If I asked you what the biggest problem is that you have with your competitors, you would probably tell me they charge too low to get the business. You then think that you have to charge a lower price to compete. You don’t, and if you do, you are going to lose money. The towing business is a service business, and the best service always wins. In 2003, I started a towing company with one truck and no accounts. Eight years later, I sold the company that had 14 trucks, 1250 accounts, and was the largest private-property towing company in the Southwest.
I also started one of the largest towing associations in the U.S. It runs with its own office with four full-time people and a budget of over $200,000 a year. That’s unheard of for a towing association. I am now starting another company, TowTrax, that will get tow companies tows they never had before. These businesses are or will be successful; all will be competitive, and pricing will play a big role in their success. In any of the businesses I was involved in, performance and service were the driving factors. I made my competition compete with me by providing a good service. I worked very hard to do the right things that provided the service necessary to outdo my competition. At the end of the day, it’s all about good service, and when it comes to service, I win. That’s where you need to get to.
The first thing I did when I started these businesses was find out who was going to be my competition. Things I wanted to know were:
- What services did they offer?
- Did they provide a service I should be providing?
- What services could I offer that they did not?
- Who were their best employees?
- Did they have anyone I might be interested in?
- Who were their best accounts?
- What problems have they had in the past?
- What did they charge?
- How many locations did they have?
All the companies I am competing with are driven by the price of the product. Some of the hardest questions you face are: What will I charge for the service I perform? Will I be competitive? Will I make a profit? If you are going to get into a bidding war with your competitor over the lowest fee for service to get the business, you are not going to make a profit. Price is the key. You don’t have to be the lowest bidder to get the business. There many other things you can address that will allow you to grow your business. As you read this article, I haven’t mentioned price once. The reason is that it’s all about service, and service wins out at the end.
Ten years ago, I talked to tow companies nationwide, and they all complained about that one company that has no insurance, does not know how to tow, and charges the lowest price. Here I am ten years later talking to tow companies, and it still the same story. I was with a group of towers at a tow show recently and one tower pointed out another tower that was making it hard in his area because that tower low balled all the other companies. My answer was simple, let him have that business, he will be out of business soon. You can’t afford to do a tow at a low-ball price.
I’ve discovered over the years that towers are their own worst enemy. One tow company comes in at one price for the tow, and their competition comes in lower. After they go back and forth a few times getting the price so low they can’t make a profit, one of them will give up. I am working with a lot of motor clubs right now, and you all know how they low ball the price. What I’ve learned at the end of the day is that price does not matter. Towing is a service business, and the best provider wins the business.
If you want to win over new customers, try a few of the following things that worked for me:
- We let our customers know about us (honesty, moral, and ethical). We let our customers know every day how we operate our business.
- We developed a staff and sold them on our way of doing business. We let our customers know that we hired the best people, trained them, drug tested them, and ran criminal background checks. (The key is to not give them the results if they don’t ask.)
- I joined the right organizations. My customers or potential customers saw me at various social meetings, and in some cases, I would sponsor lunch for the meeting. Customers or potential customers saw me everywhere they went because I joined the right organizations. It was important to join industry organizations or associations to stay on top of any changes or to see what my competition was doing.
- I subscribed to industry magazines and other industry subscriptions. This informed me on all the experts or people who were strong in the industry. Once I knew who to follow, I learned from them. Surround yourself with people smarter than you and learn from them.
- I purchased state-of-the-art equipment (new trucks, GPS, cameras and some bling) I believed in looking good. I had a competitor once tell me that he bought different colored trucks so his customers knew he had more than one truck. In my marketing brochures, I used technology to show as many trucks as I wanted. When I started, I showed 5 trucks when I only had three.
- Let’s talk about personal awards: founder of the largest towing association in the U.S., “2009 Towman of the Year,” largest private-property towing company in the Southwest. A week did not go by that I did not let my customers know about my successes. You might get the impression that I am bragging, but I just looked at it as good marketing. I use to read about a fellow tower all the time in a magazine. I asked him how he was so successful to which he replied, “Marketing-it’s all in how you spin it.” He spun stories to make him stand out in the industry emphasizing the positives of his business, not the negatives. He has a successful tow company because he knows how to market himself. He never once complained to me about price wars.
I hope 10 years from now I am not writing about the competition and how they low ball their price. I love the towing industry, and it can be fun and very rewarding if you run the business right. Know your competition, but don’t let them get in the way of how you run your business.
“Good service is king!”
For more information, visit danmessina.com
