Quipli is a U.S.-based maker of advanced software that lets independent rental companies accept customer orders, receive payments online, manage inventory, track equipment rentals, and much more.
Every now and again, a customer will end up damaging your equipment. While most renters will care for it and use it properly, customer-incurred damage is something that can and will happen.
In some cases, damage might occur in a way where the customer isn’t really at fault. But in other cases, the damage is clearly due to a mistake on the customer’s part, and they can reasonably be said to be at fault for it.
It’s important for rental companies to prepare for this contingency, and to have processes and policies in place to bill the customer fairly for the damage they caused, so that you won’t have to eat the entire repair or replacement cost.
Tips for planning ahead for cases of customer-incurred equipment damage
No matter what type of business you run, there’s always a risk of customer-incurred equipment damage. From conducting regular inspections to having the right insurance coverage, these tips will help you be ready for any unexpected situations that may arise.
Create and implement a clear, explicit damage waiver
The specifics of damage waivers can vary among different rental companies, but the core intent is the same. You’ll want a legally airtight document, which customers need to sign when they rent from you, that makes it clear and explicit what kinds of damages the customer is responsible for, and how you will go about invoicing and collecting for those damages if they occur.
This is something where it’s best to consult with a contract attorney. By signing it, the customer is agreeing to pay to cover damage to your equipment for which they are at fault (with what constitutes “at fault” delineated in the waiver). Having a well-drafted damage waiver in place not only protects your business but also sets clear expectations for customers, reducing the likelihood of disputes.
Consider implementing a security deposit
Up-front security deposits are another way to help protect your business financially from potential repair costs. A security deposit is generally returned to the customer at the end of the rental period, but withheld in the case of damage.
This approach serves as an incentive for customers to handle the rented equipment carefully and responsibly, as they are aware that they will forfeit their deposit if any damage occurs during the rental period. Security deposits can also help cover the cost of repairs or replacements, minimizing the financial impact on your business.
Timely communication is absolutely essential
The COVID-19 pandemic brought serious issues concerning the availability of replacement parts for heavy equipment. During that time, a lot of rental companies had machines that were hard down but unable to be repaired. Even now, there are still some lingering supply chain issues ongoing.
Planning ahead and keeping replacement parts available ahead of time can help you ensure timely repairs on hard down machines, to get them out on rent and generating revenue faster without having to wait on parts – multi-month wait times for a critical machinery part could mean a lot of lost revenue on that piece of equipment.
To avoid this situation, establish a relationship with reliable suppliers and manufacturers. Maintain an inventory of commonly needed replacement parts, such as filters, belts, hoses, and electrical components. This proactive approach will help minimize downtime and ensure that your equipment remains in top condition.
Implement a well-defined damage waiver policy for customers
If a piece of equipment is returned with significant damage – for which the customer is clearly at fault – it’s important to discuss it with them immediately. Machines should be undergoing inspection no later than 24 hours of being returned by a renter. However, the best inspection strategy is to inspect with the customer still onsite so that your staff can communicate in person any damage that was created. Offer to have a quote ready on the repair cost for them within 48 hours, 72 at most.
What you don’t want to do is wait days – or even a week or longer – to inform the customer about the damage. Prompt communication helps maintain transparency and trust between you and the customer, and it also prevents any misunderstandings or miscommunications that may arise from delayed notifications.
Document everything with pictures
Photographic evidence is a key way of establishing and proving that damage to a piece of equipment was incurred by a customer. Quipli’s software allows you to store and upload these images for future reference if needed. Be sure to take a series of clear, high-quality photos both directly before, and directly after, each rental period.
That way, if you need to invoice a customer for damage and they try to dispute it, you have solid proof of the damage in question. Customers also often back down from disputing an invoice for damages if you’re able to show them that you have that kind of proof – preventing legal headaches.
How to invoice a customer for damage to your equipment
A customer has returned a unit of equipment with severe damage, incurred by that customer’s own mistake or negligence. What happens now?
Take photos immediately of the damage, to compare against the “before” photos.
Before you create a work order and send the machinery in for repairs, make sure that the nature and extent of the damage is fully documented photographically. This step is crucial in establishing a clear and accurate record of the equipment’s condition, which will help you justify the repair costs and make it easier to resolve any potential disputes with the customer.
Confirm which customer was the last to rent the damaged equipment
With Quipli’s software, when you create a work order for damaged or hard down equipment, you can easily click through to view the last invoice number associated with its most recent rental period. This allows you to quickly identify the responsible party and begin the process of invoicing them for the damage.
Determine a fair amount to bill the customer to cover the repair cost.
The terms and conditions associated with this should be clearly and explicitly delineated in a damage waiver that all rental customers will sign when doing business with you. Ideally, you’ll want to charge such that the full cost of the repairs are covered, so you’re not paying out of pocket and losing money due to the customer’s mistakes.
