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Double Brokering

These days, when you talk about freight, double brokering comes up almost immediately. The problem is on the rise and will probably keep rising until the scheme stops being profitable. That’s where Brokers come in. It’s our job to stay savvy enough to protect ourselves and our customers. Just like in the other parts of our jobs, the value we can present to our customers is that we know more about the freight industry than they can know, because it’s what we do full time.

We talked about double brokering in a recent episode of The Broker Bros podcast, and Freightwaves published an article on the topic in May. Each of those is worth checking out, as they discuss a lot of the red flags that come up with double brokering.

Working with a company like LDI also gives you access to the information we’ve collected and over 100,000 carriers that have already been verified. We have a process for adding a new carrier, and that process is designed to put enough eyes on the new carrier to keep an eye out for warning signs. Still, it starts and ends with the broker being aware of the risks and conscientious.

The episode of The Broker Bros linked above has some good, specific things to look out for when talking to a carrier to make sure your freight isn’t being double brokered. The bottom line is this: the carrier should be able to answer basic questions like the driver’s contact information, the MC and other details of the carrier that arrives should match the one you contracted with, and the carrier should be able to show a paper trail of prior reviews, inspections, etc.

Here’s the recurring theme to all of those details: you should be asking for them anyway. Do your regular homework on your carriers and look for things that sound suspicious.

That brings us to one final note, a little piece of trivia that is also good to keep in mind:

When you hear someone say they were “conned” or fell for a “con man,” that’s actually short for “confidence,” as in a confidence trick. Remember, that’s what these people are trying to do: get you confident enough to feel like you don’t need to check on the details. They’re usually not counting on their sophistication or a clever grand scheme – they’re counting on getting you to not look to closely. Don’t let your guard down.

IT Security for a Freight Brokerage

Back in May on The Broker Bros, we asked you to think about what would happen if right now, your biggest customer shut down or stopped doing business with you. It’s not a pleasant exercise, but it’s one you definitely want to play out in your head before it plays out in real life. We’re going to do another one of those right now. Stop and think what would happen, right now, if a person or program gained access to your work computer, potentially even locking you out of it.

If you’re a broker who is employed by a large company, you call IT and they handle it. Worst case scenario, you may get a talking to about network security protocols and lose a few hours of productivity. For freight agents though, you probably don’t have an IT department, you almost certainly don’t have a detailed plan for how to deal with a successful hack or malware attack, and how you would handle customer calls to get freight booked while you’re shut down is probably not ideal. We’ll circle back to that last part, because it’s probably the biggest difference in how to handle a computer problem for most people compared to how to handle it as a business owner.

There are a lot of very basic steps for protecting your computer and network. The SBA has a great list for small businesses to help you make sure you have your basics covered. The biggest things to know for a sole proprietor are the basics: have unique, difficult to guess passwords, don’t use unsecured Wi-Fi, install your software updates, and don’t fall for phishing emails. As much as we picture hackers as computer geniuses with super-secret tricks for getting your passwords, the vast majority of hackers get passwords by getting someone to tell them what that password is. Those are phishing emails and phone calls. Most of the rest use “exploits,” flaws in computer security that you can probably find via Google and that are regularly patched in software updates – if you run them.

The added step for small businesses is to have a plan. Major corporations have huge, complex disaster recovery plans that help them respond to a disruption and business continuity plans that help them operate during the disruption. A freight broker agency, especially one that only has one agent, can have a much simpler plan. While you’ll have to think about your own circumstances, some questions you’ll want to answer are:

  • Which passwords do I need to reset? Make sure to get your personal ones too.
  • Do I have any proprietary customer information? If so, you’ll need to disclose the security breach to them. It won’t be your favorite conversation you’ve ever had, but your customer is trusting you with that information and could be at risk if you don’t take this step.
  • How do I get my computer or network fixed? This might be as simple as resetting a Wi-Fi password or running antivirus software, but you may need to take the computer to a qualified IT professional in your area.
  • How do I operate in the meantime? Again, this might be incredibly simple – a borrowed laptop or a personal computer might suffice. Think about whether there’s someone you can call to help you with operations in the meantime, whether that’s someone at your 3PL if you work with one or even another broker you trust. Careful with that last one though, of course. This plan also may be good to have if your internet connection goes down or your computer just isn’t working.

These are pretty easy questions to answer, but they can be hard to figure out in the heat of the moment. It wouldn’t be a bad idea to write out a quick checklist, look up a local computer repair shop, and have a conversation with the person you’d call for support. Write it up, store it someplace safe, and hope this plan is the best thing your business never uses.

