It was during a United Motorcoach Association (UMA) 20 Group meeting that Gladys Gillis, CEO of Starline Luxury Coaches in Seattle, and John Grzywacz, general manager of Central Iowa Transit (CIT) in Ames, Iowa, realized their shared interest in applying performance metrics to improve their businesses.
Gillis had previously worked for 13 years as a cost and quality initiatives manager for The Boeing Co. She says her work there was all about metrics, prompting her to develop the motto “what gets measured gets done.”
After hearing Grzywacz speak about the system he put in place at CIT to track interactions with customers and develop an appropriate sales budget, Gillis encouraged him to present his concepts at UMA’s Motorcoach Expo this past January. Both were speakers at the “Using the Right Metrics to Measure Performance” session.
Gillis defines performance metrics as a system for collecting data points that measure employee behavior. She says they offer a way to address problems or make improvements within a business by measuring the impact employees have on a daily basis. Gathering this data allows management to make informed decisions about setting goals and increasing profit margins.
“Most employees don’t know which of their behaviors are directly affecting profit as they go through their day,” Gillis says. Without an established system that measures daily business practices and sets a clear goal, she says employees are likely to “just do what they know” without considering the bigger picture.
Grzywacz’s metrics system was first developed at an employee retreat in an effort to address sales and perfect the selling process — from preparing quotes to booking trips. “We wanted to document and categorize every contact we have with the customer,” Grzywacz says. “Then we can measure what our people do and if it’s a worthwhile endeavor.”
During a brainstorming session, the company identified every type of customer contact they could think of and listed them under the categories of quotes and closing; quality and process control; relationship building; and sales and marketing.
His sales team records each interaction as a code in the customer database. “Under sales and marketing, for example, codes might include cold calling, new customer gathering and referral gathering,” says Grzywacz. Quality control contacts might include building itineraries, confirming trip details and collecting payment, while relationship building refers to contacting customers after their trips to ask about their experience or calling periodically to check in, he explains.
As time goes by, the team can study the data and match customer contact patterns to book rates in order to identify the sales practices that are working and set objectives for each category. “You could go back and say that our data shows us that we maintain a close relationship to customers by talking to them X number of times per year,” Grzywacz says.
Not only does the data help CIT allocate the sales and marketing budget appropriately to support practices or employees who are most successful, it also helps the company set quotas and expectations for the sales team. Management worked together with the sales department to determine a fair expectation for quotas, a process that Grzywacz says came about organically. “Now they have this goal where each day they have to make a certain number of contacts,” he says. “Once I had something to measure, I could set expectations.”
Getting the most out of every trip
Tracking the number of trips on weekends versus weekdays — or from one month to another — could point to some holes in the schedule that could be filled with more bookings, boosting profits during typically slower periods.
Stephanie Futral, vice president at Starkville Trailways in Starkville, Miss., wanted to find ways to book more trips during her company’s off-season and slower weekdays. By calculating the minimum number of trips the company needed to book each week to reach a net profit, Futral found a balanced way to increase utilization without taxing her fleet or staff.
“If we could utilize the coach one of the days from Monday to Wednesday, that could actually be a net profit figure,” she says. Her fleet is usually booked Friday through Sunday, providing mostly charter service, running airport transfers and shuttles, as well as occasional tours.
Getting an extra trip in the early part of the week, or double booking a coach during a weekend, was the key to reaching net profit, Futral explains. To help meet this goal, the company sends out fliers and e-mails to their regular customers, such as church and school groups, advertising discounts for trips booked Monday through Wednesday. Then, they also take advantage of local college and high school sports teams and their schedules of away games to double-book on weekends.
“During our football season, August through January, football overlaps with volleyball and basketball,” she says. Futral can book a university football team for a trip to the airport on a Friday and then schedule to pick them up late Saturday night. In the interim 24 to 36 hours, she would try to book another sports group, usually from a high school, and fit them in on a late Friday afternoon.