There are a number of ways you can go about determining amounts – some companies, for example, will specify something like “3-5x the total rental cost” as the damage penalty. It’s important to be fair and transparent with customers about these charges, as this will help maintain goodwill and minimize disputes.
Communicate to the customer that they are at fault for damage, and that you will need to bill them for the cost of repairs.
Centralized, clear communication is important. It’s a good idea to make sure that the relevant communications are all in writing – e.g., via email that you can save and back up – in case of a legal dispute in which those materials might be needed.
Provide the customer with a signed copy of your binding contract specifying that they will be liable for damages, as well as copies of the photos you took of the damage. This kind of evidence can help prevent pushback from the customer, as it demonstrates the legitimacy of your claims.
The right software can help you streamline your invoicing process for customer equipment damage
You can do this using Quipli’s billing and invoicing software tools, which also integrate with Quickbooks Online. Make sure to itemize the repair costs and include any relevant documentation, such as photographs and the signed damage waiver, to support the charges. This will help the customer understand the rationale behind the invoice and reduce the likelihood of disputes or non-payment.
Properly handling equipment damage and effectively invoicing customers for repairs is a critical aspect of running a successful rental business. By implementing clear policies, maintaining open communication, and using tools like Quipli to document and manage the invoicing process, you can protect your business from financial loss and maintain positive relationships with your customers.
Conctact us today to learn about Quipli’s billing and invoicing features, as well as service/repair features to streamline your operations and ensure a smooth, professional experience for both you and your customers.
In the competitive world of equipment rental, maintaining your assets and minimizing downtime is crucial to your success. When it comes to planning for equipment damage, being proactive can save you time, money, and headaches down the line. This article will guide you through practical steps to prepare for equipment damage and maximize your rental equipment’s lifetime, ensuring you stay ahead of the competition and provide exceptional service to your customers. Let’s dive into the key strategies for effective equipment damage planning.
Equipment damage is inevitable, so it’s essential to plan ahead for it.
No matter how well you maintain your equipment, it will eventually need repairs at some point during its lifetime of operation. By being aware of the possibilities of damage, ensuring your equipment is insured, implementing a solid damage waiver policy, and stocking replacement parts ahead of time, you can be prepared to address and repair damage to your machinery promptly. This article will explore these strategies in detail and provide insights on how to maximize your rental equipment’s lifetime.
Rental equipment insurance coverage can help you cover repair or replacement costs
Make sure you have adequate coverage for the relevant types of insurance for the equipment that you rent out to customers. Comprehensive rental equipment insurance can cover repair or replacement costs in the event of damage, theft, or other unexpected incidents.
When selecting insurance coverage for your rental equipment, it’s essential to consider factors such as the types of equipment you rent out, the risks associated with their use, and the potential financial impact of various incidents. Work with an experienced insurance agent to develop a customized insurance plan that addresses your specific needs and concerns. This may include coverage for general liability, property damage, equipment breakdown, and business interruption.
Having the right insurance in place not only provides financial protection but also gives you peace of mind, allowing you to focus on running your business effectively. Furthermore, it demonstrates professionalism and responsibility to your customers, fostering trust and a positive reputation within the industry. Proper insurance coverage can also help mitigate disputes with customers regarding damaged equipment, as it ensures that your business is prepared to handle such situations without significant financial strain.
Types of insurance coverage for heavy equipment
Commercial auto insurance: Applicable to many types of motor vehicles, including some kinds of heavy construction equipment. This type of insurance provides coverage for physical damage, liability, and other expenses related to an accident or damage involving a vehicle.
General liability insurance: Protects your company’s assets in the event of a lawsuit. It covers property damage, personal injury, and other liabilities arising from your business operations.
Inland marine insurance: A type of property damage insurance that covers certain items or contingencies that other kinds of insurance may not. It can cover equipment during transportation, at job sites, or in storage.
Property insurance: This can apply to a wide variety of different equipment your company owns and uses – highly customizable, can cover situations like employee damage or theft. This insurance covers damage to your property due to events like fire, theft, vandalism, and natural disasters.
Worker’s compensation: Protects your employees and helps ensure that you’re able to cover workman’s comp in the event of a workplace accident. It provides medical benefits and wage replacement for employees injured on the job.
Umbrella and excess liability coverage: An addition to standard liability insurance that can help expand the amount of coverage you’re able to get. It provides additional protection when the limits of your underlying policies have been exhausted.
Loss of use insurance: Can help you recover some of the lost revenue if equipment is out of commission for repairs due to damage. It compensates you for the income you would have earned if the equipment had been operational.
Property in transit insurance: Covers damage to equipment during shipment or transit. It provides protection for your equipment while it is being transported between locations or job sites.