Freight Brokers: Avoiding Disagreements with Carriers

Every freight broker knows they have to take good care of their customers. It’s the customer’s money that keeps you in business, so naturally you focus a lot on keeping your customers happy. It’s important to be a good partner to your carriers as well, however. After all, without them, you don’t have anything to offer your customer. Having good relationships with trustworthy carriers can set a freight broker apart when it comes to ongoing projects, as well.

Things like rate, equipment type, and lane are easy to keep straight, since those are the most basic details needed to book a truck at all. When carriers and brokers have a disagreement, it’s usually about the finer points of a rate con. Any arguments are usually a result of one of two things: lack of clarity on a finer detail of the contract, or disagreement about the solution when a problem comes up.

Be Proactive

 

I spoke to our own Broker Bro, Joe Adinolfi, about how to prevent disagreements with your carriers. The first thing he said was to make sure, right from the outset, that the carrier knows all the details. Give them the chance to consider those factors when placing the bid. Any risks or special considerations are part of what they are bidding on, and adding details after the fact or failing to communicate them at all is a recipe for disaster. As Joe put it, “if you ever just assume the carrier knows something then you will get burned, count on it.”

Likewise, don’t expect things to “just work out.” As soon you hear about a problem from the carrier or shipper, you need to be engaged. If you don’t start working on the solution until the customer issues a fine or the carrier complains about not receiving full payment, you’re already at a disadvantage. Ideally, you want to work toward a solution everyone can agree to ahead of time. If something has gone wrong, at least one party is getting bad news, and it will only be harder to reach a positive solution if that bad news comes as a surprise.

Of course, your biggest tool for avoiding problems is an accurate and detailed rate con. If there’s a fine you as the broker may need to pay and will want to pass on to the carrier, that needs to be on the rate con. Bottom line – the rate con is the agreement between you and the carrier about how this shipment will be handled. Not only is it the document you’ll rely on to get the delivery done correctly, it’s the one you and the carrier will both refer back to if you’re trying to settle a dispute.

None of this is to say that you need to be, or even can be, perfect. You’re always going to have some disagreements with carriers. If it was easy to keep both sides happy while shipping freight, anyone could be a freight broker, but being able to manage what happens after something goes wrong and making sure the customer and carrier both walk away happy is what sets great brokers apart from the rest. A good reputation and long lasting, positive relationships with carriers

Setting and Meeting Annual Sales Goals

On the last day of 2020, we gave you some pointers on how to measure your success after a year that could politely be called “unusual.” One of the points that we tried to make was that every business is different, your business is different, and judging your business based on what others did wasn’t the way to do it. That blog post was, by necessity, an exercise in judging something in hindsight. While many businesses set goals at or near the beginning of each year, goals set in January 2020 were probably not even useful benchmarks by the time March rolled around. The world had changed too much. So now there’s the question that a lot of us are only getting ready to ask ourselves as January 2021 winds down: where do we go from here? Let’s talk about goals.

 

What Kind of Goal Should You Set?

 

You’ve probably heard of SMART goals, and those are a great place to start. The great thing about SMART goals is that SMART Goals are a helpful framework whether you’re setting a formal goal or just thinking about the future. So as a refresher or to bring anyone up to speed on a what a smart goal is:

  • Specific: vague goals can make it very difficult to say for sure that you’ve reached the goal, or can leave you open to reaching the goal as stated but being unsatisfied with the result.
  • Measurable: in addition to be specific, it’s good to have quantifiable figures for your goal. This lets you measure whether you reached your goal and track your progress along the way.
  • Attainable: if your goal isn’t realistic, you’re not only going to fail to reach it, you’re going to take away your incentive to work toward it.
  • Relevant: your goals, and the goals of any employees you may have, need to be based on what makes your business more successful.
  • Time-based: without a date (or frequency) to achieve something, there’s nothing in your goal to work toward.

What does this mean for sales goals in a freight broker agency? The obvious way to make a goal specific is a dollar figure, but there are other ways to set goals. Let’s look at 3 different ways to build a goal, and how reaching one goal every day can help make sure you’re hitting your overall goals.

Increase sales by 15% this year1 new customer per month5 new contacts per day
SpecificIncrease salesNew customersNew contacts
Measurable15%15
AttainableCheck against prior performanceCheck against prior performanceCheck your schedule
RelevantIncreases your profitsHelps reach the first goalHelps reach the second goal
Time-basedThis yearMonthlyDaily

 

What Should Your Goal Be?

