing the areas we want our team in the field to achieve with every customer transaction,” says Chuck Miller, executive vice president. The company monitors and tracks its results of the Guarantee points to ensure its success across all branches. For example, most rental companies promise 24/7 service, Miller explains. Sunbelt, however, monitors the response time on every call to its national after-hours program. In 2005, the company received 12,265 after-hours calls: 95.1 percent of those were responded to in less than 30 minutes, and 98.7 percent were responded to in less than one hour, according to Miller.
In the field, our goal is to provide such a high level of service that our customers are always more than satisfied with their rental experience,” says Jake Stout, Sunbelt's vice president for the Midwest region. “The customer expects and deserves a flawless rental transaction. If that happens, there's no need to be concerned about the guarantee. We are providing all the service they've ever expected.”
Chicago-based NES Rentals tailors its loyalty programs to the individual customer rather than having a single reward that customers can earn for doing a certain amount of rental business with the company. NES salespeople form a relationship with the contractors in their territory on an individual basis and then determine the best way to reward them based on their interests.
“When we get to know our customers and their business we provide them with the reliable service they deserve and perhaps grab a bite to eat or enjoy a round of golf together,” says Mike Disser, vice president of marketing for NES. “What's important to one customer may be NASCAR, while what's important to another may be a round of golf, while what's important to another may be a ball game.”
Combined with one-on-one rewards NES also sponsors several large customer loyalty events around the country each year to further build on its contractor relationships and have a little fun. Events are often based on favorite regional activities. For example, NES recently hosted a crawfish boil for its customers in Houston, an event that led to the demise of two tons of crawfish and drew several hundred people.
It's all about service
Sunstate Equipment doesn't offer a frequent renter incentive or loyalty program to its customers. Instead, the Phoenix-based company invests in its customer service initiatives and direct salesperson-to-customer contact. It also invests in training so its drivers, service technicians and mechanics are trained to treat customers professionally during their interaction with them.
For Sunstate contractor customer Saunders, that's just right. “What I tell people when they mention their rewards programs is: ‘Save it. Reduce my rates, put that money back into your service department, add some more phone lines, add another service truck.’ I don't even know why rental companies bother with the frosting. It doesn't mean anything. I'll tell any of the rental companies I do business with: ‘This is what you need to be doing. Quit spending your money on perfume and just make your product better.’ We don't spend dollars to collect pennies. My time is very valuable; if I get a rebate check for $3,000 on $4 million in business, I really just don't care.”
Unfortunately, Saunders says, in the contracting business a company can waste a lot more than a $3,000 rebate in 10 minutes just trying to get in touch with its rental company contact when a piece of equipment goes down and there's a crew standing around idle because there's no equipment to work with.
Richard Walker, president of West Palm Beach, Fla.-based Discount Rental & Sales, believes that frequent renter and loyalty programs work best in homeowner rental-based stores, though he doesn't rule them out completely.
“A frequent-renter program does not make sense to me in and of itself,” Walker says. “I really believe you have to put in place a number of other things — direct-mail programs, telemarketing, inside and outside salespersons, for example — before you start worrying about coupons. That said, I'm not completely ruling out some sort of frequent-renter program, but if I did it, I wouldn't restrict it to renting or buying. Loyalty is based on service first and coupons third, fourth or fifth.”
Ultimately, Walker says, service is the key to long-term competitiveness for contractor business. “Our approach always has been to identify niche markets and then apply every resource we can to service that market in every manner imaginable.
“One of the largest highway builders in the United States has an account with us,” Walker explains. “The reason we have that account is not that we offer the lowest price, nor is it because we offer coupons or frequent-renter programs. The reason we have that account is service. I'll tell you exactly what the project manager told me. He told me that he knows he can call me, or one of my key employees, on a personal cell phone at 5:30 a.m. or p.m., and arrange to have somebody come down and open up the gate for him.”
Decatur, Ga.-based Ready Rent All president Jeff Wearing agrees that customer loyalty is based first on service. “Service is our business,” Wearing says. “We give contractors what they need, when they need it, with the best equipment we can, and service them when they have problems. We try to be very, very efficient and very prompt in our repairs or whatever needs to be done — swapping out equipment or whatever it might be — but to me, service is key.”
Joel Theros, vice president of Gainesville, Va.-based Theros Equipment also advocates providing top-quality service to contractors. That exceptional service, he says, is the best incentive for contractors to keep his company as their rental equipment provider.
Consider computer convenience
While online account management isn't a tool that all contractors are ready to utilize, it is an area of technology that more and more contractors are learning can save them time and increase their productivity. Though online technology is an area slow to catch on in the rental industry, some companies do provide the convenience of online account management tools, which does benefit some of the larger contractor companies.
