Stop Wasting Time On Bad Customers | Episode 356

Are You Chasing Bad Customers

SPEAKER_01 0:00

Are you wasting your time on bad customers? We're going to break down in this episode uh what makes a good customer, what makes a bad customer, everything from um, you know, the the time wasted on a single opportunity that's never gonna repeat itself or something you're not qualified or legally able to do, um, even customers that aren't gonna pay their bills. So um give it a listen to the end. We we go through a lot of different stories here and situations of things to look out for, especially if you're a newer broker, because you you just you don't know what you don't know. So hopefully you can learn from us and from our stories and experiences and avoid wasted time yourself. Ben, what are your thoughts on the episode we just wrapped up there?

SPEAKER_00 0:40

Yeah, I mean, I was just what I said the exact same thing you just said is basically like are you we cover are you moving freight but not making money? Are you moving loads and actually losing money? Is there more opportunity with your customers that you're unaware of and the simple things and questions you can ask to determine those things, whether it's a prospect or an existing customer?

SPEAKER_01 1:02

Absolutely. All right, let's dive in. Welcome

Show Intro And Quick Housekeeping

SPEAKER_01 1:05

back for another episode of the Freight 360 podcast. We're gonna have a good discussion today about uh how to wisely use your time when it comes to prospecting new business. But first, if you are brand new, we've got a ton of other episodes and different types of content all over YouTube and on our website at freight360.net. Make sure to share us with other colleagues and friends in the industry and um, you know, leave us a review, ask your questions. You can leave a comment on YouTube or send us a message through the website and check out the the Freight Broker Basics course if you're looking for a full length training opportunity. And this episode is brought to you by Ascend TMS. So if you're in the market for a new TMS, that's the transportation management system. If you're a small, medium-sized brokerage, give Ascend a um give check them out. It's got a lot of great opportunities at the uh price point that's affordable for someone in that small to medium size uh business.

Life Updates And Sports Detour

SPEAKER_01 2:02

So, Ben, what's going on down in Florida? We're heading into hurricane season.

SPEAKER_00 2:07

And then this fall, super excited. It was ironic. As you were doing the ad read for Ascend, I was logging into Ascend for our trucking company to go see if they updated it on all the loads from this morning. Um, not much is new. Like brokering, moving shipments. I'm like in and out of getting back in the seat, having to like jump in, take care of things. So yeah, it's fun and frustrating at the same time.

SPEAKER_01 2:35

Awesome, man. Um, sports, as a I guess a follow-up from last week's episode, the Bills and Steelers preseason game. Last Thursday night I got to go to, and you know, week three of preseason, you a lot of guys that aren't gonna have a job the next day. Um, they put on a pretty good show though for like anyone that was there. And it's funny, my my wife was like, she's like, all these fans from Pittsburgh bring their terrible towels with them. And I was like, Yeah, it's like a staple of like their attire. It's kind of like you know anywhere without it. Exactly. It's like a Bills fan taking their Josh Allen jersey if they're gonna go to a road game. Pittsburgh fans will always have that towel.

SPEAKER_00 3:15

So, but it came down to a on that point, yes, like not only that, like I remember when they would play and we would be, I would travel, like you would travel with it, just like you said. But also, like our daughter, we got a pink one that she had on her the day she was born. Interesting. That's another thing in relation to like just babies in Pittsburgh. Everyone kind of has a picture with their newborn with a terrible towel.

SPEAKER_01 3:45

People in Buffalo do like baby pictures where they're they take their newborn and like drop them through a fake like folding table.

SPEAKER_00 3:52

I saw that and I didn't know and understand what that was like related to, or like what was the origin of that?

SPEAKER_01 3:57

Breaking tables. So, like it's uh basically it's like a cliche at a bill's tailgate for fans to jump off of a car or a bus and break a folding table in half. It's like a stereotype. So, like, even our our new stadium, which I thought I thought was really cool when I went last week, they have a giant broken folding table as one of like the designs near um like one of the concession areas. So, but yeah, it's like a it's a huge stereotype, like breaking tables. So um, in other sports news, I like I just had the news on this morning, and within five minutes, it was like back-to-back um news reports on Tony Romo and Tiger Woods on their uh DUI charges. Yeah, so Tiger Woods struck a plea deal where basically um they just he's gonna lose his license for five years. Um, but no like jail time or anything like that. So and then Tony Romo pled no contest to his, and the body cam footage is like pretty entertaining if you haven't seen it.

SPEAKER_00 5:07

So I have not, but I heard that his in his public statement he made something about like having issues with um substance abuse or whatnot related to back pain. They were talking about on the radio this morning. Got it.

SPEAKER_01 5:19

So uh yeah, there's your uh there's your sports. We got college football kicking off in full this weekend, and then NFL next week. So it's that time of year. Um news.