Specific, Measurable, Relevant, and Time-based are critical parts of the smart goal, but they’re relatively easy. Attainable, on the other hand, can be difficult. No matter how much information you have, there are factors that just can’t be predicted. There’s also no one-size-fits-all solution to forecasting and goalsetting. In the example above, we assumed that your primary focus was adding new customers. However, your business may be better served by maximizing your business with existing customers, reconnecting with customers from before the pandemic, or another goal that is specific to you.

Whatever your goal is, the most important things are to make sure your goal takes your business where you want it to go, and that have a realistic plan to meet that goal. If you’re launching your own freight agency and serving one customer, doubling your number of customers might be too modest of a goal. If you’ve been established for 10 years and are serving 100 customers, that same goal is probably unrealistic.

As you might imagine, that means there’s no magic formula that you can use to set a goal. That said, there are some very important ideas to have in mind when you set your goal.

Guidelines and Suggestions

 

Be analytical. You don’t need a complicated algorithm, but you do probably want to be aware if sources like Freighwaves’s Market Experts think the industry will have a year of growth or contraction and whether you have more or less manpower for prospecting than you had last year.

Be aggressive. This is the easy part. No one ever set a sales goal of the exact same amount as last year. Remember, if you hit this goal at the end of the year, that should mean your business is in the condition you want it to be in. On the other hand…

Be realistic. This is where the first two points meet. You want to set an ambitious goal, but not one that is going to be out of reach. In the first few years your business is operating, you might grow several times over. Businesses mostly grow at the rate the economy grows, but your growth can easily outpace that, especially as a small business.

Be practical. Another of those items that seems obvious, but is critical to keep in mind, is your capacity to meet your orders. Increasing your sales means not only increasing the amount of time you spend selling, but also increasing the resources you put into booking trucks and offering customer support. A good TMS and a support network like the one Logistic Dynamics offers its agents will help, but you need to make sure you’re ready to take on the added work that comes with higher sales.

The Race Against the Clock

 

One of the biggest mistakes that businesses make is to have a goal in mind in December and not realize that they missed that goal in May. If you’re landing customers that have recurring orders, it’s worth 12 times as much to land a customer in January than December. If you want a million dollars in new sales in a year, doing $25,000 a month with one customer starting in January gets you 30% of what you need. In December, it barely makes a dent. If, starting in January, you add $12,821 a month in new sales every month (and all those sales are recurring), you’ll hit your million-dollar goal. By April, that number is over $18,000, and it’s nearly $35,000 by June. Getting 12 bites at the apple each time in January, and 11 in February, is a lot better than 7 in June and 6 in July.

One final point, and maybe the most important one: remember that these goals are about what you want as a business owner. You earned the right to make those decisions for yourself when you started your own freight broker agency. Your goal doesn’t have to be a million dollars, it doesn’t have to be bound to the calendar year, and it doesn’t have to be formalized any more than you need it to be. If you have employees, they should have formal goals and expectations, but the goals for your business should be exactly what you want them to be. The only thing that your goals need to be are detailed measurements to help your business develop into what you want it to be, when you want that to happen.

Measuring success in 2020

At year end, most businesses take some time to look back on the prior year and judge successes and failures, and the outlook going forward. Sadly, for many small businesses, that discussion also includes serious consideration as to whether it’s practical, wise, or even possible to continue operations. Small businesses close even in the best of times, and 2020 was not the best of times.

So, what does that mean for freight broker agents then? As you’re looking back on 2020, and forward to 2021, it’s harder than usual to take a look at your business’s performance and get a firm grasp on your prospects.

Freight Industry in 2020

 

The freight industry has been on a roller coaster ride in 2020. Like many industries, we were almost at a standstill in the early part of the year. Trucks and drivers are naturally essential to our economy, but closed businesses don’t send or receive a lot of shipments. In April of 2020, a lot of the freight industry just stopped moving. Since then however, you may have seen that the industry has actually had unprecedented demand. Freightwaves did a great recap of 2020 in their look ahead to 2021.

In spite of 2020’s strong recovery in freight, there’s something very important to realize for freight brokers and freight broker agents. When there’s such a dramatic change in an industry, not every business is poised to capitalize on those changes. No matter how well this or any other industry recovered, remember that many businesses may have been left out of that increase. If you weren’t in a good position to ship medical supplies or cleaning supplies, many of those increased shipments never would have been available to you. Likewise, small businesses do best when they are able to handle a steady stream of transactions. If businesses dried up in April and then skyrocketed to more volume than you were able to handle, you likely still lost out.

