The Value of Premium Service: Lessons from Refrigerated Transportation
Understand why investing in high-quality service leads to better reliability and efficiency.
Episode 347: Our guest this week is Colby Varley, Vice President of Sales at Advanced Transportation Services, who shares his expertise on the importance of premium services in the refrigerated transportation sector. He helps us understand why investing in high-quality service leads to better reliability and efficiency, and how this approach helps avert the hidden costs associated with cheaper, less reliable options.
We also discuss the importance of having commercial covenants – promises that you give to your customers that go beyond merely the barriers to entry in the heavy-duty parts business. Lastly, in our That’s Not Heavy Duty segment, we discuss 6 dreaded words that a good parts person should never say to a customer.
Links
Sponsors of this Episode
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HDA Truck Pride: They’re the heart of the independent parts and service channel. They have 750 parts stores and 450 service centers conveniently located across the US and Canada. Visit HeavyDutyPartsReport.com/HDATruckPride today to find a location near you.
Disclaimer: This content and description may contain affiliate links, which means that if you click on one of the product links, The Heavy Duty Parts Report may receive a commission.
Transcript of Episode:
Jamie Irvine:
You are listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and this is the place where we have conversations that empower heavy-duty people. Welcome to another episode of The Heavy Duty Parts Report. In this episode, we are going to talk about how to take your value proposition to the next level.
We’re going to learn several lessons about how to offer premium service, and we’re going to do so by talking to someone who has successfully done this for decades in the refrigerated transportation sector.
And we’re going to end the episode talking about six words that drive parts managers crazy. Let’s get started. If you’re in the heavy-duty parts business, what does excellent customer service actually mean?
Well, a lot of people would say that it means having the appropriate amount of experience. It would mean quality products and services. It would mean competitive pricing, good availability on product and excellent service in the form of delivery of that product and answering questions and things of this nature.
Well, every one of those things is an essential part to being successful in heavy-duty parts. And really when you think about it in any business, the reality is those are the barriers to entry into the business.
What I mean by that is try being in the business of heavy-duty parts and not do any one of those five things. If we, for example, don’t have any product on the shelf, so availability is poor, it’s going to be pretty hard to succeed if our pricing is way high compared to the market pricing.
Not a lot of people are going to buy from us if we don’t have the experience and aren’t able to offer quality products and service. People are going to figure that out pretty quick and we’re not going to be in business for very long. And yet most businesses in heavy-duty parts use these five things that I’ve just listed, the barriers to entry into the business as their value proposition.
If you look at all of their marketing, if you look at their sales pitch, it’s all centered around these five things and they really don’t take it any further than that. They expect that these five things, which are really the barriers of entry into the business, is going to be sufficient to differentiate them in the marketplace.
And guess what? It’s not. So then the question is how do you move beyond the barriers of entry into the business? Well, one of the things that we encourage our clients to do is to develop a value proposition based on five to seven commercial covenants.
Now, commercial covenants are different than just pointing to the barriers of entry and saying, we do that as an example. We make quality products. It goes beyond that. A commercial covenant actually explains to the potential customer what it means to get said barrier of entry into the business field.
So for example, if you wanted to look at a supplier, perhaps you wanted to look at the way that that supplier goes to market with their products.
Now, we all have experienced a situation as distributors where a supplier comes in and sets us up, works with us, we go into our market and we capture market share from this supplier’s competitor and everybody’s happy until they go and sign somebody else up and somebody else and somebody else.
And before you know it, the market is completely flooded with their product and there is no longer any competitive advantage to offering their product over anybody else’s.
And we get into a price war with all of our competitors and it’s a race to the bottom on margin. Now, if you’re a distributor, you’ve experienced that. So imagine then a supplier that comes in and has a commercial covenant centered around limited distribution.
This commercial covenant is given to you in writing and they prove over time that they actually stick to this covenant of limited distribution.
Now all of a sudden you have a real compelling reason as a distributor to put more of your time and energy into supporting this supplier and promoting their products in your market because you now can have confidence that you’re not going to be undermined by a competitor down the street in the next couple of weeks.