Enforcement News And Market Ripple Effects

SPEAKER_01 5:33

So did you happen to catch Sean Duffy's press conference on Monday this week about like all the so clearly we've like our industry has made it into the the public uh kind of like this public spotlight, right? With between the 60 minutes episode on chameleon carriers and super ego and all this stuff, and the the really just a lot of the lobbying and um you know folks talking to their you know congressional leadership and all that. So they had a big press conference. Obviously, enforcement's been big on English language proficiency and cracking down on um non-domiciled CDLs and unsafe carriers, things like that. So some of the stats that came out of his press conference is that 28,000 drivers were put out of service for English profit English proficiency violations. 30,000 improperly issued CDLs were revoked or canceled, 8,000 CDL training providers were removed from FMCSA's registry. 100,000?

SPEAKER_00 6:40

I was like, because I saw 110. What was that?

SPEAKER_01 6:42

Well, that so 110 is the the uh driving schools, 8,000 is the uh CDL training provider. So like when you go to take your test for to get your CDL, there's a written test, and then there's actually the um the driving portion of it. That is completely separate from the driving school. So um, but 110 additional driving schools were removed immediately in the latest action. 160 additional schools have been targeted for possible removal. Nearly 400 investigations launched across 40 states. A nationwide audit of third-party CDL testers is underway. There's a crackdown expanding into fraud, fake identities, shell carriers, visa violations, and illegal employment. And now the list of agencies involved includes the DOT, uh, so Department of Transportation, the Department of Homeland Security, Department of Justice, the FBI, ICE, and HSI, which is the Homeland Security Investigations Office. So um five years ago, this would have never like we we were never making national news and headlines, but the uh the current administration has has taken a um I guess taken the opportunity to really lean in on this. So and I think it's I mean, you know, at the end of the day, oh, and his big takeaway is like drivers are now across the board overly generalizing it, but are now making and earning a way more appropriate wage for the work that they're doing. So obviously we kind of we knew that with an excess amount of capacity in years past, rates were kind of just hit a bottom floor and just held there for years. It felt like eons that rates were like, you know, it's crazy. The amount of like you could grow your brokerage by doing more and more loads and volume, but you weren't seeing your revenue, you know, going up very much because rates, you know, it's like your volume could go up, but your rates were going down. So you're doing more work for the same amount of of business, essentially.

SPEAKER_00 8:49

So and not only is that true, right? But like I don't think people really have a really, I guess, I don't want to say like clear understanding, but like think about it very often of like how much inflation has occurred in that period of time as well. Like everything has gotten so much more expensive. Like, I I can't remember what the numbers were, but like it was significant. Like the average household budget was is like three times what it was like pre-pandemic. Like it's a lot. But someone else said something interesting recently, they compared this to like 1996. And if you just look at the median income for the whole country, just like the middle, and you look at it today versus was it 30 years ago? Yeah. Um so you looked at it 30 years ago. The median income, if you add up health care, like average college tuition, and the average cost of a home, average grocery basket, what they like basically define as like this milk and whatever, it's like gets you like real close to the middle. It was like the average income was something like 90 grand, and all of the expenses, including owning a home, was like 36% of that 90 grand. Now the number, I can't remember what the income is, but the amount of expenses makes up like 80% of the average median income. And most of it was healthcare. Like healthcare was just way off the charts in like 810X, what it was 30 years ago. Homes were definitely up in a way bigger piece, but like healthcare was just like eating a massive chunk of this, as well as like college debt. So you take that and you take incomes for truck drivers, right? Like for like six years, they were falling. It's like I don't even know you like kind of almost had to do things color outside the lines to be able to like pay your bills. Yeah. Because there's just like no way. Like you just can't, it just the math doesn't math.

SPEAKER_01 10:49

Yeah, it's crazy. It's like I I've gone to if you make like a quick run to the grocery store to get a couple things, then you check out, you're like, oh my gosh, like I can't believe how much stuff costs now.

SPEAKER_00 11:00

Dude, my aunt says this too. We were in we saw her over Easter, and she's just like, everything is a hundred dollars or a thousand dollars. And I actually asked my accountant this when we were talking, was I was like, I was like, do you like look at your grocery bill? Because he's like an accountant. I'm like, if anybody does, like maybe he does, he's like, Oh dude, I can't even pay attention. He's like, I drive myself nuts. I'm like, because just like you said, I'm like, I'm like, I don't know. I'm like gonna drive to like six different places to get like a cheaper this versus this. I'm like, I just don't even have time to drive that many places. Anyway, I definitely notice it, and I definitely notice like because my Costco bill, I notice the most because we buy like the same things there like every week or every other week. And like you see the same total every time, and you don't really look at them individually, and we just buy the same stuff. And I'm like, oh, it's like 30% more than it was like six months ago or last year for sure.