Replacement cost coverage: Helps pay to replace a piece of equipment that was stolen, or was destroyed entirely and cannot be repaired. It covers the full cost of replacing the equipment with a new, similar item without factoring in depreciation.
It is essential to work closely with your insurance provider to ensure you have the right mix of coverage that meets your specific needs.
Stock up on commonly needed replacement parts ahead of time, to make sure you have them on hand when you need them.
The COVID-19 pandemic brought serious issues concerning the availability of replacement parts for heavy equipment. During that time, a lot of rental companies had machines that were hard down but unable to be repaired. Even now, there are still some lingering supply chain issues ongoing.
Planning ahead and keeping replacement parts available ahead of time can help you ensure timely repairs on hard down machines, to get them out on rent and generating revenue faster without having to wait on parts – multi-month wait times for a critical machinery part could mean a lot of lost revenue on that piece of equipment.
To avoid this situation, establish a relationship with reliable suppliers and manufacturers. Maintain an inventory of commonly needed replacement parts, such as filters, belts, hoses, and electrical components. This proactive approach will help minimize downtime and ensure that your equipment remains in top condition.
Implement a well-defined damage waiver policy for customers
A damage waiver on rental equipment clarifies the customer’s responsibility for any damage caused to your equipment. Being clear and upfront about the customer’s responsibility and your method of collecting damages if necessary will help protect your company. A well-defined damage waiver policy should include the following elements:
Clear definitions of the types of damage covered by the waiver
Explanation of the customer’s financial responsibility for damages
Procedures for reporting and documenting equipment damage
Timeline for returning damaged equipment and initiating repairs Providing customers with a comprehensive damage waiver policy will not only protect your business but also help establish trust and transparency in your customer relationships.
Always take high-quality photos before and after renting out a piece of equipment. These images will provide vital evidence if a customer is at fault for severe, expensive damage to your equipment, and you need to bill them or take them to court.
Additionally, maintain thorough records of equipment inspections, maintenance, and repairs. This documentation will help you track the equipment’s history and determine if any recurring issues need to be addressed. It can also help you identify patterns in equipment usage or customer behavior that may lead to damage, allowing you to implement preventive measures.
Find a good service manager and put strong internal processes in place
Hiring a skilled and experienced service manager is crucial for companies that rent out heavy equipment. Strong internal processes will keep hard down equipment moving smoothly through the maintenance and repair process and avoid booking out equipment that isn’t usable yet. The service manager plays a vital role in optimizing equipment performance, reducing downtime, and maintaining a high level of customer satisfaction. Their expertise in handling equipment maintenance ensures that your rental fleet is always in top condition, ready to meet the needs of your clients.
One way to facilitate this is to use software like Quipli to track and manage soft down and hard down equipment, and where each piece of machinery is in the maintenance or repair process.
Implementing advanced software solutions such as Quipli not only streamlines the tracking and management of equipment but also enables the service manager to have better visibility and control over the entire maintenance workflow. This, in turn, leads to increased efficiency, reduced equipment downtime, and improved customer satisfaction.
Quipli makes it easy to create, track, and manage work orders for your equipment
Quipli’s suite of service and repair features allows you to streamline communication between departments and improve overall efficiency, monitor equipment usage and identify trends that may indicate potential issues, simplify the process of scheduling maintenance and repairs and ensure that all necessary documentation is easily accessible and up-to-date. Utilizing software like Quipli can help you:
Manage and track ongoing work orders easily
Track progress over time
Mark machines as “soft down” or “hard down”
View current status and work order histories
View detailed machine hour breakdowns, including which hours come from internal activities vs customer rentals
View the last invoice number associated with damaged equipment to facilitate billing the customer for damages
By incorporating software solutions into your rental equipment management process, you can save time, reduce errors, and improve the overall effectiveness of your operation.
In summary, planning for equipment damage and maximizing your rental equipment’s lifetime requires a multifaceted approach. By ensuring adequate insurance coverage, stocking commonly needed replacement parts, implementing a well-defined damage waiver policy, and using software like Quipli to track and manage equipment status, you can minimize downtime and maximize revenue.
Unlock the Full Potential of Your Rental Equipment with Quipli
Don’t let equipment damage and downtime hinder your business’s success. Discover how Quipli’s equipment rental software can help you streamline your equipment management process, reduce downtime, and ensure your rental equipment remains in top working condition.
Sunbelt Rentals is one of the largest full-service equipment rental companies within the U.S. with over 900 locations, 550,000 units in their rental fleet and over 15,000 employees.
Every independent equipment rental company is going to find themselves competing against Sunbelt Rentals in their city. So – what can you learn from their marketing efforts and how can you apply those to yours?
Our marketing experts at Quipli took a deep dive into Sunbelt Rentals to analyze their growth channels and identify growth tactics that you can apply to your business.