So that’s an example on the supplier side where you go beyond the barriers of entry and you actually develop a commercial covenant that gives a reason for the customers, the distributors to buy from the supplier.
Now, what about the distributors? What can distributors do? Well, I think one that is related to the barrier of entry around experience can be developed, and a lot of times distributors talk about this, but they rarely actually do a good job of actually committing to it and fulfilling it in real time at the counter level.
What am I talking about? So it’s one thing to say, we’ve been in business for 75 years and at every counter we have a combined experience of over 300 years of parts people’s experience at your disposal. It’s one thing to say that that’s what a lot of companies do. It’s another thing to explain how you use that experience to benefit the customer.
So an example would be we will never sell you a product based solely on purchase price. We will teach you how to lower your total cost of operation by buying the right part for your application and the part that may not be the cheapest upfront with the purchase price, but is guaranteed to lower your total cost of operation over a specific period of time.
This is a guarantee from us. This is one of our commercial covenants. Now, not every customer that’s going to appeal to them.
There are some people who can’t get that through their head and they just don’t focus on total cost. They only look at the purchase price. So those customers that commercial covenant doesn’t mean a lot to them, but to the people who care about lowering total cost of operation, this becomes very, very attractive to them.
This is a marketing message that would get their attention. This is something that people who care about lowering total cost of operation would factor in when making decisions about who they’re going to buy parts from.
Are you going to buy parts from the guy who’s just going to push the cheapest price and a product that might raise your total cost of operation, or are you going to go with the people who have a commercial covenant built around this and are going to always help you lower total cost of operation?
So as you can see, going beyond the barriers of entry doesn’t mean fundamentally moving away from the things that make up those barriers of entry into the business. And I’ll review them quickly for you experience quality products and service competitive pricing, availability and excellent customer service.
But it does mean defining those five or maybe seven things. You might expand on it a little bit, defining what it means at your company. When you talk about those barriers to entry by defining them in more clear terms and really showing your potential customers what they get out of that commercial covenant.
You will draw to your company the right kind of customers and you’ll actually push away customers who you don’t really want to do business with anyway, and you should be happy that they’re going to your competitor and driving their margin into the basement. Something to think about.
Now, I want to continue this conversation in today’s episode about this concept of just offering better services to our customers. And we’re going to do that by interviewing someone who’s made an entire business centered on offering premium services.
We’re going to take a quick break to hear from our sponsors when we get back from that break. We’re going to have our interview with someone who has done just that. We’ll be right back.
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Before the break, we were talking about how to take your value proposition to the next level.
Now we’re going to have our featured interview. My guest today has made a career out of respecting truck drivers, providing a premium service and fighting the race to the bottom on price by providing guarantees that lower the customer’s total cost. I hope you enjoy the interview.
My guest today is Colby Varley, Vice President of Sales at Advanced Transportation Services. Colby is a seasoned leader in the refrigerated transportation sector, currently serving as Vice President, as I mentioned of sales, but he’s also co-owner of ATS. One of the things that is really important to note about their company, they’ve got over 40 years of experience and Colby isn’t one of these people who came in at the executive level. His dad made him start at the bottom.
He worked his way up, he learned the business over time and this really gives him a deep understanding of the industry and the intricacies of operating in their particular sector of our transportation industry. So I’m very glad to have Colby here. Colby, welcome to The Heavy Duty Parts Report. So glad to have you here.
Colby Varley:
Hey Jamie, thank you so much for having me. Happy to be here.
Jamie Irvine:
So today we’re going to have a conversation that I think a lot of people, at least from a mental perspective, they understand the idea of going after a premium product or a premium service.
But when metal meets the road or when real dollars are involved, there’s always this tendency, at least from my time in heavy-duty parts, there’s always this tendency to slide back towards only looking at purchase price, not looking at actual the whole package, the total cost of operation.
So I was really excited to have the opportunity to talk to you because I think you represent a different perspective, but I think there’s a lot of things that you and I can agree on. So let’s kick this off. Tell me about the big idea from your perspective behind the idea of premium services, enhancing reliability and efficiency.
