To paraphrase one longtime bus operator, owning and operating motorcoaches is tough enough without adding marketing and sales.
This particular operator relies heavily on work from other companies and some of the newer Internet-based sources.
But another highly regarded industry veteran has a different opinion, saying that based on his experience, depending on outside marketing comes with some serious concerns.
“Anyone between you and your customer is a broker,” he said.
These two contrasting views, each voiced by highly accomplished executives, illustrate a dilemma faced by modern operators as technology and the pace of business advance.
During a period when the motorcoach industry seems to be running in place, many companies are turning to an increasing number and variety of Internet services that promise to deliver increased business. This comes from more efficiently booking traditional consumers, but also by creating incremental business using digital technology.
Historically, bus operators worked together during busy times. A company might overbook, and then “farm” the excess work to local operators who had spare equipment. The operator that originated the charter would keep a percentage for his or her efforts.
This traditional system has served the industry and the public well. Customers could find coaches, and operators utilized their equipment more efficiently.
The only hiccups came if companies didn’t pay each other promptly, or provided inferior service on work they picked up. In a tight-knit industry, word spread quickly enough that bad actors often were weeded out before they did significant damage.
Some operators thrived on overbooking, consistently accepting more work than they could service with their own coaches and building a network of operators willing to accept what amounted to “pre-packaged” business. This is true for both the charter and line-haul segments of the industry.
Scheduled-service companies traditionally do this on holidays and other times of peak demand.
Charter operators rely on it for major events. Frequently a major player in a market would contract to provide far more transportation than its fleet could handle, and then book and coordinate other companies. If the event were large (like the Olympics) the company would hire equipment and drivers from distant cities.
These types of arrangements often worked well, sometimes did poorly, and occasionally failed in spectacular fashion. Failure took the form of either poor service or operators not getting paid.
Also in the mix were tour companies that owned no equipment. They would put together itineraries, sell seats retail and then charter buses to handle the transportation.
One steroidal form of failure happened on occasions when a bus line, tour company or, later on, website broker negotiated a low price for work then withheld payment. When the operators asked for their money, they were told they could be paid now at a further discounted rate or wait weeks or months for full payment — this despite the fact that the consumer had paid for the transportation long before.
Examples linger in the industry’s institutional memory, making some operators cynical when “brokers” are mentioned.
With the dawn of the digital age it became simpler to offer pure brokerage services, and maintain a visible presence nationwide, while owning few, if any, coaches. A group leader could find a website, click on any city and shop for charter transportation without having any direct connection to the actual operator until the bus showed up.
Often customers had no idea they were not dealing directly with a coach company. One gentleman referred to his brokerage site as a “value-added reseller” offering customers one-stop shopping for charters, and operators pre-packaged work they might otherwise not have gotten, or even known about.
The perils of brokered work for both the customer and the bus company are virtually the same as when work was “farmed” from other operators, but compounded by the anonymity of the process.
Tour operators fall into a middle ground. They add value in ways that simple websites don’t. They sell retail, create itineraries and often make deposits on rooms and event tickets. They have a relationship with their customers and real skin in the game.
Conversely, in competitively packaging tours one incentive is to cut transportation costs. Many negotiate price aggressively. Some reward quality, others don’t care.
The fact that they have capital tied up is a two-edged sword for their coach suppliers. Tour operators are a buffer with the passengers and do generate business, but if they sell too few seats on a tour or are generally under-capitalized, they are tempted to ask bus companies to pay for the tour broker’s sins.
It is important to remember that they work for their customers, not the coach operator.
Of the nine websites offering brokered bus transportation contacted for this article, only three — Rally, Ground Charters and Shofur (Rallybus.net, Groundcharters.com and Shofur.com) — responded with anything beyond an automated reply.
It’s worth noting that these three companies each have expended some effort to build relationships with coach operators.
Recognizing the genre’s checkered history, the general manager of Ground Charters pointed out that they do work for the customer, but consider coach operators a valued resource and are always transparent regarding who is actually operating the buses.
“We’re good brokers,” she said, indicating that she understood the industry’s fear of “bad” ones.
In recent years, new technology has ramped up the Internet’s ability to book, and even create, business. Crowdsourcing software allows certain sites to assemble groups of individuals interested in attending the same event or to create commuter routes by connecting people who make similar daily treks to work.