All of this is to say one thing: if you had a rough year but heard the rest of the freight industry had massive volume, don’t lose hope. You may know freight brokers who had great years, some that had terrible years, and every possibility in between.  Wherever you fall in that spectrum, it’s going to be important to take the lessons you can and move forward, ready for new challenges and opportunities in 2021.

What to expect in 2021

 

We’ll start with a disclaimer: we have no idea what to expect in 2021 for the most part, and anyone who says otherwise is probably wrong. It does seem like we’re all expecting things to return to normal, or whatever the new normal will be, at some point in the second half of the year, however. So let’s think about what that would mean.

What would happen if, right now, every account you had suddenly behaved as if it was December of 2019. Certainly, that’s not what is going to happen, but it’s probably the closest approximation we have. There’s probably a lot of good things that would come out of that, but are there any problems? If those companies suddenly resumed their prior shipping habits, would you still be their first call? Would you be able to handle the sudden increase or decrease in volume or change in timing, mode, or lanes?

In September we reminded you to stay in touch, if possible, with your customers that were not shipping or not shipping as much during the pandemic. This is a good time to do that as well. See if you can get a handle on any changes they’d like to make to their shipping processes when things pick back up. On our blogs post, social media, and on The Broker Bros podcast, we’ll continue discussing our experiences and what we’re able to learn, but remember that no one knows your customers like you. Your product is yourself, your understanding of what their business needs, and your expertise in freight – keep offering the best mix of those three things.

If you have customers that are shipping more since the pandemic started, this may be a good time to start feeling out whether you’re part of their long term plans. Businesses that needed shipping support to deal with changing circumstances during the pandemic might plan on going back to how they did business before, but if you’ve shown your value, it’s a good time to remind them that you can help with their day-to-day business even after things calm down.

The Takeaway

 

Setting aside the strategic suggestions for a moment, the biggest thing for everyone to remember right now is that 2020 was unusual. However you did in 2020, personally and professionally, was probably affected in a very direct way by things that were beyond your control. While none of us know quite what to expect in 2021, we all expect the end of the pandemic and better days ahead. If your business is doing well right now, do your best to capitalize on that. If not, remember that there are big changes coming in the New Year. As always, LDI will be here to support freight broker agents in 2021.

Hiring Employees

If your freight brokerage has reached the point where you’re considering hiring employees, you’re not alone. Around 20 million employees in the US, more than 15% of all workers, work at a company with 20 or fewer employees. Hiring that first employee can be a milestone for your business that helps determine your growth prospects for years to come. The decision to hire and the process of making that hire should not be taken lightly.

Should You Hire?

 

If you’re considering hiring, that almost certainly means that you’ve grown your business to the point where you can no longer manage it alone, or you foresee reaching that point very soon. Congratulations on your success so far. The first thing to do is stop and think about whether you need to hire someone, or if you might have better ways of getting help. Hiring an employee is a major, ongoing investment that changes the way your business operates, even if the employee doesn’t work out. Before you hire, check to see if there are services or contractors that can do what you need.

If there’s no service for what you need, or it looks like you’re going to need those services so much that it’s more cost effective to have a full-time employee, that’s when it’s time to move ahead with hiring. Be careful though, just because you’re sure you need to hire doesn’t mean you have all the information you need.

Requirements

 

There are some important details in hiring that can’t be overlooked, and frankly aren’t fun to research. Fortunately, there are resources available to help. The Small Business Association (SBA) has a guide to help hire and manage employees. It’s likely to be an important resource for you, since your area of expertise probably isn’t HR. The SBA’s guide should be able to help you through some administrative requirements, required and optional employee benefits, and other laws you might need to understand. Make sure to look at your state’s laws as well, which the SBA has aggregated in a link on the same page.

A common question for freight broker agents when hiring is whether they can pay their employees commission only. As with most employment questions, the answer is more complicated than a simple yes or no. That said, you’re probably going to be held to federal minimum wage and overtime requirements.

Reading the link above, you’re naturally going to be drawn to the outside sales exemption. It’s possible that someone working in your agency will qualify for that exemption, but it’s a high standard. The Department of Labor defines who qualifies for the outside sales exemption, including that “The employee must be customarily and regularly engaged away from the employer’s place or places of business.” On page two of that same document, you can find that ANY fixed site qualifies as your place of business. The phrase “customarily and regularly” is less clearly defined, but court cases seem to view this as a high standard as well. Bottom line – unless they mostly travel to customer locations, they probably don’t qualify, and will need to be paid at least minimum wage, plus 1.5 times minimum wage for hours worked over 40. They can be commission only, but you’re on the hook for the difference if their commissions are less than minimum wage would have been.