Colby Varley:
Yeah, absolutely. That’s a great question. So we just believe in providing a better service and that’s not necessarily the cheap service to your point.
And just growing up in the produce business with my dad, being in the produce office and hearing things and the horror stories, and there’s obviously different levels that you’re going to pay for. And yes, sometimes you do have to pay a little more, but that’s a better service that you’re going to be able to provide and that’s what we’re looking to provide to our customers.
That was our niche market. We went with refrigerated. We don’t do a lot of dry or heavy haul, step deck, anything like that. We want it to be the premier refrigerated broker and there’s a cost to that and we charge for that, but you’re going to get great service.
Jamie Irvine:
So let me ask you something. What is the cost of only looking at purchase price and not taking a look at the total cost of a service or product?
Colby Varley:
Yeah, so for us for instance, we kind of look at it both ways. So on the carrier side, we’re not looking for the cheapest carrier to haul our freight. And what’s the overall cost? To your question there is when there’s a breakdown, is that carrier going to be able to recover that? Do they have other assets out on the road?
What’s their service like? Are they communicating all the time? Do they have the greatest latest technology integrated with our system? Do they have a great after hours? Do they have a live body 24/7? All those things are added costs that you’re going to have to pay for, but you’re going to benefit from it.
And we try to explain sometimes to our customers is I might be three, four, $500 higher on a freight rate than someone else, but if they have that load sold to a customer and they’re expecting it on Sunday night at 9:00 PM and Sunday night rolls around and they can’t get ahold of anybody, they don’t know where their load is, what was the cost that you just lost on your sale because you were trying to save two or $300?
What does that opportunity cost? Now they have an upset customer. Now you lost money because you can’t sell the product that you thought you had sold that was going to be sitting on your doorstep Sunday night at nine o’clock and now it’s not there and you can’t find it. So those are the kind of costs that you might not see but are very important when you’re looking at an overall cost standpoint.
Jamie Irvine:
Yeah, I agree with you wholeheartedly. From the maintenance and parts side of the business with fleets and owner operators, I just have seen this over and over and over again where somebody will try to save a few dollars on let’s say a replacement part for their truck or their trailer, then lose $750 to a $1000 a day when that vehicle is down.
It makes no sense at all right now. It’s one thing to talk about it and as I mentioned in the intro, to kind of mentally understand the concept, it’s another thing when the dollars and cents, it’s real. There’s constraints on your budget, there’s this pressure to choose the cheaper option.
So how do you use data to support this idea that a premium service improves reliability and efficiency and also is the lower total cost overall. So how do you use data to support this claim?
Colby Varley:
Right, so that’s actually been really helpful for us in our sales pitch in our business. With all the data that’s available now, we really leverage that. We’re looking at tender rejections. Hey, we’ve accepted a hundred percent of your freight. We’ve never rejected a load from you.
We’ve picked up 98, 99% on time. We’ve delivered 97, 98, 99% on time. Our claim ratio is a thousand to one. All these specific data points help us when we go to negotiate a deal. Hey, here are facts.
A lot of people get caught up in the emotion, especially on the price, especially on the price and being able to have that data and say, oh, well, we thought you had some lates. And it’s like, hey, here’s our scorecard from the last season. Love to share with you.
Please, if you feel that this is not right, we’d love to see your scorecard. I mean, we’ve had customers that show us a scorecard and it’s like, well, that load wasn’t late, that load wasn’t late, that was picked up on time. So having an internal data set that you can provide to your customer, to me, that’s the ultimate bargaining chip.
Jamie Irvine:
Yeah, I think on the part side of the business, the service side of the business that I’ve spent most of my career in, one of the things that I was always successful with is when we would demonstrate the economic impact of choice A versus choice B right there in front of the customer.
Colby Varley:
Absolutely.
Jamie Irvine:
Sometimes it would be as simple as me flipping out. I had it in my head and I had this little notepad in my pocket and I’d be standing at the yard and I’d lean on the truck and on the hood of the truck I would write out, okay, so you want to do it for this price, and then how many, what’s the service intervals and how many times are you going to have to change that?
