March 19, 2001
Trucking companies won't be surprised by a business consultant's survey that trucking is perceived as one of the hardest-hit businesses by the economic slowdown. But they may not think about what they need to do to get through the slowdown other than just staying afloat.
The survey of medium and small business owners, by consulting firm George S. May International, shows 80% of respondents believe the slowdown has hurt trucking businesses. Other businesses perceived as being hurt include retail stores, dealerships and manufacturers.
As a result, say the consultants, trucking companies must be very careful not to cause themselves additional damage by allowing customers to perceive that their specific operation is having difficulties.
"This survey highlights the danger of a perception growing into a self-fulfilling prophecy," says May International President Donald Fletcher.
"Customers respect and prefer to do business with successful people," he says. "While they may feel sorry for a business that is having hard times, it is dangerous for a transportation operation to show its difficulties. If it does, customers will begin taking their business elsewhere.
"This reaction is part human nature and part business nature, and it is very difficult to turn that impression around once it is made."
Transportation companies are expected to be ready to serve their customers. In addition, they're expected to be problem solvers. However, when services are cut back or the problem solver is seen as having problems of its own, customers begin to look elsewhere.
"Customers [will] forgive an occasional lapse," Fletcher says. "But if it becomes a general trend, they'll start to shop elsewhere. People may say it is just to 'check out' the other guy. But if they try and like the other guy, the first business is in serious danger of losing that customer."
The importance for truckers of presenting a successful impression to the customer is confirmed by the fact that positive, growth-oriented actions were selected by 59% of the survey respondents as their response to the lagging economy. These activities include increasing sales and marketing (30%), retaining or increasing current employee benefits (12%), expanding internationally (9%), increasing employees (5%) and increasing inventory (3%).
Only 41% are taking actions to reduce business activity, according to the May survey, including reducing inventory (17%), decreasing the number of employees (15%), reducing benefits (11%) and cutting back sales and marketing (1%).
The May survey showed general agreement that the softening economy is hurting the majority of businesses, at least in the short run. Among the businesses being hurt the most are retailers, dealerships, manufacturers and trucking companies.
However, a clear majority believed the downturn will last less than a year.
"While 76% of the respondents say the economy will turn around before 12 months is over, there is little agreement how many months it will take," Fletcher says. "In our survey, people's opinions are closely divided among six months (21%), nine months (25%) or 12 months (20%)."
The survey found that 71% believe the business environment is more competitive than in the past; 25% think it is about the same, and only 4% said it has gotten less competitive.
"Perhaps the 4% who think it is easier are the ones who've seen some of their competition eliminated," Fletcher says. "Even if that's the case, now is not the time to relax. Those customers are looking for another source, and that is an opportunity for smart business people to capture more market share."