Working With Motor Clubs- Best Practices

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Working With Motor Clubs- Best Practices

The towing business has it’s ups and downs.  One day you’ll be swamped with high-quality cash paying customers and the next you’re stuck cleaning your truck–hoping the phone rings.

But is that any reason to work for the motor clubs?

Sadly yes, for most, it’s a good reason to sell yourself and your business short.  Because you gotta eat.

A brief history:

AAA was the first motor club to offer roadside assistance. The year was 1915 and back then the closest gas station attendant or local mechanic would use whatever resources were available to get the stranded motorist going again. Sometimes they would even pull the “horseless carriage” back to the shop if necessary. Due to the scarcity of qualified help the trade-off was a fair exchange and the service provider (mechanic/attendant) was paid market rates.  Flash forward 100 years and you find millions of cars traveling the roads and dozens of roadside assistance companies (motor clubs) peddling their wares to insurance companies, automobile manufacturers, and wireless phone companies.  As they compete to win huge accounts these motor clubs are now selling our services like a commodity- driving down our rates.

Put yourself in the shoes of the insurance company that offers roadside assistance. It’s an added perk or “freebie” designed to motivate a customer to do business with them. Imagine their dilemma.

To begin with- That insurance company doesn’t own a fleet of tow trucks, so…in order to be omnipresent, everywhere at once, they must contract with someone who can get the job done.  And to be able to back up what they say, so their customers will feel like they’re “In good hands” they’ve got to get these promised services at cut rates.

  • Here comes Motor Club 1- They display their network of towers and their track record of service working for other companies and propose to get the job done for $x amount per dispatched call.
  • And Motor Club 2- They do the same, suggesting that they provide better service- and promising they can do it for less than Motor Club 1.
  • Motor Club 3-  Has been around a lot longer than the other 2 and has developed a less expensive way to dispatch calls, an automated call center- Their proposal is less than the others.

The Insurance company executive is impressed with Motor Club 3’s proposal and signs a three year contract.

Now Motor Club 3 already has a lot of contractually obligated service providers so he’s not too worried about servicing the insurance company’s customers. But he is slightly concerned with his margins.  You see even though his system is automated he still needs to maintain a large staff of call receivers, dispatchers, computer engineers, office personnel, and managers to keep everything running smooth.  But, even though margins are thin, he’s not too concerned because he’s got other options.  Options which include cutting the rates paid towers or decreasing funding for provider support or just plain making it more cumbersome for the tower to get reimbursed, hoping they’ll just give up trying to get paid for additional services or mileage issues.

You can’t blame him- he’s got tough decisions to make.(sarcasm intended)

Because of the low-ball offer he was forced to make– in order to win the contract- He must now ensure that his company continues to make a profit.

And so must you. From the beginning you’ve got to count the costs associated with choosing to run motor club calls and remain stern in your desire to make a profit.

Don’t be fooled by a misrepresentation of the facts- Motor clubs will promise you:

  • Primary Service Provider status- then cut your area as they sign up 3 more PSP’s
  • Call volume that only materializes on snow-days when you’re already overloaded
  • Additional money for going out of your way- That you’ll have to fight 6 months to receive
  • They’ll tout Provider Benefits like uniforms and wireless phone discounts- that you can get on your own
  • They’ll suggest the prestige you’ll gain by working for them (allowing you to use their emblems) But the customer won’t remember you- just the motor club’s 800 number.

All this they’ll do for you if you agree to work at their rates.

While on the outset it may look like working for motor clubs is a bad way to go- there are a few things you can do to make them work for you.  Many longstanding companies have benefited from working with them and they’re successful for more than a few reasons.  Below are some of the things you can do to make working for motor clubs work for you.