SPEAKER_01 11:46

Yep. Wild. Yeah, the student loan thing, too, is like what I've heard from a lot of people. Um, and I think it's like totally unrelated to freight, but on just on the on the topic of like costs, like it blows my mind the concept that we're discussing, we had discussed in the past canceling student loan debt while still issuing student loan debt. It's just like what are we what are we doing? Um and then like housing, right? Like I I was telling my my brother-in-law, like his generation, but he's he's like eight years younger than me. Um but basically like if they don't own a house now, they're like screwed. Like there's the cost of housing now is just so wildly uh um different than what it was before. I don't want to say it's unattainable because I think if you look, if you look at like you know, what people want for a house and what they can afford, it's usually two different things. Like everyone wants a 3,000 square foot house that's four bedrooms and has a finished basement, and it's like travertine floors with the colour. Yeah, and they're like boomers for all the houses, and they were so cheap. And it's like, well, the average house, you know, for the boomer generation, their first house was like a thousand square feet.

SPEAKER_00 13:06

So so yeah, here's an interesting one, right? Like my parents were boomers, obviously. My dad and my mom, I think, were born like 53 and yeah, a month apart in like 53. So, like right after World War II. The house I grew up in, they bought in 1979. I think they paid $86,000 for it. Okay. And it was like, I mean, it had a basement, so like the square footage was probably double the $1,200 because it had the basement, but it's not counted. So it's maybe 2,000 square feet, right? Now, my house that I bought, I think three years ago, has appreciated twice what my parents paid for their house. My house has appreciated $150 in two and a half or three years, because like we just looked at it, and I'm like, that's literally twice what my parents paid for their house. Crazy. Yep. Wild.

SPEAKER_01 13:56

Anyway, that's the uh that's the state of the economy and where things are at. But

Prospecting ROI Starts With Qualifying

SPEAKER_01 14:03

let's let's talk our um our topic today. So we you know, we were talking off air and we can share some of these stories, but basically we're gonna look at you know the the return on investment, the ROI of your time when it comes to prospecting. So we've talked a lot in our content about you know how to find potential shippers to be, you know, customers, you know, how to reach out to them, questions to ask, how to handle objections. But qualifying the shipper itself, I think is a is a skill that if you're not taught it, you might find yourself wasting a lot of time on potential business that is not worth that time. And there's a lot of different rabbit holes we can go down there, but I'll just kind of start off with a couple that I've seen recently and we can kind of go from there. But like I I've had um, you know, I had a guy that I talked to in the last month, and he he always seems to have a bazillion ideas of these, you know, new customers, and he gets really excited about them. And one of them is like, oh, you know, he this guy's got you know two loads that he he needs moved this month, and he spends all this time trying to find the right carriers at the right price. They're gonna be, you know, very little um empty mileage, so he's gonna be able to get a good rate and all that. And for weeks, he's like giving me updates on this, and it's for two loads, and there's no more business after that. I'm like, you're gonna spend all this time for business that like isn't gonna be evergreen and and continuous. And another situation with a different guy was about um one single shipment that was gonna go from I think it was Canada into the US. I know I know it was coming in from it was either Mexico or Canada, I think it was Canada. And he's like, Yeah, you know, the the customer doesn't, you know, they this is a one-off for them. And the the only reason he's talking to me is that no one else can seem to figure this out, and he doesn't know how to do the the uh customs paperwork and the customs brokerage part of it, so I'm I'm gonna do that for him. And I was like, no, I was like, we're not a customs broker. It's like we don't have that license to do that. Yeah. And like I I've seen guys in the past that would help their customer with the paperwork and help some forder for all that, but like we're not we're not that entity that can do that.

SPEAKER_00 16:30

Um and it was an interesting thing, and not only do you do we not have the license, but like like I dug into this years ago when I think I was helping start international at TQL. We were like scoping the work and like doing the like due diligence. They hired a you know really experienced freight forwarder that ran international companies, and I worked with him because I did all the relationships with the Drey Age companies. So we were just like looking at how we could do this. And when you don't have a license to do that, you can't charge a margin for it because you're not legally allowed to offer the service. So people say it's a gray area where they're like, I'll just charge more for the trucking service and then I'll do break-even as a pass-through. But like, you don't have a license to be able to pass through those things. And like that's why they exist. So there are certain things like you like literally can't make money on. I remember I had a client that needed something shipped from you know that island off of uh Africa, Seychelles, that's like fancy, that like has like these resorts on it you ever hear mentioned. No, anyway, it's literally out in like the middle of nowhere. And this client owned a business there that they sold and they had a bunch of their personal belongings they needed shipped back to the United States. And they were like, Can you help me with this? And that was where like I went down that rabbit hole and I was like, Well, I can't like make money on this because we don't have an international license. So, exactly what you said, like I just looked at one of my freight forwarders, called them and said, Hey, can you help my client with this? They did the work because like I literally went to legal and TQL and I'm like, Well, can I make money on this? They're like, No, you can't. They're like, you can point them in that direction, but we don't have a license to do this, so like you can't just mark it up and pass it through in the company.