So now we’ve got the scary stuff out of the way. Those requirements are a big part of the reasons we talked about whether you can find support without hiring in the first section. Here’s the good news: if you’re heavily leveraging outside services to get your day-to-day work done, or you’re not growing because you just don’t have the help in the office, then a new employee can be a great investment – as long as you hire a good one.

How to Find and Interview Candidates

Wanted

This… probably won’t work on its own

It’s almost unfair to small business owners that when it’s time to grow, hiring becomes maybe the most important factor in your success. That almost certainly wasn’t the skill that made you decide to start your own business in the first place. For freight brokers, booking loads does very little to prepare you to find and interview potential new employees, so you’re left with a whole new skillset you need to learn.

There are more ways to find candidates than we could ever discuss here, so let’s just talk about what works for small businesses. You need to compete with everyone, so take the advice of baseball great Willie Keeler and “hit them where they ain’t.” Major companies are prevalent on top job sites, so check out sites that serve your specific industry like Jobs in Logistics. Talking to people in your network is also a great idea. In a small business, being linked up with candidates by people who know you and the candidate can help make sure you’ll have a cultural fit. You’re not just asking them for help, you’re looking to potentially give someone they know a great opportunity.

No matter where your candidates come from, it’s important to go into hiring with a plan. You want to make sure that you’re asking relevant questions to help you identify the person who best fits the job and your business. Keep in mind, too, that you are trying to grow, and the person you hire today needs to be a good fit for the organization you want to become. You need to decide ahead of time the skills and temperament that you’re looking for and how you’re going to identify those.

To do that, really stop and think about why you’re hiring. It can be tempting to hire “another you,” someone who reminds you of yourself, has a lot of the same skills, and can back you up on almost anything. Undoubtedly, that person can make your work easier, but is that the best move to help your business grow? After all, your business already has you. Consider what this person needs to be best at. If you’re looking to offload the tasks that you enjoy least or struggle with most, another person like you may feel the same way. If you’re just overwhelmed with volume and need someone to back you up on everything, it could work. Even if that’s the case, though, it might make more sense to let a hire take on administrative work so you have more time to do what you do best.

Onboarding

 

It’s easy to overlook the importance of the employee’s first few days in a new job. Before they start, you should have a checklist. They probably need a computer and a phone, but what else? If they’re working from your office, where are they going to sit? If they’re working from home, how’s their internet service? There are probably all kinds of logins, licenses, and software they need in order to do what you do. It’s best to have all of that in a list and even set up ahead of time to make a good impression, but that’s a small part of onboarding.

Your new employee is looking for a paycheck, of course, but the best employees are usually looking to grow and advance. They’re going to want training, not just in a formal setting but from you every day. None of that starts the day they get to the office, but it’s a good idea to make sure they know you’re there to help them learn. Employee retention is tough in an age where people have unlimited access to information and employers can hire in your neighborhood even if they’re a thousand miles away. Ultimately, you can think all you want about compensation, benefits, and titles, but your employees want to feel good about their work.

Making sure your employees find their jobs fulfilling, while also making sure they are a good fit for you, is a tough task. There’s no one way to make sure you hire the right people, but if you make sure you have a clear understanding of your needs and what you’re offering through your hiring process, onboarding, and during their time at your company, you and your employees will be far better off.

Customer Reviews

Let’s start with a fun fact: the first known customer complaint is held in The British Museum and was written on a clay tablet 3800 years ago. The customer was upset that the wrong grade of copper was delivered. Etching a clay tablet seems like it must take a lot of effort, so it’s easy to imagine this must have been some pretty bad copper. It’s a lot faster and easier for modern customers to leave a review online, and companies need to be ready for both the threat and opportunity that review sites present.

The Importance of Customer Reviews

 

According to Invesp, customers are more likely to use your business and will spend more when they do if you have good reviews. It makes sense, right? If a customer can quickly see that they can trust you, a major factor in their decision making is already decided in your favor. 47% of customers won’t even consider using a business with fewer than four stars, meaning you can lose almost half your potential customer base without ever even speaking to them.

We’ve all had the experience of a customer threatening us with a negative review, too. Whether something has actually gone wrong with their order or they are just angling for special treatment, some customers will use your online presence for leverage. That can be a frustrating situation, especially if you don’t have a lot of reviews and you know one bad review will significantly lower your rating. If you get enough positive reviews, a few negatives are less damaging. They may even help, since customers will find large numbers of exclusively 5 star reviews suspicious.

