Increasing sales often takes months, and it requires the capital to buy more cars and to absorb more marketing expenses. Need a shorter path to boosting profits? You can be much more profitable by lowering costs.
The beauty of cutting costs is that it can be done immediately and often produces better cash flow and profit numbers within weeks. Having achieved better cash flow and profits, you can then use the surplus to buy more cars and get the inventory to drive higher sales.
In this set of articles, I will discuss pay for performance. I have helped dozens of yards roll it out successfully. Some recoup the cost of hiring me in less than one week.
In past articles in this series, I have discussed pay for performance for sales people, dismantlers, and parts pullers. In this article, I will discuss pay for performance for delivery drivers.
Have you ever noticed that when the truck goes out with 6 stops, it gets back around 4? And when it goes out with 15 stops, it gets back around 4?
HUH? That can’t be right, can it? Of course not, but with 6 stops, there is simply no hustle.
Before you implement pay for performance, you should make sure that your drivers have the right equipment to be efficient. I recommend making parts deliveries with box trucks that are at least 18’ and have a 6’ lift and are equipped with a pallet jack so that your drivers aren’t asking customers for help unloading their orders (Think about it: When was the last time the Fed Ex man asked you to help get something off the truck?).
Assuming you have an efficient fleet of delivery vehicles, paying drivers by the stop isn’t complex. Gather data on how many miles your drivers are now driving and how many stops they make. You will begin to see some do more than others. Now, put the all your data in a spread sheet so that you can get a handle of what’s really happening.
As you look at the numbers, you will see some differences that you can explain. Maybe a driver with lower deliveries per day operates in a city and spends a lot more time stuck in traffic. Maybe a driver who appears to lag the pack has to drive a long way to get to his first stop because he is delivering to customers on the edge of your service area. Rest assured, however, there will also be numbers that you can’t explain with anything but a lack of hustle.
Most yard owners are stunned when they find out that switching to pay for performance will increase deliveries per driver by at least 50%, drivers will be cashing bigger checks, and their yards will be more way more profitable.
At my yard after we started our pay for performance program, drivers sometimes finished routes early. We offered them the chance to go home early or to get paid for additional non-delivery work at their delivery hourly rate. Our drivers made a lot more money than their counterparts at other yards, and they loved being able to go home early some days.
Of course, the switch to pay for performance presents some issues, but none of them are so daunting that you should give up the chance to double delivery driver productivity.
Does incentive pay really make that big a difference? Here’s a true story. After Greenleaf had accumulated 28 salvage locations, the leadership had my team roll pay for performance out. Drivers on pay for performance averaged more than 20 stops per day. We had only one location where union rules prevented us from doing pay for performance. Drivers there made only 11.
You can’t afford to wait. Make the switch to pay for performance for your delivery drivers! Next month, I will discuss how pay for performance can make your inventory clerks into rock stars of hustle.
REMEMBER ONLY YOU CAN MAKE BUSINESS GREAT!
Ron Sturgeon, Mr. Mission Possible, has been a successful business owner for more than 35 years. As a small business consultant, he can wisdom and advice gleaned from an enviable business career that started when he opened a VW repair business as a homeless 17-year-old and culminated in the sale of several businesses he built to Fortune 500 companies. Ron has helped bankers, lawyers, insurance agents, restaurant owners, and body shop owners, as well as, countless salvage yard owners to become more successful business people. He is an expert in helping small business owners set the right business strategies, implement pay-for-performance, and find new customers on the web.
As a consultant, Ron shares his expertise in strategic planning, capitalization, compensation, growing market share, and more in his signature plainspoken style, providing field-proven, and high-profit best practices well ahead of the business news curve. Ron is the author of nine books, including How to Salvage More Millions from Your Small Business.
To inquire about consulting or keynote speaking, contact Ron at 817-834-3625,
ext. 232, rons@MrMissionPossible.com, 5940 Eden, Haltom City, TX. 76117.