Focus on Increasing Profits

Most customers don’t purposely misuse equipment they’ve rented from your company. It’s frustrating when it happens, but there are some ways to minimize this problem.

One way is to train employees to give better and more consistent operational and equipment care instructions. It’s very easy for your employees to assume all customers know the basics of operating and caring for the equipment. The longer some employees work in the rental business, the more likely they are to feel the basics of equipment operation, safety and care of the rental equipment are “common sense” and therefore unnecessary to share with customers.

It’s very important to reinforce the importance of giving proper, thorough instructions consistently. Even employees who understand the importance often resort to shortening their instructions on very busy days.

It’s best to retrain everyone (including those who are at the counter) in the techniques that will prolong the useful life of the equipment — as well as the teaching techniques to stress these same principles to customers. Even equipment that is designed to live a tough life (like large electric pavement breakers) will live a longer, less breakdown-prone life if it’s transported properly in the customer’s truck (not in a pile of sand or dirt) and if it’s not used as a pry bar. A few words from an employee who has learned to be an effective teacher can go a long way toward minimizing equipment misuse.

Another way to cut down on the misuse of equipment is to be certain that employees are doing a great job of determining the customer’s true needs. Sometimes equipment is misused because it wasn’t the correct tool for the job. Be sure employees are asking the right questions to determine what the customer is trying to accomplish. If the equipment is not the best match for the intended project, the equipment (as well as safety) could be compromised.

Do you need to adjust your rental rates?

The costs of many of the essential ingredients for operating your rental business are rising. Even the cost of the fuel needed for your delivery vehicles (and the cost for your delivery vehicles themselves) have probably risen since the last time you increased delivery rates. Many of the other costs of doing business have risen as well. As a result, I believe it’s wise to consider adjusting your company’s rental and delivery rates.

Rental rate pricing strategy is important to the growth and future viability of your business. Resist the temptation to just tinker with your rates. And don’t do a percentage across-the-board increase or decrease. These are among the surest ways of either charging too much or leaving too much money on the table.

I recommend a comprehensive plan to adjust your rates. Although my experience has been that many more rates have deserved to be raised, sometimes it makes sense to decrease rates for certain rental items depending on all the factors that relate to the company’s rates. Your rental rates need to be right for your community. I suggest an item-by-item adjustment as part of a comprehensive plan to increase profitability. Remember, what you should be charging is local-market specific.

Some factors have made rental customers focus far more on price now than they have in the past. The economy, the Internet, competitors and other factors have made price more important to customers — and more critical that your company to get rental rates right. Even though it’s difficult to raise rates in competitive markets, equipment prices are going up and rental companies need to raise rates accordingly and strategically.

In conclusion, both rental rates and equipment misuse are emotional issues but are well worth dealing with sooner rather than later. Your company is providing a valuable service, and you deserve to be very profitable.