How to Get More Reviews

 

Unfortunately, it can be difficult in the freight industry to get a positive review. Customers leave reviews when an experience is different than they expected, whether positively or negatively. A restaurant or product might get a good review because someone was surprised by excellent service or functionality, but a surprise with your freight is almost never good. The two possible outcomes for most shipments are either exactly what the customer expects or a bad experience.

So then what’s the best way to get positive reviews? There’s a deceptively simple answer: ask for them. It may be as simple as mentioning it next time you’re on the phone with the customer, but there are other good opportunities as well. Put a link in your email signature, post about it on your social media, or put a link on your website if you have one. You need to be careful not to trigger any spam or security measures, but a good rule of thumb there is just to be honest.

Take a look at any automated messages you send out, too. Got an email that goes out when a customer’s delivery is dropped off? Think about including a link to a review page. Same if you have a notice to a carrier saying that their payment is on the way. This is where you want to be careful though. If you have an alert going out to your customer saying their payment is late or to a carrier saying they damaged a shipment, it might be best to leave the link out. Ultimately, you’re just trying to remind your customers and partners about review sites at times when they might not normally think of them.

Review Sites

 

The largest review sites, like Google and Yelp, are important to every industry, but DAT and Truckstop both have places to leave feedback. It’s also important to be aware that if you’re an employer, you should keep a close eye on your ratings on Glassdoor and Indeed, along with any other job-hunting website. The first thing to know about any of these sites is that you can usually log in and manage your presence, and it’s good to do so.

Some common review sites in and out of our industry

Since reviews are all about making a good first impression, let’s start with maybe the most likely place for a potential customer to see your business for the first time: Google. Google reviews can be left by customers, current and former employees, suppliers, and just about anyone else. The mix of reviewers means that to keep your Google reviews high, it’s important to be a good partner to everyone. It also means that asking for a Google review is an option no matter who you’re talking to, so you have the opportunity to really build up your presence.

It’s also important to be aware of reviews on DAT. Carriers will be able to leave you (or the company you’re operating under) reviews based on their experience. Much like customers, drivers have the expectation that things are going to go smoothly, so they have either the experience they expected, or a bad one. Here again, the best way to make sure that they’re still leaving reviews when things go well is just to remind them. Just like with customers, you don’t need to harass your carriers for good reviews, making sure the link is readily available will usually get reviews steadily trickling in.

Responding to Reviews

 

Most review platforms give you a chance to respond to reviews. That’s important for a few reasons. First, if someone leaves a negative review, your response can be a chance to correct whatever went wrong. For readers of the reviews later on, they get a chance to see that when something did go wrong, you were active in trying to make it right. As an added bonus, a lot of websites use engagement as part of their algorithm that decides where you get listed. In short, if you’re active, you rank higher. There’s no big trick to responding – you’re performing the same customer service you do every day.

In fact, you’ve probably noticed an ongoing theme – none of this needs to be or even should be a major effort on your part. Reviews should be a small part of your daily customer interactions, not a huge initiative. The most important thing is that you don’t neglect this important part of your online presence.

The Importance of Customer Retention

Let’s face it, landing a customer is hard. We don’t always like to say that out loud, because most of us make our living based on how good we are at landing customers. Being good at it doesn’t necessarily mean it’s easy though. According to sales consulting firm The Brevet Group, it can take 8 cold calls to reach a prospect and 5 follow ups after a meeting to give yourself a good chance of landing a sale. Even then, up to half of all sales go to the first vendor that responds with a workable solution.

Of course, you need new customers to grow and even sustain your business, but it’s important not to overlook the value of customer retention and maximization. Both are exactly what they sound like: customer retention is how many of your customers continue to do business with you over time, and customer maximization means getting the most out of your existing customer relationships. Effectively, we’re talking about selling more to your customers, for longer.

Why is Customer Retention Important?

 

Okay, we all have a pretty good grasp on this on an intuitive level. It’s not like anyone reading the first section stood up and shouted “why should I keep my customers?” Still, it’s important to take this to the next level and quantify what we’re talking about, so you can make educated decisions on how to focus your efforts.

It’s an old adage in sales and marketing that it costs 5x as much to replace a customer as it does to retain one. Depending on who you ask, that number can be almost anything, but it’s always at least a few times more. Of course, if you’re a freight broker agent, you’re really looking for how you can make more money, more reliably. Simply put, it’s easier to run a business if you have a baseline of recurring or relatively easy to close sales each month. As an example, picture this: you reach out and try to make a sale with 20 contacts, 10 are existing customers, 10 are new leads – how many sales do you make to each group? If you’re an average company, you make 6 or 7 sales to the existing customers and 1 or 2 at best to the new leads. New leads are critically important, but when you’re planning out your day, you may want to focus a little more on deals that are very likely to land. There’s no better lead than a prior sale.

