Telematics can yield all sorts of gains: reduced insurance, repair, and replacement costs due to increased safety; reduced fuel costs through driver coaching and proactive maintenance; avoiding fines by remaining compliant with government regulations; and lowered operational expenses and increased potential for revenue through optimized dispatching and routing — just to name a few. But how do fleets document all of those returns on their investment? Seven industry insiders share their tips.
Step 1: Establish a Baseline
Recording how your fleet is running before implementing telematics is the first step for documenting ROI. After all, you can’t truly track the impact of your solution without comparing the before and after.
“To successfully understand the ROI behind implementing telematics, managers should establish a baseline before installing and utilizing the hardware to compare against the metrics after the hardware has been installed for a few months; this comparison will help identify ROI,” said Sherry Calkins, associate vice president, strategic partners, Geotab.
Meghan Saunders, partner marketing manager, Fleetio, said tracking baseline data is critical for helping fleets show how telematics help solve the challenges they face. “You should establish your current costs and challenge areas, then document the data once you have your fleet management software solution, like Fleetio, along with your telematics provider,” she said. “This will likely show improvement in your previous challenges, resulting in enhanced performance and cost savings.”
Saunders said one Fleetio customer documented a 48% reduction in maintenance spend by comparing month-over-month maintenance costs before their investment in Fleetio and then again after their investment. “By having their maintenance records fully documented and easily accessible by their team, they were able to avoid over-spending on maintenance by performing PMs on time and ensuring their drivers were not performing PMs too frequently,” she explained.
Step 2: Choose Which Metrics to Track
Comparing against a baseline is great in theory, but how does it work in practice? An important part of that process is identifying which metrics to track.
“Data is plentiful and should be applied intelligently to the specific needs and context,” said Edward Montes, CEO, GPS Trackit. “For instance, a services fleet should have distinct metrics from a long-haul trucking fleet.”
The list of potential metrics is a long one, so it’s wise to track those that align with your key fleet goals. A few examples include:
- Accident rates
- Repair, replacement, and legal costs related to crashes
- Driver behaviors like speeding, harsh braking, hard cornering, or seatbelt use
- Insurance claims
Reduced Fuel Spend
- Monthly or quarterly fuel costs
- Idle times
- Average MPG per vehicle
- Customer satisfaction levels
- Trip length
- Completion time
- Labor costs
- Vehicle uptime
- Employee productivity
- Cost of an employee’s time per job
- Total cost of ownership
- Admin time
- Fines for non-compliance
- Vehicle fleet numbers
- Routing costs
- Maintenance costs
- Repairs costs related to breakdowns
- Cost of vehicle downtime per hour/day
“When you start to dig into all the metrics you can track to evaluate ROI, it’s easy to pick too many,” Fleetio’s Saunders said. “It’s important to measure what matters most to your organization.”
Step 3: Factor in Costs, Savings, and Revenue Gains
While you may document the dollars you’ve saved on things like fuel or maintenance, Saunders says there may be indirect costs to factor into your calculations as well. “Consider direct cost savings like avoiding fines and fees, but also consider ‘softer’ costs like employee time spent on tasks that could be automated,” she said. “When you audit what tasks your team is spending time on and what those tasks are taking them away from, you might uncover additional opportunities for return on your investment in a solution that reduces or eliminates the time they spend on those tasks.”
Documentation must also include all the costs associated with the solution, not just the initial investment. “When calculating their ROI, fleets will need to consider metrics like the overall cost of any hardware installation, monthly software charges, and any additional training or setup prices,” Geotab’s Calkins said.
Because telematics can also help fleets improve productivity and service to grow their business, it’s also important to factor in revenue gains. “If you have dialed in the metrics that matter, we have beautiful reports and dashboards that allow you to view, monitor, and share your ROI data for both top-line and bottom-line returns,” said GPS Trackit’s Montes.
Step 4: Set Focused ROI Goals
Just as you don’t want to waste time documenting an overwhelming number of metrics, John Carione, vice president of marketing for IntelliShift, advises fleets also home in on specific ROI goals.
“Fleets should avoid going too broad with ROI goals,” Carione said. “Setting specific, measurable KPIs will provide a better analysis of how different elements of your telematics technology make a real difference, in turn helping to identify areas for additional investment. This will also arm you with better insights to share with executives, as well as identify areas where initiatives could take place across different areas of the business.”
The goals fleets set could focus on immediate returns or long-term benefits. Geotab’s Calkins shared a few examples of ways fleets can focus on a specific ROI goal. “One proven ROI is the ability to increase profits with fleet utilization,” she explained. “Fleet utilization will result in optimized on-road driver productivity, improved fuel efficiency, and streamlined vehicle maintenance, allowing fleets to cut costs and boost revenue.”
Another goal may be to reduce miles driven, cut costs, and save time with improved routing. “With a telematics solution, fleets can record assets’ actual arrival and departure times at a job, which can help identify where a stop can be added throughout the day to an existing route, instead of adding staff or additional vehicles to help keep up with demand,” Calkins explained. “This is an example of increasing revenue without increasing costs, an excellent ROI.”
Kevin Aries, global leader of product success for Verizon Connect, said there are so many opportunities to optimize a business with telematics data that it can be easy for a business to get overwhelmed. “The common mistake is trying to tackle everything at once,” he said. “I recommend choosing one aspect of your business you want to improve, then focusing on measuring and improving that one area. It’s important for businesses to get together, understand or hypothesize what some of the problems are that may be holding back the bottom line, then rallying around that one particular area. It’s so important that businesses don’t try to solve a world of problems all at once. There is no company that will be able to solve everything at the same time.”