  1. If you’re going to be contractually obligated don’t move an inch off your regular rates. Even though it may be a deal breaker and cause the motor club that’s courting you to place you on back-of-the-pack status- hold tight to your rates. This will allow you to make a profit whether you’re running one call or 10.
  2. Don’t be contractually obligated at all.  Many towing companies will only alert motor clubs as to their presence in a market rather than signing a contract.  The dirty little secret- motor clubs don’t want you to know- is that if they can’t find a tower in your area, who’s contractually obligated, they’ll go to the outside market and pay YOUR rates with a credit card.  So, in this scenario, if you are part of their contractor network you’re at a disadvantage.  So…Don’t be part of their network- but Do let them know you’re in town.  Some motor clubs have caught onto this and go one step further to circumvent our knowledge of their practices. They use Google or some other search engine to find area towers- make sure you’re listed.
  3. Only accept calls that allow you to make a profit- Examples would be if you’re already in the area, or you can do 2 calls for the price of one-or it’s on the way.
  4. Don’t take motor club calls after hours- Unless you can guarantee you’ll get YOUR after-hour rates steer clear of accepting calls after hours.
  5. Don’t allow the MC dispatcher to use psychology to get you to do what they want.  Have you ever received a call from a MC dispatcher stating that their customer “asked for you by name”? Their attempting to use something that you hold dear, your company’s name, against you.  They’re assuming that you’ll take the call because you wouldn’t want one of your competitors servicing YOUR customer. Don’t fall for it. It’s despicable, the depths MC dispatchers will go in order to trick someone into losing money.
  6. Never do anything extra-outside the confines of the Purchase Order- unless the MC gives you a second Purchase Order, pays you by credit card or the motorist pays you directly. Many may have difficulty with this one.  But the thing to remember here is that- While you may believe you’re building a relationship by going the extra mile and providing added services at no charge- the Motor Club clings to no such ideal. They don’t believe in loyalty.  To them you’re just another number. And when someone else comes along, who’ll do what you do for less, you’re out of the picture.

Building a business based on providing awesome customer service and memorable impressions is a strong foundation that can last many decades. But building a business on the faith that motor clubs have your best interest in mind is like building a house on sand, it can be washed away at anytime.  Fill needs and use motor clubs don’t let them use you.

 

 

About the Author:

Don G. Archer is the former owner of a 12 truck, 20 employee towing business. He now spends his time helping others build and start successful towing businesses around the country. Don is a multi-published author, educator, and speaker and is known as the tow-evangelist, www. thetowacademy.com Want to learn more? Email him direct at don@thetowacedemy.com

6 Comments

  1. LARRY BRADLEY October 27, 2016 at 12:45 pm - Reply

    HELLO, THIS LARRY’S GARAGE IN HANOVER MICHIGAN. WE ARE A TOWING COMPANY AND REPAIR FACILITY. WE ARE INTERESTED IN TOWING FOR OTHER COMPANIES. WE HAVE BEEN IN BUSINESS FOR 45 YEARS. LICENSED AND INSURED. WE HOPE TO HEAR FROM YOU ON ANY INFORMATION YOU CAN GIVE US. A FAMILY OWNED BUSINESS WILL TO TOW FOR YOU. THANK YOU, LARRY BRADLEY

    • Don G Archer October 27, 2016 at 1:57 pm - Reply

      Larry
      Good to hear from you, if there’s anything I can do for you please either send an email to don@thetowacademy.com or schedule a call on the “Work With Don” Page. Thanks again

  2. Al September 12, 2017 at 3:20 pm - Reply

    Thanks for taking the time and writing this , GEICO IS THE BEST , and Agero, which used to be cross country, is the worst. They’re just ass holes & BIG THIEVES, and Honk are the Idiots. 😂 I have so many funny stories about them ! But all in all f**k Motor clubs. That’s it.

    • Don G Archer September 13, 2017 at 1:39 pm - Reply

      Al, don’t pull any punches, tell us how you really feel:) There are very few motor clubs/insurance companies who truly want to work WITH tow company owners, they’d rather churn through the newbies, running their wheels off at rock-bottom rates. Thanks for your comment.

  3. Steven November 6, 2017 at 7:45 am - Reply

    I been w clubs 14 yrs never had a raise just more companies in my area now I’m stuck with truck payments help

    • Don G Archer November 6, 2017 at 9:42 am - Reply

      Steven
      Yes, sorry to hear about your troubles, give us your phone number and someone will give you a call, we can help.

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