SPEAKER_01 19:18

Yeah. Yeah, the full uh the international stuff is it always blows my mind because you'll have like the broker will get excited because they're like, I had a good conversation with this customer, and then they realize that you know the only reason they're having that conversation is because nobody else that no one else prospecting them for business took the time because they know they it's not their it's not their wheelhouse, essentially, right? Yeah, it's not their wheelhouse, exactly. So yeah, interesting. Um I've seen it too with like um like if it's a commodity or an equipment type

When Freight Is Not Your Wheelhouse

SPEAKER_01 19:56

that you've never dealt with, and you try to like spend time to learn about it, and it's like just I would just focus on what you're good at. Like people that LTL is a great example, right? Like I I come from an LTL background, so I have a a good level of knowledge and good amount of comfort with it. Um, but a lot of times, like I'll be someone will come to me and be like, hey, this customer is asking about just a few pallets to ship. They want to do an LTL, asking for rates, blah, blah, blah. And I start asking questions and they have like no idea what I'm talking about. I'm like, all right, like what's you know, what freight class is it? And they're like, what's a freight class? I'm like, well, it has to do with density. And, you know, they're like, well, can I just like put it in a calculator? I'm like, well, yeah, you can put the dimensions and weight in a calculator and it'll give you a density, but that isn't always 100% accurate. Like, literally, the the freight class, there's a list, like a a very large, a very large document that will list the type of commodity and what freight class it is, and it's a number. And if you have that wrong, or if you have the weight wrong, and it goes, you know, through the LTL network for a carrier, and they, you know, they inspect it and they find that the class was wrong or the weight was incorrect, or you know, anything, right? There was an absence scroll that was missed. Like you get they get charged for that after the fact. And then the customer's like, why is there an extra $600 here? Like you told me this was the rate, and it gets like very, very messy. So like rebills and LTL, like it, there's a whole bunch of stuff in there. And then like re for LTL, people are like, Yeah, you know, this this customer, like, they've got this opportunity to move, you know, these refrigerated, attempt controlled few pallets here and there. Like, how do I do re for LTL? And I was like, I was like, that's like the one nut no one can really crack. Like, typically, people that that do re for LTL are either running it on a small truck, like a refrigerated uh box truck or cargo van, or there's actually brokerages that specialize in consolidating temp controlled um shipments and they put them together on the same truck of you know, exactly meet the same temp requirements and stuff like that. So there's niches that like if it seems complicated and um like out of the ordinary and you have no experience in it, you're probably gonna waste a lot of time just learning about it, let alone trying to find a solution for you know for that customer.

SPEAKER_00 22:25

Correct. Right. And it was ironic because I'm like the brokerage I'm the CEO of, it does that. Like that is the niche, right? But the reason we're able to do that is because we have trucks, we have a brokerage, and we have warehouses and a new warehouse being built that allows us to be able to do those things, right? Just trying to do that out in the market is almost impossible, and you'll probably lose more money than you make and end up with more claims. But the other thing, too, I wanted to like I lost my train of thought, that I wanted to touch on, right? Is like, but when does it make sense to do something that no one is doing, right? Because I would say, right, like I