We’d figure it all out. And then if you bought this part and you only had to do it once every four years, well look at that. It’d be $700 an axle and how many units again do you have?
And you’d look around the yard at just what was parked in the yard, nevermind what was out. And you could just see the wheels turning and cha ching, cha ching. And they’re going, oh my God, I never imagined this one choice was actually costing me that much. It’s pretty easy sale after that, isn’t it?
Colby Varley:
Yeah, it definitely helps. It doesn’t always go our way, but we’ve really, you got to have that north star and believe in what you’re striving for and don’t deviate from that. Don’t deviate from that.
Jamie Irvine:
Tell me something I’d like to learn a little bit more. We briefly touched on the history of your company, but you don’t get to this level of confidence in this process and using data overnight. This is something I’m sure that has developed over time.
So tell me a little bit about the origin of the company and how I have this strong belief that the way a company starts, it kind of imprints a DNA and over time that DNA keeps showing up throughout good or bad. So tell me about the origin of the company and how you’ve arrived at this value proposition and how you’ve developed it over time.
Colby Varley:
So we were started in 1984 by a truck driver. Marshall Kipp was a truck driver for Tom Lang Lines, which is a big produce trucking company out of the Midwest. And he just was in the right place at the right time and went from the driver’s seat to the c-suite.
And ATS was started with some great partners that believed in what he could do. And back in those days it was more of a leg up and I still think it is a leg up. Having that driver knowledge, being able to have that empathy and understanding of what the driver’s going through has made us or allowed us to grow our business.
So in 2010, I got my CDL, I still have my CDL. I did drive before I got on the desk. And just having that understanding of what it actually takes and what drivers have to go through day in and day out has really helped us evolve and grow over 40 years.
Not to say that somebody else is at a disadvantage, but when you’re dealing with somebody that’s never been inside of a tractor trailer, never driven one, never loaded one, never pumped fuel in one, never turned a reefer unit on, I mean to me the choice is clear.
You have people in a company that were truck drivers, are truck drivers, understand how it works versus maybe someone that’s not. And that’s been the difference for us in understanding both sides of the equation. Hands down, the best thing that we’ve done is we’ve had the hands on the wheel.
Jamie Irvine:
So for those of you who are listening, we did not set that up. I did not know what your answer was going to be, but you just reinforced my core belief that the DNA of a company, that origin story just is so powerful in helping companies succeed over time.
And I agree with you, if you’re not from this industry, if you don’t have a backing, you better get your hands dirty for a while before you start to go in any one direction because let’s face it, the men and women in this industry, they’ve got these decades of experience.
They’ve been there, they’ve done that, they’ve seen these things, they’ve seen the cycles. And if you get your hands dirty and you come up through the business and learn it the right way, then it empowers you to make decisions and take your company in specific ways that you just wouldn’t be able to do if you didn’t have that background. I’m sure you agree.
Colby Varley:
Absolutely. We have the unique opportunity to, a lot of brokers get a bad name. Oh, they’re going to screw the driver or they’re going to claim the company.
We are not that company. We are not those people. I mean, I go and fight up against customers all the time for the driver. I mean, we are probably one of the biggest things we advocate for as a driver, that trucking company, because without them we can’t do what we do.
Obviously it’s a fine balance. We really have to be careful, but we have a real good opportunity to bring the facts and how it really goes down, not what people think.
Jamie Irvine:
Yeah, exactly. So tell me a story of one of your customers who paid the higher price, got the better service, and what was their situation before? How did it work out and how did it end for them in a positive way? Tell us that story.
Colby Varley:
You see a lot of customers that have been around a long time, obviously it’s their obligation to try and find the most economical, best transportation option that they can find. I mean, they’re a business just like anybody else.
So whether you’re a trucking company looking for the best tire vendor or fuel vendor, it’s the same thing for any company that’s moving freight. So a lot of companies I think have gotten smarter, especially since Covid. Some people had all their eggs in one basket, which I highly advise against that. I mean, we don’t do that. We don’t give all of our freight to one carrier.
