Back in 2007 when I founded ASR Ltd,
My first purchase was 2 machines for a 5 year contract hire. The funny thing is, back then anyone that was worth there salt in business was screaming at me to invest in new. But to me, the thought of spending £40K, most of which I would have had to finance, was just to bigger risk or so I thought. So I went ahead and purchased 2 older pieces of equipment, and hired them on a 5 year deal to this prestige company that was very established. Funny thing is I can actually laugh at this now and wonder myself, what the hell was I thinking, it does as everyone was saying seem absolute madness that I would have done that.
So what happened!?
Well - On the first day they were dropped onsite both machines broke down. One with a battery issue the other with a control issue! I don't have to go any further and tell you the outcome with this hire, as, you could probably have a good guess yourself and not be too far off the mark.
This lesson taught me 2 things in business.
Firstly your product is a reflection of you and your business. Poor product = poor business.
And secondly - at that point, I myself couldn't believe that I was going to build a sustainable business by offering this type of service and professionalism, So if I couldn't believe it, then how could my customers?
So I sat down and evaluated, I asked myself what is it that we as a company need to offer to sustain the highest standards, and can we do it, doing the above? And what I found myself thinking was that in order for the customers to take our business seriously, we had to also take ourselves seriously, and do it right. And accept that I was going to have to put myself out of my comfort zone. Because what I could see was that not only did my business look bad at the point of them machines breaking down, but the customer had lost confidence also. And in his loss of confidence, I lost the order.
For the record. that particular order was for 5 years hire, with a net revenue of 20K per year. the machines new would have cost 40K. Looking back it was a no brainer. so in 1 hour, I thought and analysed, and I decided that, in any instance like the one above, that I was going to invest in new products as a company because that was the only way we as a business could guarantee the service we wanted to offer. And also going on from that, where it made financial sense to do so, In our general Hire fleet of Scissor lifts and Cherry pickers I was also going to do the same.
7 years on. We have 80% of our hire fleet being under 3 years old, and we have managed to keep a premium customer base for the best part of that time.
With a very high percentage, 93% by what our market research company has told us. as being overall pleased with the service and products we offer.
Customer acquisition is a very high cost in business - So in short.
The fundamental reason that we invest in a large amount of new equipment as a company, is because it allows us to retain a large amount of our customer base. Through providing confidence in the product and the services we provide from front to back. We also believe it reflects a image of professionalism and sustainability as a company.
Steve Riley - Managing Director. ASR Ltd