The Hard Call To Fire Customers

SPEAKER_00 23:04

definitely that was my strong suit at a big brokerage. Because at a big brokerage, right, you have the name recognition, you have the insurance, you got the financial backing, and you typically have the carrier density, which gives you some advantage. Your disadvantage as an employee, as a salesperson at a big box brokerage, is there aren't really any leads that somebody isn't already owns working with our customers or somebody's already prospecting. Like you need to like literally get them in your name to get the ability to call them, right? So for me, the biggest difficulty working at a big company was like, I couldn't go with produce. There was not a produce company in the country that wasn't being prospect or was a customer or was a customer and then stopped working with us, right? And I'm like, okay, because they've been in business 20 years at that point, right? Most of the big companies were onboarded. So my strategy was to go in the opposite direction that everybody else was, because that's where I can get leads the quickest and get them into my name. But to your point, I didn't spend time I should have been prospecting or moving loads to figure them out. I stayed after work to do that work so that it would be worth the time and did the research after hours to determine like, would this be profitable? How many loads could I do? What would my staffing need to be? And literally tried to at least back of napkin math, go like, is the juice worth the squeeze? Right. Like, could you make money doing this? Oh, because this is the story, and I'll never forget this one. I think it really drives this point home. This was, I didn't, I think I did know who this was, but the guy who was my first manager, who's been in the industry like 15 years when I started, used to tell this story a lot. There was a broker that had been there for about a little more than a year, and the guy was moving like 30 loads a week. Okay. But his average gross profit when you added all those 30 loads up was like only somewhere between 2,500 and 3,500 a week, which is like 100 to 125 a load. Now, this is like 10, 12 years ago, right? Now, the problem is when you're at a big brokerage, you have benchmarks and expectations, which most people do even at small companies. But for you to literally get to the next stage to really earn commission, at the time you needed to generate $4,000 in gross profit per week, and you needed to average that for 12 weeks or three months. Once you were above that number, you got a second person as an assistant, which allowed you to free up your time to go prospect more and then go to the next step. And then I think at six grand, you got two a week. Then when you hit eight, you got three people, 12 and so on, all the way up, right? So this person was just like stuck in limbo where like he couldn't get an assistant because he didn't qualify because he was right below the 4K. And he was working really hard. He's moving 30 loads a week and he's doing it with like 12, 15 customers. And Jason sits down with him and he goes, Well, like, clearly you didn't take this job to make the 45 grand a year base salary you have. And he's like, No, like I took the job to make six figures. He's like, Well, you know, you've been here a year and a half. Your customer makeup doesn't seem like they're willing to pay enough for your service for you to actually get out of this hole you're in to get to the next step. And he goes, Yeah, I know. And he goes, and the problem is it takes me so long to move their freight that I don't get a chance to prospect enough to get the next big customer. And he's like, right. So he goes, Well, what do you think I should do? And Jason says, Well, I think you need to start over, which is really demoralizing when you spent a year and a half like finding customers, closing them, and working your ass off to get to that. But sometimes the reality is just like these customers aren't willing to pay for the service you provide enough for you to keep doing it. And that was the solution. Literally had to fire all of his customers, start back from scratch. But when he did, that's really how you learn how to qualify. Because if you don't have constraints and you don't really understand that like how much time you spend on some of these things, it's hard, I think, for the person in the seat to realize that they're like not actually making money. It's like, oh, I moved another six loads today and I made $50 on each one. And you're like, well, um, if you just look at the hourly rate that you cost to sit there and what it costs to give you a computer, like you brought in less revenue than the business spent to give you these tools. And that's what we really mean we mean by qualifying.

SPEAKER_01 28:37

I'll I want to give you the other side of a situation like that. So in LTL, here's where I've seen people do actually very well. Um, because LTL obviously like smaller shipments, smaller price tag, smaller

Automation As The Low Margin Cheat Code

SPEAKER_01 28:51

profits, right? So where I've seen people do well with lower ticket business like that is if they can get it where it's automated, and the customer has a direct login to a portal that's white labeled to them, and they can run rates on demand, book on demand. The margins are already pre-calculated in there. And I've seen people that legitimately they're like, yeah, I'll just, you know, every day, I just, you know, I could essentially sit back and 40 loads got booked, and I didn't have to do anything. I just have to handle issues if they pop up. But now I have all this other time to focus on full truckload spot business, and that LTL business is just kind of sprinkling in. And if if you did it the other way, where you're manually trying to quote it every single time, you know, 40 loads in a day, you're not going to be able to probably cover those 40 loads in a day. Um and you're spending so much time just trying to get rates for small tiered items. So, but if you have it automated and it's like just kind of runs like you know, a well-illed machine, that's kind of like the cheat code in those situations. So um that's why I think if you have a high volume of business and you can get repeat carriers that can be dedicated on it, and you just manage as the as the middleman to make sure everything runs smoothly and handle exceptions or issues as they pop up, that's the direction you want to head in versus you know, all those time killer customers where, you know, it's one load here and there or the margin's super thin on it. Like I've seen I've seen dudes that like they make 50 bucks profit on a load and they just run a high volume of them because they're you know short transit or whatever it is. Um, but to your point, like it's very time consuming and they're doing all this work, and you know, it's just the guy next to them is doing half the amount of work and making twice the profit. So things to to look out for. And I've seen the same thing too with like you know, the the e the customers that send out a load list every day, or they always like perpetually sending out like RFP invites, and you're like one of

RFP Time Traps And Cheap Lanes

SPEAKER_01 31:05

200 brokers trying to quote a giant spreadsheet, and you know, I've seen people spend an entire week trying to get the best pricing and they win zero lanes. So things to look out for for sure.