More reliable business is nice, but how much does this really hit the bottom line? One study showed that “increasing customer retention rates by 5% increases profits by 25% to 95%.” If you own your own business, that’s probably all you needed to hear.

How to Retain Customers

Business meeting in a booth

Develop a relationship with your customer

You’re going to find a lot of overlap between retaining and maximizing customers, and for good reason. Retaining a customer without maximizing them means that you’ve landed a recurring deal, and now you’re leaving a lot of money on the table by failing to do anything more with that customer. Maximizing a customer without retaining them means you’re either got great profit margins or a high percentage of the customer’s business, and now they no longer do business with you. Either way, you and your customer probably don’t interact much, and are indifferent toward each other at best.

We would all love to discuss a brilliant new strategy for this, but the bottom line is that you need to build a relationship with your customers. If you run a Google search any time for how to retain customers, you’ll get article after article full of great ideas. Honestly, it’s a great idea to run a search and read new articles often. Each of those articles is going to give you ideas on how to build and maintain relationships. In freight brokering, your customer stays with you because they’re confident that you know their needs, you’re reliable, and they’re comfortable working with you. Bottom line: handle their shipments well, and then make sure they know you can do that for more of their shipments.

That last part is also huge when we are discussing automation and technology companies that are working to get some space in the freight brokerage market. No matter how good their technology gets, there’s one thing they can never offer your customers: you. If your customer feels a sense of confidence knowing that you are available to them, then there’s nothing anyone else can offer that replaces that.

Maximizing Customers

Online shopper

Maximizing sales to a customer doesn’t have to look like this.

Just like retention, there’s no magic formula or big secret to maximizing your sales to each customer. Maybe the most important thing is that you keep this fact in mind: you should be maximizing sales to your existing customers. That has to be one of your goals. It’s a shame not to do it, but it’s easy to get so caught up in prospecting for new clients and handling customer service for existing ones that we forget that a current customer is also a sales opportunity. When it comes down to it, the best lead you’ll ever have is a prior sale.

There are a lot of great ways for any small business to maximize customers. This article breaks them down into three categories: increasing penetration, developing a plan of action, and building credibility and trust. So, what does that mean for a freight broker? It’s a good idea to read the article and think about that for yourself, but let’s quickly summarize each part.

  • Increasing Penetration: Are you currently handling a small part of your customer’s freight, or most of it? Talk to your main contact at your customer’s company and see if you can find out if they have any lanes or types of freight you’re not currently handling. See if you can find out if there is anyone else at the company that purchases logistics services, and if you can make contact with that person.
  • Developing a Plan of Action: Work with your customer to make sure you know exactly how they want their freight handled and make it clear to them that you understand. Consider combining this step with LDI’s CRM blog to give yourself an advantage in tracking and executing that plan.
  • Building Credibility and Trust: Do what you’re going to do, when you say you’re going to do it, and when that goes wrong, make sure your customer hears from you that you know it went wrong and you’re on it. The last thing you want is your customer hearing from their customer that there was a problem with their shipment. Do your best to be in front of any problems and honest with your customer.

If you take nothing else away from this post, just take some time to think about whether you focus enough of your time and energy on retaining your customers and maximizing your sales to them. There are a lot of ways to do that, but the first and most important step is to make it a priority.

Sales and Marketing During COVID-19

Coronavirus

COVID-19 has presented every business in the world with an unprecedented challenge, with Freight Broker Agents and the rest of the logistics industry being no exception. If you’re in logistics, your sales process is certainly different than it was last year. Considering the demand on the freight industry, you may have even seen increases in your sales, but whether you’re up, down, or even, you’re certainly facing new challenges. If you relied on trade shows or customer visits at all, two powerful sales opportunities have almost entirely vanished, and even if you’ve worked entirely online for years, your customers’ changing needs in response to the pandemic have almost certainly changed your approach. Hopefully you’re feeling pretty good about the ways you’ve adapted in the last 6 months, but there may be more steps you can take.

Marketing

If you’re running a business, odds are your marketing efforts have been primarily online for years now. If not, the good news is that you’re likely to come out of the COVID-19 pandemic in a better position for modern marketing than you were before. Even if you were already doing most of your marketing online, there are a couple of good ways to increase your opportunities.