Some have characterized it as the motorcoach version of Uber. That’s not a precise comparison, but in the right ballpark. In many cases customers are folks who weren’t previously using, or even considering, buses, so this is incremental business.
Local transit operators have, for years, offered on-demand service where practical, so in some ways crowdsourcing is evolution as much as revolution.
As these systems are refined, and new ones are developed, operators who have idle equipment or don’t have an affinity for marketing have an incentive to work with them.
When considering if, and how much, to get involved with these new services, there are a number of considerations.
The traditional litany of caveats remains relevant. Are they going to pay a reasonable price? (Or is the “broker” going to treat transportation as a commodity and contract the lowest bidder without regard to quality?) Mark Twain once said, “History does not repeat itself, but it sometimes rhymes.”
Are they going to pay in advance, or at the time of pickup? Why not? They already have the customer’s money. It’s worth noting that at least one large crowdsourcing site has, so far, consistently paid operators in advance.
There have been instances when customers thought they were booking luxury coaches with amenities and didn’t get them because the broker didn’t order, pay for or guarantee them. On occasion the customer finds it difficult to find anyone to talk to, let alone get relief.
In some ways the process is like buying a house, but in reverse. In this case the broker is working for the customer. There’s nothing wrong with that, but everyone involved should be aware it is the case.
At least one crowdsourcing website (Rally.com) has been represented at a number of industry meetings, building relationships with carriers and making the effort to address their concerns and needs.
There are a few other things to consider. If a bus line, website or broker proves to be reliable, you still have to determine how much of your fate you are willing to put in its hands. Are you willing to abandon marketing entirely and allow an outside entity to book all your work (and thus control your destiny)?
Bear in mind that tour operators and brokers have come and gone, and may evolve in either direction, so it’s important to monitor the relationship. It can be instructive to look up reviews on the Internet.
One potential pitfall of crowdsourced charters is that, even though passengers are all going to the same event, you may not be transporting a true “affinity group.” There is no group leader to smooth the way. All football fans are not the same.
Alternatively, working with these sites offers the opportunity to turn a small charter into a larger one. A small group of people wanting to travel to an event has the chance to attract additional participants, generating more business.
A second alternative is to build relationships with your clientele, pursuing business on your own, and use the Web services only to fill slow spots. Clearly, this method gives more control, but you incur the expenses associated with marketing and sales.
At least there’s no one between you and your customers. If you have drivers who are popular and frequently requested, that’s a consideration.
One industry observer pointed out a variation of this strategy. Some operators consciously avoid brokered work. They feel that, with the exception of crowdsourcing, it often just moves existing business from one carrier to another in a race to the bottom price.
These companies cede that work to rivals, then chase value-driven clientele, allowing competitors to wallow in low margins.
A brokered charter generally does not afford the coach operator the opportunity to win the customer permanently via superior service because the client’s communication has been with the broker.
A third variation is to recognize that nothing prevents a coach line from developing or buying software that does regional crowdsourcing. Find or create your own incremental business. Virtually every scheduled-line operator is doing online booking, with the efficiency that comes with that process.
Consider Uber. There was nothing to stop traditional taxi operators from doing the same sort of thing as Uber. Versions of the technology that makes Uber consumer friendly could have, and probably should have, been developed by cab companies years ago.
They chose not to because they were in a protected market and saw no need. They’re currently fighting a holding action just to survive. Paraphrasing Pogo, they have met the enemy, and it is them.
Marketing has not been a traditional strength of the motorcoach industry. In order to do well in the current environment, we need to put more energy and thought into that phase of the business. At some point Internet sales and marketing will impact each operator either directly or competitively. If you don’t control it, it will control you.
One size doesn’t fit all, and each operator will decide for itself where it fits along a “marketing continuum” that extends from complete digital dependence to total self reliance (depending on customer relationships to bring enough business to thrive).
Bear in mind that along with game-changing innovation a lot of ideas have come and gone. You may not be able to see the future or pick a winner every time, but you will want to carefully monitor the things you try.
Each company should know its strengths and weaknesses and make considered choices about what percentage of their sales and marketing they outsource based on their own skills, resources and vision.
Dave Millhouser is a bus-industry marketing consultant and freelance writer. Contact him by email at Davemillhouser@gmail.com.