SPEAKER_00 31:19

So, well, let me ask you this when you have somebody that works or is an agent for you and you've identified this, what do you how do you teach them and what questions do you help show them to ask to determine these things, right? Whether it's a prospect or an existing customer. And I'm gonna add some more context to this question. Is this something I've seen pretty frequently, right, in brokerages like this year? Somebody says, Hey, this customer's just cheap. I don't quote them. And the thing I always say is like, are they cheap with everything? Or are you just quoting some of their lanes that are cheap? And maybe they have better paying lanes they give to someone else, which is another way you can look at this, right? Because and I want to keep this like simple, but like, you know, they the 80-20 rule Pareto's principle, like most businesses, 80% of your profit comes from 20% of your customers. Okay. Now, think about a shipper, not a brokerage. A shipper is very similar. Like a company that sells produce, for example, or food, they kind of have the same thing, some version of it, meaning like 80% of their money comes from 20% of their customers. So if they have a hundred shipping lanes, they are not going to be as price sensitive on the ones going to their most profitable customers because those lanes, they can't have service failures. Now, their customers that are cheap with them that are low margin, they want a cheaper truck. So when you're prospecting or starting to work with a company, they don't give you the most profitable lanes that they want the most service because they don't know how well you'll do. So you almost always start with the cheapest loads because if you screw up as a new broker with that shipper, they don't lose their biggest customer. Those loads are already going to a broker they've been working with or a carrier for years because they know the accounts and they know they won't get screwed up. So not all shipping lanes are created equal with a shipper. What questions do you teach people and how to ask to identify what loads they're actually quoting versus how many loads are there versus what the opportunity really is?

SPEAKER_01 33:33

Yeah, there's a couple things I'll I'll kind of peel back the layers on here. The first is how do you identify that that's happening? And usually what I'll do in this um, this is why I think sales meetings can be very beneficial to kind of get everybody

Metrics That Reveal Profit Leaks

SPEAKER_01 33:48

in the same room to go through. It's not to pick on anybody, but it's to kind of give people perspective on where they are versus what everyone else is is capable of doing in the same freight market, same organization, et cetera. Okay. And that's I I get really granular on the metrics that I look at. So I will look at, I actually did this yesterday with some of our guys, but we'll compare obviously top line of you know, load volume that they're doing in a month or a week. And then I'll also look at what kind of gross profit they're doing, the margin percentage on average. So how efficient are they being with the business that they're they're doing? And then I'll look at things like what is their average profit per load? What is their average, I'll even do profit per mile of the actual transit, um, things like that, and how are they trending? And then I'll look at where are they in comparison to the median, right? So if I look at the average, let's I'll just make numbers up here. Let's say the average broker on the team is doing, we'll say um 4K a week. So like 16, 17k a month in profit, and someone's only doing 11 or 10 in that same one month. So, you know, just about a little over half of everybody else. And then I'll look at like, you know, all right, well, the load volume is about the same, but they're they're clearly working on lower margin, either lower margin because it's just cheap freight, or it's um lower dollar amounts. So they're getting less juice, less juice for the squeeze. Um, and then I'll have a conversation with them about, you know, talk to me about these customers, what do the opportunities look like? And they're like, yeah, you know, this guy, you know, he's just always moving these same lanes. And I'm like, well, what else are they moving? Like, what else? You know, you've you've clearly proven that you can do a good job with them. They're like, well, I don't know. I don't know what else they move. And I'm like, well, there's definitely other freight that they're moving. And they're like, I never even thought about that. I'm like, well, you're definitely not getting 100% of their freight. And any, any customer that tells you that that you're their, you know, sole guy for everything, um, very likely that it's not accurate. It's not true.

SPEAKER_00 35:55

So that one, just that one, right? I I wanted to just interject one thing. I was second voicing a call for another broker at TQL. And I remember it was like a quarterly call, and they were talking about all the freight that we were moving, which was like all the freight in like the northeast. And I just asked, Well, hey, what do you guys do in other areas of the country? And this customer responds, We do a lot on the West Coast and the Southwest. And the broker sitting next to me's eyes get real big, just like that. And they go, They're literally like, so we're at a huge brokerage, and this shipper was a pretty big company. And they go, We didn't know you guys could service the other side of the country. Would love to use you over there. So half of their business, they weren't even able to see or look at because the shipper just assumed the Northeast was where this broker could service, and it never dawned on the broker to ask what other loads they were moving or if they had other loads anywhere in the country. And the account doubled because of that one question, right? Yeah. So two, yeah.

