The theme the February 2012 issue of LCT Magazine expands on a topic given added depth during the 2011 LCT Leadership Summit: How to attract and keep affluent clients. For our coverage, we tapped the LCT Operators of the Year Class of 2012 to share the latest observations about this most-monied market niche and how to get their business. We also offer articles from two veteran operators, LCT contributing editor Jim Luff and 2010 LCT Operator of the Year John Green, on how to pursue affluent clients.
Affluent/wealthy clients have been the original and traditional slice of chauffeured transportation, or livery, business going back centuries. They’ve always had plenty of money and expected elite service, thereby connecting limousine and wealth in the public mind. Despite the economic challenges of recent years, the U.S. still retains a vast accumulation of wealth, assets and income that drive a high rate of consumer spending compared to the rest of the world.
While the upper slices of the consumer pyramid will always remain the core clientele of the limousine industry, sole reliance on them can no longer carry the industry forward. When marketing and promoting products and services, businesses need to be aware of the economic atmosphere and cultural context in which they swim. America in 2012 is a nation torn apart by class, wealth, taxes, spending and economic fairness. President Obama vilifies the rich and cynically stokes class warfare for political ends, broadly tarnishing all capitalists and wealth-creators with the sins of a few. Wealthy candidate Mitt Romney is more often seen wearing casual button-down shirts and khakis on the campaign trail than in dressy business suits. In this atmosphere, appearing middle class is prudent, regardless of personal assets. Consumers now generally don’t want to look rich any more than teenagers want to be seen with their parents; it’s all about playing down what one has and angling for a bargain. This is the era of jeans-wearing paper-millionaires who shop at Costco and drive Toyota Camrys, one of the top-selling personal vehicles in the $1 million-plus net worth demographic.
It only follows that an industry rooted in luxury should diversify beyond its traditional service with ground transportation levels that pull from taxicabs and airport shuttle services. There are many upper-middle class cab riders, for example, who could afford chauffeured services that fall somewhere between the Town Car and the yellow cab. I recently checked in with five operators nationwide who have been trying tiered services that, while deviating from the elite vehicle level, apply this industry’s legacy of high service quality and techniques. These examples show how the chauffeured transportation concept is widening and changing, while creating more business opportunities:
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1: Randy Allen of James Limousine in Richmond, Va. bought two Toyota Camry sedans two years ago and has seen his “business class” level service steadily rise. The sedan service resonates with middle managers. Bottom line: The Camrys are priced 15% less than a Town Car sedan; cost about 50% less to buy and operate; get 50% more fuel economy; and yield a higher per-vehicle profit margin than the Town Car. Allen is looking to buy one or more Camrys in 2012.
2: Father-son team H.A. and Andy Thompson of Rose Chauffeured Transportation in Charlotte, N.C. have attracted a solid middle class clientele with their motorcoach division, launched in 2008. Andy reports that its growing middle class customer based includes sports teams, cheerleading squads, and groups and clubs traveling on budgets and looking for an alternative to flying. Motorcoaches proved to be a progressive investment for Rose, now running 12 motorcoaches.
3: CEO Kim Garner of Best Transportation of St. Louis started a GoBest Express airport shuttle service in 2009 that consists of a separately branded fleet of 10 vans. Year-over-year growth has averaged 15% with GoBest constituting one-fifth of Best’s total annual gross revenues. The Best team trains its drivers like chauffeurs, makes them wear casual uniforms, picks up riders on time, cleans vehicles daily, and applies the latest reservation technology, such as mobile apps. GoBest Express is a big hit in the Pointe 400 area of St. Louis, full of value-minded younger college-educated professionals who live in condominiums and apartments and prefer a reliable quality airport service.
4: Matthew Strack of Strack Premier Transportation in Los Angeles and Orange counties in California last year converted to a three-tiered sedan service strategy: Toyota Priuses, Ford Fusions, and a BMW 7-series hybrid. His green-savvy approach lowers his overhead and resonates among eco-minded Southern California clients. Example: Airline pilots like to be chauffeured in the low-cost Prius between LAX and John Wayne International Airport in Orange County, Strack reports.
5: Owner/CEO Robert Alexander of Maryland-based RMA Worldwide Chauffeured Transportation, a major chauffeured operation in the Washington, D.C. area, took the boldest step toward middle class service last June by creating Orange Taxi, a fleet of 15 Scion XB and Toyota Prius cabs. Like GoBest Express, the drivers receive training; cabs arrive on time and are cleaned between runs; and the drivers help riders with their luggage while wearing clean polo shirts and slacks. The higher-level taxi service also is a great way to introduce clients to traditional chauffeured sedan service, Alexander says.
As such operators prove, a mix of tiered chauffeured options — elite luxury sedans/SUVs, value-priced sedans, motorcoaches, shuttle bus services/routes, organized van group tours and corporate road shows, party/recreational limo buses, and higher-end cab services — provide the full range of private sector ground transportation that can gain customers from low-brow cab companies and cattle-style shuttle services. The challenge for operators is to supplant the politically toxic image of “rich” with the more relevant and inclusive message of practical value. Regardless of income, we are all “middle class” now. Operators who understand this and restructure service levels, brands and fleets will reap the most rewards in the post-recession ground transportation market to come.
-- Martin Romjue, LCT editor
| posted on Tuesday, February 28, 2012 11:16 AM