According to people who think about customer value, “the value of a product or service is only in its intended purpose.” Additional services create additional value for the users.
Sounds simple. Unfortunately, too many businesses have not internalized that value-added services differentiate the company from all others and create long-term customer loyalty. In this and future posts, I will describe how some well-known businesses are excitingly acquiring new customers and incremental new revenue from existing customers while cementing the relationships.
The Plan
In this post, I will look at U-Haul and differentiation (the company that rents those ubiquitous trailers, vans, and trucks). They have identified several services that will add value to their customers and increase their customer satisfaction with the company.
I also identified some other businesses for future posts, including:
- Monsanto, who now specializes in products to increase agricultural productivity, just announced a $1 Billion purchase of a data analytics company.
- USAA – the top-rated insurance company for military families.
- Caterpillar manufactures bright yellow construction equipment that implements superior technology in partnership with local dealers to help customers increase ROI.
Each example was selected for these reasons:
- They are major businesses
- They created unique services to increase customer retention and growth
- They keep doing more
- Not all the solutions required significant investments in technology
U-Haul
We have seen people, frequently college kids returning to school, towing one of their trailers, or driving their vans or trucks. And we realize they must rent and install trailer hitches to haul these boxes. But what else do they do? Following are some of the items they rent or sell, which I copied from their website:
- Local & Long Distance Moving: You control your move, and U-Box provides flexible delivery options and Moving Helpers to accommodate your needs. To supply helpers, U-Haul has set up movinghelp.com, where you can find and choose safe, affordable, and reliable movers in your area.
- Propane refill stations: U-Haul fills all your propane needs nationwide with the most convenient hours and locations. Please browse our store for propane tanks and heaters, propane parts and accessories, and grilling accessories.
- Dollies and furniture pads: Move like a pro! Save time and prevent damage to your belongings by renting our dollies, hand trucks, and furniture pads.
- Storage Pods and Self-Service Storage locations for longer-term storage.
What makes this a compelling story is that U-Haul took a relatively simple business, renting trucks and trailers, and thought about why people rent their stuff. They then identified all the other things needed for the move and made them available at the time of rental. This is an excellent strategy because:
- People move infrequently and probably don’t know all the stuff they will need. U-Haul takes care of that by showing (and selling) the items their customers will most likely purchase.
- When people get home with this stuff, they feel good about doing business with U-Haul. If everything turns out well, there is a very high likelihood that the customers will recommend U-Haul to friends.
- U-Haul uses all its’ channels to enhance the brand. And they advertise their oversized items like trucks and trailers. I remember seeing trucks with National Parks on their sides for many years. Isn’t it wonderful to have your moving billboards? And this little one seems so cool to me.
Financials
This story is interesting, but how does it affect the company’s financial performance? The following is from Yahoo Finance:
AMERCO (the parent of U-Haul) operates as a do-it-yourself moving and storage operator for household and commercial goods in the United States and Canada. It’s Moving and Storage segment engages in the rental of trucks, trailers, portable storage boxes, specialty rental items, and self-storage spaces primarily to the household movers; and sale of moving supplies, towing accessories, and propane. This segment also provides eMove, an online marketplace that connects consumers to independent Moving Help service providers and independent self-storage affiliates; auto transport and tow dolly options to transport vehicles; and specialty boxes for dishes, computers, and sensitive electronic equipment, as well as tapes, security locks, and packing supplies. This segment rents its trucks and trailers, as well as offers self-storage rooms through a network of approximately 1,490 company operated retail moving centers and 16,400 independent U-Haul dealers. As of March 31, 2013, this segment had a rental fleet of approximately 112,000 trucks, 90,000 trailers, and 34,000 towing devices. This segment operates 1,180 self-storage locations with approximately 445,000 rentable rooms comprising 40.0 million square feet of rentable storage space.
The Property and Casualty Insurance segment provides loss adjusting and claims handling services, as well as underwrites moving and storage protection packages, such as Safemove and Safetow packages, which offers moving and towing customers with a damage waiver, cargo protection, and medical and life insurance coverage; Safestor that protects storage customers from loss on their goods in storage; and Super Safemove, which provides rental customers with a layer of primary liability protection. The Life Insurance segment provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement, and annuity policies. AMERCO was founded in 1945 and is based in Reno, Nevada.
This chart shows the stock price since the company went public:
In the future
This post is the first in a series showing how strong companies have and are growing by offering value-added services that satisfy their customers’ needs. However, the business must consistently meet or exceed customer expectations to make this strategy work. Achieving this objective gets more challenging as the suite of services grows, but the results are worth the effort.
Download the white paper to read about the whys and wherefores of changing your business from product-focused to service-focused.
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create value using new services, please contact us or check out some of our free articles and white papers here.