SPEAKER_01 36:56

So on that point, so two different things that I've done with folks in the past when they're just working on the same, you know, we'll just call it cheap freight or whatever. And and I asked, like, you what else are they doing? Like, I don't, I don't know. So one way, pretty simple, is like go to their website, see where their facilities are located. Most most manufacturers or organizations are going to have some sort of like locations or about us section of their website. And you could see, oh, they've got like 30 different facilities across the US, and you're only you're only focused on one. Um, another way too, and this is more in more recent years, is gen logs. Really, really good data on where you can see shipper activity, their inbound lanes, their outbound lanes. And we won't go down the rabbit hole of of how their data you know is compiled and analyzed, but if you use gen logs, you can literally put in the name of a company, see their facilities, and you'll see with two different colors inbound activity, outbound activity, and it'll blow your mind because you might be dealing with the same two or three lanes out of just make it up, like Charlotte, North Carolina, and then you look it up and you're like, they've got 13 facilities across the US that have a ton of volume, and I haven't even tapped into it. And I already know how this customer operates. I know what their requirements are for carriers, I know what matters most to them, whether it's service, price, or somewhere meeting in the middle on those two things. And I've got an I've already got an in with my the team that I'm working with or the point of contact that I've got. So those are some of the things I'll look at. But another point too, and this is um more on carrier selection, is I've like when I see someone who's struggling with lower margin, and I compare them to the average for the company. So, like let's say, you know,

Stop Post And Pray Carrier Sourcing

SPEAKER_01 38:40

last month our company averaged 15% margin across the board, and I've got someone struggling with seven, eight percent margin on a certain customer. And or overall, let's say. And I'm like, well, you know, what's the issue? And a lot of times I hear lately they're like, well, you know, trucks have gotten so expensive lately, and you know, you know, our our selection criteria has cracked down after all the the stuff in the news lately and the Supreme Court ruling. And it's like, okay, but there's still hundreds of thousands of trucking companies out there, even if you got rid of a third of them because they don't meet our standards, you still have every everyone else that's still out there. And I'm like, well, what are you doing to source carriers? Like, well, I just, you know, I post it up on data, and uh, you know, whoever calls me is who I'll talk to. And it's like, you've got to, you've gotta go beyond post and pray because the carriers that are gonna call you on your load posting don't that's not a you know an accurate assessment of the total amount of capacity that's out there. That's where you have to use intelligent ways of of sourcing capacity because you're you might be finding a guy who quotes you high because his insurance bill is high for his truck and his maintenance costs are high, and he's got a bunch of dead miles to run and blah, blah, blah, blah, the list goes on and on and on. You're not seeing the actual capacity that's that's out there that's the best fit for it. So I used to always make the joke like way back in the day before a lot of this new software existed. I was like, man, it would be great to just know where every truck in the country is at all times, because then you'd find you'd be able to easily find the best carrier fit for a customer at all times. And then you're like, boom, now we've got you know tools like gen logs and highway, and the list goes on and on with all these sourcing tools now. You just gotta, you've got to use the right tools because to the customer, if they're paying the rate that they're gonna pay, right? If rates go up across the board, they're gonna be forced to pay more overall. Um, but if you just keep giving them the same rate and you know, you get the same price truck, like you're just hurting yourself. You're doing the same amount of work for less money.

SPEAKER_00 40:50

This happened like recently when the past week, right? I was running a training in the company, right? And one of the brokers, this this client, right, has a trucking company and a brokerage, and they're both on the on the call with me, right? So you got the dispatcher, the trucking company, and you got the brokers. And the brokers go, Hey, this guy running the trucking company now, they're like, he doesn't want to run these loads for the same rates that our customers need to pay. And I asked the guy running the trucking company. I go, What would you be able to do? Like for that load, if they want to pay $350, what do you think you should charge? He's like, Well, with gas and tolls on that lane, right? I need to be at at least, I think it was like $800, give or take. So it's like almost double, right? And then the the broker goes, Well, my customers need to be at $400, whatever that number was, right? And the guy at the trucking company goes, Well, like, it costs more to do it than you're charging them. Like, I will literally lose money by paying the driver the gas and the tools. That's not even including equipment. Like, we're just losing money, right? And then the broker goes, Well, like, I'm gonna lose the customer. And then the other senior broker at the company goes, Okay, wait a minute. So your customer says they need to be at 300 or 400. Our trucking company says it should cost 800. And he goes, he asks the broker, he goes, So if you don't move that load, what do you think your customer will pay? And you could just see a blank stare. And then the answer is like, your customer is gonna pay market rate, 800, because no one else is gonna run it for a loss. So when your customers tell you, like, I need to be at these rates, that's just them negotiating with you, doing their job. It's your job to keep going, hey, I know this is where you used to be. Fuel is now at this amount. This is what it cost six months ago when we started this. We did all in rates. I can't keep this rate anymore because eventually we'll just be bankrupt and I can't help you move your freight anymore anyway. Right. So, like these are real scenarios where it's like customers will always say, like, I need to be at this rate, but you can't do things that are free or you're losing money because then nobody has a job anyway, right?