Step 5: Record the Findings
Once you’ve chosen the right metrics and goals, it’s important to present the information in a way that makes the ROI very clear and easy to understand. Fortunately, telematics and fleet management software can automate this process.
“The advantage of a real-time, platform-based telematics solution is that the documentation can be done very easily — and much of it automatically,” Intellishift’s Carione said. “Set KPIs to track the goals that matter most to you, and then leverage the insights gathered to make informed decisions across the business.”
Fleet management software can also integrate with telematics data to provide useful ROI documentation.
“Using fleet management software gives fleets the ability to instantly view reports and dashboards for actual status on fleet,” explained Will Wycks, senior vice president, product and marketing for Chevin Fleet Solutions. “Fleet management systems can pull all the data in, report against historical data, and see instantly where improvements can be made.”
Wycks cites the example of Chevin customer DC Water, whose telematics system feeds driver behavior information into their FleetWave software, allowing them to generate reports that highlight poor driving practices that lead to unnecessary fuel usage. “The system also sends automated ‘bad practice’ alerts directly to personnel and management on a daily basis while also linking to training programs to help support a culture of improvement,” he said.
Montes from GPS Trackit said ROI reporting doesn’t only have to be historical, as real-time analytics can help fleets make quick adjustments that further drive ROI. “Ultimately, fleet management platforms are analytics tools. Analytics should be deployed actively. This market is too focused on historic data and reporting rather than real time and near time,” he said. “Work with your providers to create alerts or data models that provide faster action to improvement (or predict improvement!).”
Verizon’s Aries said the days of number crunching and paper-and-pencil documentation are no more. “The beauty of a fleet management system is that the documentation doesn’t become necessary because oftentimes you’re reporting on something you can visualize with the click of a mouse. Verizon Connect makes it easier to get actionable insights by providing the tools you need to see how you can improve your business,” he said. “For instance, dashboards are popular because they are visual in nature (and can be customized if needed) and tell you everything you need to know about a certain aspect of your business. People don’t realize how easy it is to maximize ROI when all of the data is right at your fingertips.”
Aries said one Verizon Connect Reveal customer used reports to dramatically improve the company’s accident rate. Before telematics, 16 of the company’s 100 vehicles were involved in crashes, and the company paid more than $1 million in damages as a result. After bringing on Reveal, the fleet used weekly reports to monitor driver behavior and improve vehicle safety with timely maintenance. The following year the fleet had just two accidents. “Those results are super tangible,” Aries said. “That’s the kind of awesome ROI we love hearing and seeing from customers.”
Step 6: Document the Process
In addition to documenting progress on specific ROI goals, IntelliShift’s Carione says it’s also important to document how you arrived at that conclusion.
“One thing that has been consistent for many years, is that it’s still about people, processes, and technology. To document and gain mindshare across your organization successfully, all three are needed,” he said. “Make sure once the metrics and goals are set, they are communicated both verbally and in writing so everyone on your team has transparency and understanding. Don’t just document the metrics and KPIs — you should also document the process: How and when do you collect data; when it will be reviewed and at what frequency; what happens for underperformance; and how about overachieving?”
Step 7: Share the Findings
Documenting the ROI of telematics might give a fleet manager a personal sense of satisfaction, but the findings are most powerful when they’re shared with others in the organization, from drivers to leadership.
“Once ROI is documented, it’s important to keep this information on-hand and up-to-date for company meetings and training sessions to showcase the importance of the telematics solution,” IntelliShift’s Carione said. “From quarter-to-quarter decreases in fuel compensation to year-over-year decreases in insurance claims, this information is key to keeping your business running efficiently and highlighting the power of an intuitive fleet and safety management solution.”
Carione said driver training sessions offer one opportunity to present ROI data. This setting allows you to showcase how telematics can benefit drivers directly, like how many accidents have been avoided, or the number of hours saved through route optimization. Carione also suggests presenting ROI data, like the decrease in annual insurance claims and premiums or the amount of money saved through fuel optimization, at company meetings. “This showcases how the investment in a fleet and safety management solution is well worth the cost,” he said.
Fleetio’s Saunders says sharing ROI documentation can also go a long way toward organizational buy-in. “Let leaders, executives, and even your employees know where you’re seeing returns on investment in your software systems. Communication and transparency are important to create a knowledgeable and invested team,” she said. “If you’re presenting ROI data on existing investments, be sure to include data from before and after your investment so your organization can see the improvements.”
Aries agreed, saying Verizon Connect Reveal makes it easy to share ROI-related information, which helps unite stakeholders around a common goal. “In Reveal you can share and socialize data and insights really easily. With the click of a mouse, dashboards can be shared with other users in the organization. Reports can be automatically generated and shared with others in the company, too,” he said. “We’re trying to help companies build a culture around data and improvement by making it easy not just for one person to rally around a certain metric or part of their business, but for everyone to get there. The more you’re sharing with other people, the more you’re going to do.”
Step 8: Create a Feedback Loop
Once you’ve been able to identify ROI, use that as a new baseline to measure against and identify more ways to improve. “The most important thing to do is to take action on your findings,” Geotab’s Calkins said. “Now that you see where the savings are, continue to evaluate and drive further. Fleet benchmarking is essential to understand if you have continued areas for improvement.”
Demonstrating the value of a telematics solution is important because it helps fleets know they’re spending their budget dollars wisely. But creating a data/improvement/ROI loop can also offer a competitive edge in a challenging climate.
“Businesses are facing new and different challenges more than ever before,” Aries of Verizon Connect said. “The increase in deliveries, the rising cost of goods, supply chain delays — it’s been a tough year with a lot of interruptions. So to have an ROI focus, to think about what your business needs to do in order to stay ahead and be competitive and continue to grow, is so important.”
Originally posted on Automotive Fleet