“Anytime that I can save paperwork or writing something down; anytime we can automate a process via technology, we do it,” says Saunders. “If I can't get a hold of a person to ask a question, then I need to have access to the same information they do, so I can get my questions answered. I get here at 5 o'clock in the morning for the sole purpose of having quiet time to process things. If I get stuck on an invoice for instance, I like to be able to go online, get all the information I need and then be able to continue my work.”
NES Rentals has thousands of customers who are actively using its system to review their rental accounts online, says Disser. Having access to invoices outside of regular business hours is a real convenience for busy contractors' accounting departments. And online access also helps contractors' operations managers keep up-to-date with what equipment they have at various jobsites — especially the larger customers who have multiple jobsites and projects going on and need to know what equipment, and how much equipment, is at these various locations.
NES Rentals' website provides contractors a secure portal to access their specific account information, including accounts receivable, invoices, payment history, out-on-rent items and service history.
“I'm a technical supporter,” says Disser. “I believe in the future of technology in this industry and probably every other industry you can think of. So we really support technology and are developing it for future applications.”
Sunstate Equipment offers its version of an online account management tool to its customers called Sunstats. Designed in house to be a user-friendly system that contractors can use to track their accounts, users apply and then are e-mailed a password to the system. They can log in to review their account, check on what equipment they've got at individual jobsites, find out where their accounts payable stand, find out what's out on rent and what's getting ready to come off rent, says Larry Cox, director of sales for Sunstate. Having access to Sunstats also allows contractors to go online at any time of day or night to print their invoices without having to wait for the accounting department to open.
Scottsdale, Ariz.-based RSC Equipment Rental last month launched RSC ePay, an online payment option for its construction and industrial equipment customers in the United States. RSC ePay is part of the company's RSC Online service, which allows customers to reserve equipment, manage reports about rental transactions and call equipment off rent — all online.
“This is yet another step we're taking to make the rental experience both easy and efficient for our customers,” says Tom Zorn, president and CEO of RSC Equipment Rental. “They can process payments and access payment history more easily with RSC ePay, and that greater efficiency can help them increase both their productivity and profitability.”
Sunbelt contractor customers too have visibility of their rental accounts through an extranet, as well as some account management capability, but, according to Miller, that degree of technology isn't as full blown in the rental industry as it is in banking or other industries, for example. Online customer account access is also used successfully by United Rentals, Hertz Equipment Rental Corp., and a number of other, mostly larger, rental companies.
Though NES does offer some online account management capabilities, only a small percentage of its customers are currently utilizing them, and those contractors who do are often directed to the service by their rental sales representative.
“I do think sometimes its one of our best-kept secrets,” says Disser. “Because I know from speaking to a lot of customers that once they do finally sign up and get into the system they find it very helpful to them, so I can't imagine that it can't be helpful to more people.”
Discount Rental & Sales' Walker agrees, noting that the popularity among contractors of using online resources to reserve and order equipment, and manage an account online is growing, but that face-to-face contact is still critical to long-term business relationships. Truly effective online management systems work best when those systems are rooted in traditional sales and marketing efforts, he says.
“Anybody can establish an online reservation, sales or parts ordering system, but not everybody can bring to the table sales representatives with decades of experience,” Walker says. “Forward-thinking contractors are like forward-thinking people anywhere: They want to find ways to improve efficiency and lower costs. Online management tools certainly are the way to do that, but if those systems don't rest on the foundation of traditional methods, then those systems aren't worth the powder to blow them up.”
The bottom line is relationships
Whether or not a rental company provides high-tech rental management tools to contractor customers is not a critical factor for most when deciding where to do their rental business. What is critical to winning business and loyalty from contractors are the traditional methods of exceptional service and good, solid working relationships.
Paul Schlerf, sales manager for EquipRent, Azusa, Calif., strives to have as much personal contact with contractor customers as their schedules will allow, which includes phone calls, and office and jobsite visits.
“I have friendships, strong friendships, with some of these people,” says Schlerf. “That's my loyalty, and my job is to provide them with what best helps their individual business. So what's important is that I know what they are, and who they are, as a separate customer from everybody else.”
EquipRent recognizes that all concrete contractors, roofing contractors and subcontractors are not the same. As a result, the company strives to find out and understand what makes each of its contractor customers tick so it can provide them with precisely what they need. “You have to take time to seek that out from each individual account because their tastes and what they expect vary on a day-to-day basis.”
Ready Rent All's Wearing agrees that building relationships with contractors is the basis to getting and keeping their business.
“This business is not only a service business, it's a relationship business,” Wearing says. “We have to develop relationships and rapport with our contractors and let them know that we will assist them in any way to solve their problems, and by doing so we earn their business.”