In the last 10 years of working in the ready-mix concrete industry, I have made an effort to observe and listen to those around me. I was fortunate to complete all four modules of the NRMCA Certified Concrete Sales Professional program early in my career. Module II dealt with profit/loss and operations of businesses in general, and focused on generating profits in our industry.
After many seminars and questioning many industry experts, I had a lot to think about. One thing I took away was a short list of five ways to increase profits:
1. Promote value-added products (VAP) like fiber, set retarders, and water reducers, which enable concrete to be poured at a higher slump and makes life easier for the finisher. Spend a couple of days training one or two people in the customer service/dispatch office about these products, and give them instructions to refer to when talking to customers. These products don’t cost much, but they can add a lot of profit to each cubic yard of concrete. Customers will appreciate their benefits, and will be likely to reorder.
2. Identify your most profitable customers based on yards poured per hour and revenue per hour. A simple Excel program can take the information stored in the dispatch system and break it down. I have observed that most companies break even around 2.8 yards per hour at $80.00 per yard. You may be able to offer select customers a discount in exchange for more of their business. For the less profitable customers, a personal observation of their practices can help you make suggestions to speed up their placement of concrete.
3. Quantify your largest COD accounts. COD usually represents about 30-35% of a producer’s business, but we often know very little about them besides revenue per cubic yard sold. How many hours does it take to generate the COD revenue? To quantify the cost, give each COD customer an account number, just for tracking purposes. You can then track the order from start to finish like you do for charge account customers, and generate revenue or yards-per-hour reports.
With this information you can apply some of the steps mentioned in Suggestion #2. Again, with personal observation you will see why some finishers turn around the trucks quickly and why other finishers keep your trucks onsite for a long time.
4. Follow the Golden Rule with your drivers. Get close to them and earn their trust and respect. Give them feedback on the leads they give to you. Reward great leads and information with a $25 gift card to a local eatery. Their spouses and kids will really appreciate what Dad or Mom did to earn them.
5. Foster the sales/dispatch relationship. It’s important to build a working relationship between your sales force and your dispatch/customer service people. Encourage your salespeople to learn how to take orders and utilize the basic functions of the dispatch software. When I worked a few days in dispatch as a sales representative, many of my customers were surprised to hear my voice on the phone when they were calling in an order. More than one customer remarked that I “did it all” in order to take care of their business.
Customers were also really impressed when I showed up at a jobsite and introduced them to someone they had talked to many times when they had called in an order. Putting a face behind a voice made an impression on both the customer and the dispatcher. I firmly believe it helps build customer loyalty and gives a new perspective to the person working all day in the dispatch office.
Stay tuned for more recommendations; in the meantime feel free to email me with questions or for further explanations of the ideas I have suggested. I welcome your ideas for increasing profits based on your own experiences and insight.
Tom Johnson has spent the past decade getting to know the ins and outs of the concrete industry from various viewpoints including driver, salesman, dispatcher, and quality control professional. Contact Tom with comments or suggestions at firstname.lastname@example.org.