We spread it out. I think a lot of companies learn their lesson in regards to that, and some companies fell down and couldn’t make it happen. And when that happens, the ones that you have a really good relationship with, they come to you and they’re honest.
Say, hey, we had this company X, Y, Z at this price and we’re having service failures or it’s not working out or the communication, whatever the case is. So that’s where we can kind of step in and say, hey, here’s where we are. Here’s what we quoted. We’ll honor it and just pick up the ball and run with it.
But I think just like anybody, they don’t want the headaches and the heartaches. And after you experience the headaches and the heartaches a few times you start to say, hey, maybe that $200 a load is worth my sanity. I’m tired of getting called at 3:00 AM in the morning because of X, Y, Z. And that’s what you’re paying for, right?
You’re paying for somebody to step up to the plate and handle it. And we staff an office 24 hours a day, seven days a week, 365 days a year with live human bodies in an office here in the States, and you got to pay for that.
Jamie Irvine:
Yeah, that makes a lot of sense. So you’ve already kind of told us a little bit about your personal story, but I’d like to get to know my guests a little better if I can. What challenges have you had to overcome during your career and how would you say being part of the trucking industry as a whole helped you with overcoming those challenges?
Colby Varley:
Yeah, so some of the challenges, I would say one of the main ones, I think that was a really big deal was the electronic logbook. Nobody knew what was going to happen. And what I’ve kind of come to realize in our business is change is constant. It’s always going to be changing.
So I’ve really become okay with change. And another thing that I’ve really realized is everybody’s in the same boat. So for example, the electronic log book that was industry wide, no one kind of really knew what was going to happen to the industry. And it’s like you might get worked up or not, and then it’s like, hey, nobody knows, everybody’s in the same boat. Our competitors in the exact same situation.
Nobody has a crystal ball that’s telling them exactly what’s going to happen, so let’s just take it as it comes and whatever obstacles come, let’s fix ’em, deal with ’em and move on and put it in the memory bank, hey, next time if X, Y, Z is going to happen, we’re going to do it this way, not that way. So just learning from your mistakes growing. But I think the electronic logbook was definitely one of the more influential challenges that we we’ve faced.
Jamie Irvine:
It’s so interesting you talk about that constant change really in many ways the trucking industry has stayed very stable for a really, really long time. And yet, to your point, I would say just around 2019, just before Covid started, it just started to rapidly change.
And we saw the precursors to some of this big change in technology and things like that, that were coming out years before that. But I know that in the last five, six years, right, we have seen more monumental change in the trucking industry than perhaps in all of the years in my career before that.
And one of the things, you talked about this earlier, but you talked about the origin of your company and that understanding and that dedication to the truck driver. I talk about being a heavy-duty person and there’s certain characteristics that make something heavy-duty, and one of them is that resilience and that strength.
And you see that in trucking. You see that in the people in this industry, that internal strength, that fortitude, that resilience that come what may they’re going to show up, they’re going to do what they do. And really at the end of the day, trucking is the backbone of society.
So not only are they going to do their job, but they’re actually contributing to holding up everything that we hold dear to us. So from my perspective, we’ve gotten an education in change management over the last few years, but we’ve also proved as an industry the kind of people we are.
Colby Varley:
Absolutely. And I can say to your point, I mean I’m dealing with specifically trucking, but the transportation industry is probably filled with one of the most resilient types of people. And it doesn’t matter.
I mean, we see, we travel all over the United States to our vendors, so I could be in the Midwest, I could be in the southeast, I can be here in California. And no matter how bad it is, the trucking industry has been in probably one of the worst downturn cycles that we’ve seen in a long time.
And these individuals get up every single day and put their best foot forward to try and make something happen. I mean, that’s just incredible day after day and we’re going on three years now being in the dark and these individuals get up and make it happen every single day.
Jamie Irvine:
Yeah, a hundred percent. So I’ve really enjoyed our conversation when it comes to that general theme of paying a little more for something that’s better. What’s the one thing you just want listeners to remember from our conversation today?