SPEAKER_01 43:07

Yep. The last one I'll add in here, too, and this is about um a customer's credit worthiness is people that spend a whole lot of time trying to get a project worked out or an opportunity coming up, and it it almost

Credit Checks Before You Invest Time

SPEAKER_01 43:22

seems like too good to be true. And then you find out the reason that they have this opportunity is because no other brokers want to keep working with them because their credit sucks. So, and there are it like, yeah, it costs money to run a credit report, but you can, you know, if you like truck stops $20. But even even without paying for a full credit report. So, like Ansonia, I think the package we have, it's like five bucks for us to run a credit report based on the 2020. And I don't do volume at all. I was gonna say, even before that, though, like as part of your truck stop license, there's a kind of like an Ansonia Lite feature included in it where you can see the Ansonia credit score and the days to pay for the customer. Um, and then if you want to buy the whole report, then you'll get like, you know, their reported payables and balances, stuff like that. But I like we've had a guy, um, this is a guy that actually was was considering coming to work for us. And I was like, let's check out your customers beforehand. We we gotta make sure that like it's gonna be able to work with us. Because his whole thing was like, Yeah, you know, my current company is, you know, wants to doesn't want to work with them anymore, wants to shut them off and freeze their credit, blah, blah, blah. And I'm like, okay, well, let's, you know, why is that? Let's look at that, right? And then I see like out of a hundred, a hundred being the best, they have like a a 44 out of 100, which is an extremely high risk, and their days to pay is like 70. And I'm like, well, there you go. Clearly they got behind on paying their bills and and their credits suck. So like we're not gonna approve them. Um, and this is like if you don't work for a company that runs credit for you and you have and you're responsible for doing it yourself. So if you're a solo broker, um this is like really important because these customers, when it seems too good to be true, when they, you know, they're like, Yeah, I got these couple loads right here, you know, I can't find one to run them for me. Um, check their credit because their credit might be shot. And that's the reason why they're taking your phone call or reaching back out to you after you, you know, were prospecting them months back and stuff like that. So um that's the last one I want to hand on because those ones, while it might seem like you're making money, you don't actually realize that profit when the bills aren't eventually, you know, they eventually go unpaid and you send them off to collection. So that's that's kind of the last um situation I'll give you. And um, but yeah, there's definitely like there's tons of business that's out there, and it's not all created equally. So like we kind of talk about the 80-20, like 80% of your uh headaches probably come from 20% of your customers. Um, you gotta identify who those 20% are and you know, try to replace them with customers that have less headaches. So not as easy as it sounds, but those are very important things to look at to make sure you're not wasting your time.

SPEAKER_00 46:19

Two funny stories that came up um was it like last week? I was talking with um a private equity guy, and we were talking about exactly this conversation, right? Profitability

Cupcakes, Watermelons, And Simple Math

SPEAKER_00 46:33

and things, right? And that, like, you know, revenue isn't the same as gross profit, and gross profit isn't the same as retained earnings or you know, what you get after you pay everything. But the two stories that we were both laughing was he said he was watching this TV show called The Profit, I guess where the guy goes in and like helps turn business around. Yep. And the one that he said struck him was I think it was a football player that owned a cupcake shop. And he comes in and they're like, Yeah, like we just don't seem to be able to like pay the bills with this company. We don't know what's going on. And he goes, Okay, um, how much do you sell a cupcake for? And they went, two dollars. And he went, How much does it cost you to make that cupcake? And they both went, We don't know. So the punchline, after he looked at all their statements and all their expenses, he goes, Well, it costs you two dollars and twenty-five cents to make a cupcake that you're selling for two dollars. That's why you're not making money. You are charging less than it costs you to make the cupcake, right? The other, the other story that made me laugh, it's like an old one, but um, two brothers go to the farm and they rent a truck and they buy a hundred watermelons for a dollar each. So they buy, you know, a hundred dollars worth of watermelons, they get a hundred watermelons. They drive to the like market where they can sell it, where all the other people buy stuff, right? And they sell all the watermelons for a dollar because everyone else was selling them for a dollar twenty-five and they wanted to sell them fast. So they sell them all super fast for a dollar each. And the one brother looks at the one and says, I don't think we're really making much money. And the other brother scratches his chin, looks and he goes, Do you think we need a bigger truck? And it just like those stories are funny, but like in my head, like it, those are like why those like little reminders make me go look at the simple things, right? Like if there's an issue and it's profitability, it's usually what it costs versus what you charge, or it's when you're paying your bills versus when you're getting paid. Like those are like the four simplest things to look at, whether you're a broker or you I'm gonna brokerage or any business for that matter.

SPEAKER_01 48:45

Exactly. Well, good discussion. Let us know if you guys have any uh any stories about a bad customer that you had or you found out your time was wasted. Um, final thoughts, Ben.

SPEAKER_00 48:57

Whether you believe you can or believe you can't, you're right. And until next time, go bills.