On United Rentals' fourth-quarter and year-end results conference call earlier this month, Michael Kneeland pointed out some remarkable numbers in regard to the company's national accounts program. In a year in which rental revenue was essentially flat year-over-year, United Rentals' revenue from national accounts increased 15 percent, and in the fourth quarter, during which its rental revenue did increase by 10.4 percent, national accounts rental revenue jumped 20 percent. And that national accounts program is growing. United Rentals signed 1,300 new accounts in the fourth quarter from its eastern region alone.
RSC Equipment Rental, HERC, Sunbelt Rentals, Ahern Rentals, and anybody else large enough to have something akin to a national account program are all growing those efforts. It's a natural evolution for the rental industry. It obviously makes sense for larger customers. If they are doing business in Mobile, Akron and Seattle, why not have one point of contact to take care of business for them, to get them what they need? What would you rather do — call one point of contact and get your needs met in various cities, or go to the Yellow Pages or Internet and start searching and comparing rates and asking around who is reliable and maybe getting recommendations?
Not only is there a convenience factor, but a lot of those rental companies offer rebates or quantity discounts so that the more business a customer does with them the better deal they get. But that doesn't preclude smaller local and regional players from doing some business with those larger companies. You can carve out a niche if you play your cards right, and this month's cover story on Aerial Access Equipment shows how it can be done.
It bears stating that these national-accounts-type programs expand and add to the professionalism of the rental industry. They were an inevitable step in the industry's evolution and they provide important services that expand the reach of the rental industry. But that doesn't mean there is no place for the little guy at the table.
A lot comes down to relationships. There's something that a locally born and bred entrepreneur offers that is unique. He might have grown up in the community, so when he goes to visit a contractor, he might be talking to a guy he went to school with. Their kids might play little league or soccer together or go to school together. Torrence talks about spending years as a rental salesmen calling on jobsites. Now he has his own company and finds that some of the owners or decision-making executives of some of the contractors his company does business with were the guys he used to call on. There's a comfort level there that cannot be underestimated.
Another point is patience. Aerial Access' vice president of sales and marketing Scott Gaudet told me of customers he spent a few years cultivating, trying to find the right person. Just offering a cheap rate is probably not going to win over a company that has a national account relationship. But offering a particular service that their rental providers aren't offering may make a difference. OK, you may be getting your boomlifts from a national company, but do you need a carrydeck crane? We have them. Do you need some repairs on any of the units you own? We can do them. Is there some other item your provider doesn't have? Maybe we do.
It's all about finding a niche. And not being too proud, in some cases, to pick up the crumbs. I've heard that expression more than once in this industry. One fairly prosperous rental company owner told me how he knew very well when a big job opened up in his city that the main equipment rental contracts would go to the majors. “I just hang around and pick up the crumbs,” he laughed, doing what I just described, doing repairs, providing specialty items, available 24 hours a day to pick up the pieces. He “picked up the crumbs” well enough to have a fairly good-sized profitable local company, to make a nice living and be able to employ 30 loyal solid employees who worked hard and loved what they do.
Mechanical expertise is a great quality for your company to strive for as well. I'm not saying the national companies lack this, but that you need to make it an absolute strength of your company if you want to have a chance to compete. You need to have something that you do better than anybody else and if you aren't sure what that is, you have to figure it out and turn it into your strength.