Colby Varley:
Honor your word. I’ll be honest, sometimes we’re a little bit more and we pay the price, we got to pay more or something goes outside of our control, but honor your word.
If I give somebody a freight rate and I’m going to do that load for them and I’m upside down in the load, I’m still going to do it. Just honor your word. It’s going to sting for a second, but you’re going to gain more respect.
And ultimately the goal is if you honor your word and don’t let somebody down, they’re going to keep coming back. I would just say we didn’t really talk about that too much, but just honoring your word, do what you’re going to say you’re going to do, and it’s all going to work out.
Jamie Irvine:
Yeah, I agree with that a hundred percent. You’ve been listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine. We’ve been speaking with Colby Varley, Vice President of Sales at Advanced Transportation Services.
To learn more about advanced transportation services, go to advanced transportation services.com. Links will be in the show notes. Colby, thank you so much for being on The Heavy Duty Parts Report. It was a great opportunity for us to get to know each other a little better and to talk, and I appreciate your perspective.
Colby Varley:
Yeah, thank you for having me and love being on the show.
Jamie Irvine:
Well, I hope you enjoyed our in this week’s episode, I think it was a good case study on how to level up your value proposition and how to offer premium services that lower total costs for your customers. It’s now time for our final segment of the episode called That’s Not Heavy Duty in this edition of That’s Not Heavy Duty.
I want to talk about the six words that really drive parts managers crazy. What are those six words? The six words coming from their parts, people working the counter? Oh, sorry.
The six words are, we don’t have that in stock. I personally think now this is a bit of a bold statement. I think that parts people who make it a habit to utter those six words, that is grounds for dismissal. Why? Because as parts people, it is not our job to just look up what we have in stock.
It is our job to find out what our customers need, go find those parts and sell them to our customer. That’s part of our value proposition. People don’t have a lot of time, they need you to go do that work. They don’t want to be on the phone for two hours searching for a part. They’re relying on you.
So if you’re a parts person, instead of saying those six awful words, you can say, we don’t have that in stock, I will find it for you, give me a couple minutes and I’ll call you back.
Now, that is a completely different way of dealing with an out of stock issue. You’re saying to the customer, unfortunately, I can’t serve you immediately, but you can go and do other things because I’m going to figure this out. Now, you can’t wait six hours to phone them back.
You’ve got to actually follow through with what you said. You said you’ll call them right back. What does call them right back mean? Well, it should be relatively quickly. And what you should do is you should search for the product, you should find the product, and you should give the customer a few options.
That’s the heavy-duty way. So what that might look like is, Hey, listen, I found it. It’s at a PDC. It’s one day shipping. If I bring it in on air, it’s going to cost this much freight and it’s going to cost you this much.
Do you want me to go ahead and order it? Customer looks at that and says, that works great. I won’t tear the truck apart today, I’ll do the work tomorrow. Yep, go ahead and order it. You’ve got the sale and you’ve taken care of the customer.
Now, the customer might say to you, no, sorry, I can’t wait. I need it today. And if you’re a good parts person, you should have this follow up already figured out. No problem. I did find it locally. It’s going to be a little bit more money, but I can get it over to you the next couple hours. Is that okay?
Do you want me to go ahead and get that for you? So in this case, you’ve done your homework, you found the product through your supplier at a PDC that you can ship in. You’ve also done the work of looking around locally.
Maybe there’s a dealership down the street that has it or a competitor, you’ve called them up, hey, do you have this part? Yeah, I do. Great. How much does my cost? Of course, it’s going to be a little bit more money, but then for the customer, it’s up to them, right?
If they say, no, I don’t want to spend that much and I’m going to spend time, go search, you’ve done your job. But more than likely they’re just going to say, yeah, okay, bring it in. I don’t want to think about it. I don’t have time for this today.
Anyway, thanks for the good service. And that is how you actually can go beyond the barriers of entry into the business and truly offer good quality service. So parts people do not use those dreaded six words we don’t have it in stock without offering to go find that product for the customer and take care of them.
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