First, make sure your business is listed on Google. For freight agents, you may be comfortable working with shippers all over the country, but there’s an advantage to being local. If a shipper in your area does a Google search for freight carriers, you may be more likely to come up based on proximity. From the customer’s standpoint, they may feel that you have a better understanding of their industry, truckers in their area, or unique details about your local market. You can set your business up on Google here.

If you were visiting trade shows and customers before, and giving out flyers and business cards, remember that there are virtual options for that as well. LDI agents should make sure to use the marketing materials available to you in our knowledge base (and get in touch if you have any questions). There are also digital business card apps like Switchit and My Vista by Vistaprint that let you share a card via email or text. Those apps will continue to be helpful even after the pandemic, since you don’t run out of or lose digital cards.

In terms of social media, it’s important to remember that LinkedIn is not the only one that can be valuable to you, but it is still your main online networking tool for business. It can be tough to find the time to stay active on those websites, so remember that you can share LDI’s posts on LinkedIn, Twitter, Facebook, and Instagram. Present yourself as an active and engaged expert on all things freight. You may find that contacts reach out to you because of what you post, but even if not, your profile will lend credibility to your efforts when you’re prospecting.

Prospecting

Reaching out to new potential customers is always critical, but in 2020, it’s a key to survival. The more uncertainty your customers face, the more you want to insulate yourself against losing too much of your business if one of your customers stops shipping. After the downturn in 2008, Forbes listed the biggest risks to a business and made a note of concentration risk – the idea that one customer representing a large portion of your business is a threat. Sadly, there’s a good chance you got a lesson in this in March by having one or more of your customers shut down production or shipping. It’s important to have a diverse book of business to insulate yourself against the risk of your customer’s business changing dramatically, and a lot of businesses change dramatically when this happens:

Major drop in GDP

One of the best ways to diversify right now is to look for businesses in the industries that are seeing more demand in 2020. While medicine and medical supplies are the obvious answer, there are several sectors that growing rapidly. There are also industries that have been deemed essential, and you can usually find those on state websites. It’s good to get this information locally, since each section of the country is facing different challenges right now.

States have been affected very differently by COVID-19

Whether your customers or prospects are up, down, or even, they’re also facing challenges they’ve never seen before. In addition to looking for businesses that are seeing increased demand that you can fill, look for businesses that have unique problems you can solve. As shipping costs rise and capacity decreases, a freight agent who can help a company book trucks and shop for pricing has even more to offer to a shipper than normal. Check out our free ebook on using Google Alerts for prospecting; that can be a great tool for getting in touch with your customer about the latest news that’s affecting them. When you set up your sales calls, you’re going to sell your freight capabilities, of course, but you’re also going to sell yourself as the solution to their problems.

Selling

Of course, all of your marketing and prospecting efforts comes to this: selling. Once you’ve done your homework and learned about your customer’s challenges, make sure your customer sees the results. You’re not just there to sell your freight services as a solution to your company’s problem, you’re there to sell yourself as a solution to your contact’s problem. If you’re on the phone or meeting with the right person, then having a good freight agent will mean less stress in their daily work, and in 2020 they probably have more stress than ever. Make it clear, you’re going to make it easier to do their job by taking some of those stressors and handling them with your own expertise and capabilities. This is what you do full time, and you’ve devoted your efforts to adapting to the current situation. Gartner published a research paper on logistics challenges presented by COVID-19 where you can learn more about the problems that are keeping your customers and prospects up at night right now.

It’s important to remember, too, that selling an ongoing service is a very personal process. Right now, many of your potential customers may be isolated in home offices, unable to take meetings and not seeing anyone at trade shows. When you can, try to find a way to add a personal touch. Handwritten cards, friendly messaging, even cookies or a fruit basket. That personable attitude that probably got you where you are today needs to show through, even in these times. For as long as the pandemic continues, it’s going to take a little more effort to make a connection.

When the Pandemic Ends

Despite how it feels sometimes, the COVID-19 pandemic will end sooner or later. As much as we’re all looking forward to that, it’s important to prepare for it to be yet another seismic change to the way every business in the world operates. If you have one of those customers who has been shipping more than ever during the pandemic, be prepared for their business to decrease suddenly and significantly. You may find yourself needing to ramp up your sales, marketing, and prospecting all over again when the pandemic ends.

One way to mitigate that is to remember your customers that shut down or had a major decrease in business during the pandemic, or your contacts from those companies that may have been laid off. Make sure they know they are still valued and that you’re still there for them. Those contacts and companies are likely to need a freight agent again, and you’ll want to be at the forefront of their minds when that time comes. It’s good to know that things will be normal again before long, let’s make sure our businesses are ready for that as well.