“In October through December, we averaged double-bookings about four times each month, which is exceptional for our area and the number of coaches we were running at the time, which was 13,” Futral says.
Rules to follow
Metrics can be a good way to address a variety of problems within coach companies, but managers need to think carefully before implementing any metrics system. Gillis points out three main factors to consider:
1) The metric should measure something positive for employees to work toward, not something negative.
An example of a negative metric, Gillis says, is counting the number of accidents that occur in a given period of time. The positive way to measure the same thing would be to keep track of how many days are accident-free. This gives drivers something to work toward, a measurable goal they can be accountable for, and at the end of the year managers can reward the drivers who are accident-free. Striving to stay accident-free will also help keep insurance and maintenance costs low.
“Your insurance company may send reports that have to do with your losses, but if you look at losses to determine how you’re doing, those are negative measures because something went wrong already,” says Gillis.
2) Managers need to consider the metric’s possible effects in order to avoid an unintended result.
A manager’s instinct might be to set up a metric with a goal of monitoring and reducing certain expenses such as overtime. Gillis cautions that such a plan could backfire.
“If I want to monitor overtime in the shop, so I don’t have maintenance staff working any overtime, I might end up with my bus out of service for 15 days out of 30. That’s an unintended result,” she says. Part of implementing a metrics system is making sure that the goal of taking that measurement is not in conflict with other business goals.
Similarly, a sales team could be motivated to increase utilization, thinking that the more buses are on the road, the more money the company is making, says Gillis. But salespeople may be booking more trips by giving discounts to customers in order to close the deal. “If the owner’s real objective is to increase gross margin or profit, giving a discount to customers — even if it’s under the auspices of trying to increase utilization — is not increasing your gross margin,” Gillis says.
A more effective metric would be to instead measure what percentage of sales are made at full price or the sales of add-ons and high-margin items.
3) A metric should measure something that directly impacts the daily activities of the employees. It should be something specific that can be counted and assignable to each person in a department.
Managers often come up with a high-level goal to increase profit margin, says Gillis. “That’s a great goal for an owner to adhere to,” she says, “but as you move down the org chart, you have to be able to say, what does an increase in profit margin look like by department?”
A company-wide metrics plan focused on increasing profit margins, according to Gillis, could direct salespeople to focus on selling at full price or increasing the number of add-ons they sell. The accounting department would work on keeping accounts receivable inside of a specific number of days, for example.
“Broad goals don’t mean anything to the employees unless you work your way down the org chart and identify key measures for each department that support the organization’s goal,” Gillis says.
Specificity is also important, says Grzywacz. “Just measuring total sales won’t give you the whole picture,” he says. Instead, tracking the number of calls per day, month and year, for example, will collect useful information for building a sales plan and making informed decisions.
Putting new systems in place
Although there are many software products available that help manage and track different aspects of a motorcoach company, Gillis says there isn’t a package of metrics that operators can automatically plug in and apply to their systems. “So it does take a certain amount of desire on the part of the owner of a company to do a meaningful job with metrics,” she says.
In her experience, Gillis says establishing metrics and then creating and maintaining the systems to collect the data takes precious time away from a manager’s daily responsibilities. But as she sees it, metrics help save time in the long run by focusing the efforts and productivity of each employee. Like Gillis says, “what gets measured gets done.”
Grzywacz says implementing his sales metrics was a “learn-as-we-go” process. At first, he says it was difficult to get staff to track all their conversations. To make it easier, Grzywacz set up screen views on staff computers and wrote a protocol for inputting and viewing customer data. Eventually, he realized that it would be more effective for his sales staff to have two screens at their stations to be able to view everything they needed all at once.
“Then it was just a matter of keeping people on it and trying to bring out the benefits of what we’re doing,” he says. The sales metrics enabled him to demonstrate to staff the positive effects of the system, such as a reduction in the amount of itinerary mistakes and improvement of the quote-to-book ratio. “As we were able to tie that together more and more, staff has accepted it and now it’s a part of our culture,” Grzywacz says.