SEO is core to every equipment rentals marketing strategy and Sunbelt is no different. As a national player in the equipment rental space, Sunbelt has made a great effort to improve its SEO over the last decade and this has played a huge role in their success.
Using SEMRush – a digital marketing intelligence tool commonly used in the SEO/SEM industry – we took a look into Sunbelt Rentals.
At a bird’s eye view as of 4/19/2023, Sunbelt Rentals has developed a very strong SEO strategy. Sunbelt ranks for around 154.6 thousand keywords and has an estimated 784 thousand visits each month. If you were to purchase this traffic each month using paid ads, SEMRush estimates this would cost 1.2 million. That’s a lot of free traffic.
Non-branded traffic makes up 57% of their traffic while branded search is 43%. For the volume of traffic, this is an exceptional amount of non-branded traffic for Sunbelt Rentals.
SEO 101: What is the difference between Non-Branded Traffic and Branded Traffic?
This refers to website visitors using keywords that do not include “Sunbelt Rentals” to find Sunbelt’s website. For instance, someone may be searching “excavator rentals” and finds Sunbelt rentals. Branded Traffic would include all variations of “Sunbelt Rentals” where users were actively searching for Sunbelt Rentals.
Sunbelt’s top 10 landing pages
These are Sunbelt Rentals top landing pages with their estimated traffic per month. Because Sunbelt Rentals has locations all over the U.S, they are able to rank at a national level.
Sunbelt’s top category page (mini excavators) brings in an estimated 20 thousand visitors a month:
What does Sunbelt do well for SEO?
Sunbelt is capitalizing on a mass amount of SEO traffic to their website – so let’s take a look at some of the strategies they are taking to do this.
Sunbelt has optimized its most important page types. This includes their homepage, categories and product pages so that they are targeting important keywords, are easily navigable, and include the information customers need to make their decisions – though we do see more that they could do.
SEO 101: Considering Page Types
There are 5 common pages types for SEO for an rental equipment business:
1) Your Homepage: An essential page. If you have a single location, this should target your primary city.
2) Your Location pages: pages for your different locations. These are essential for ranking in different cities
3) Your Category Pages: The categories for your different product types. If you have multiple mini excavators, you should have a category page where customers can view all of them
4) Your Product Pages: The product page for each equipment rental. This is where users should be able to select availability and add this product to their cart
1) Sunbelt’s Homepage
Sunbelt’s homepage is simple to navigate, defines their brand and business well and links out to their most popular category pages, products and blogs.
Plus, Sunbelt is using their homepage to strategically feature timely products and value propositions that are relevant to their customers. In this case, this is a combination of indoor cooling, environmental consciousness and the importance of air quality from a health code perspective and how this ties into Sunbelt Rentals ventilation services.
2) Sunbelt’s locations pages provide the essentials
While there is more that they can do with their location pages, these provide all of the essential ingredients for a customer looking to understand the details of their local Sunbelt Rentals.
This includes:
A Map + Get Directions link
Phone number / email
Address
Hours of Operation
Some content about what the business offers
Links to their most popular categories
3) Sunbelt’s category organization is clean.
One look at their menu and you can find a clean category structure that allows you to easily select categories and subcategories of equipment.
One of the most common problems we see with equipment rentals is a lack of organization from a category structure. Either there is no overarching category for earth moving equipment (excavators, skid steers, etc) or this equipment it lumped into one category that is poorly named and non-descriptive.
4) Sunbelt has a strong product page.
Sunbelt does a great job with its product pages and providing plenty of information for a customer to make a well-informed decision.
Sunbelt features a product description for every product that’s around 5-8 sentences of concise information
Sunbelt has a specifications on common questions, makes, models and more on each product page
A clear way to book a product with online rental rates cleanly visible
What can Sunbelt Rentals do better?
Sunbelt Rentals’ national branding and overall authority plays a large part in why its Mini Excavators page ranks well. We can tell this because the page is missing a few core SEO optimizations that you can do fairly easily.
1) They’re missing an H1 headline.
Adding an H1 to your webpages with your primary keyword focus (in this case, “mini excavator rentals”) is an easy win for improving your rankings. For example, United Rentals is doing this with their category pages.
2) Sunbelt Rentals doesn’t add any additional body content
Adding additional content to your category pages can also improve your keyword rankings. United Rentals does this well.
One example of adding content to your category pages might be adding a few paragraphs about the products you feature:
Another option is answering frequently asked questions related to the product category.
2) Sunbelt’s Location Pages Do Not Have Geotargeted Headlines
Each of Sunbelt Rentals location pages do not mention their city of operation in either their headlines. This page would ideally be titled “General Equipment & Tools in Littleton, CO.” This is an easy win for them to gain more local visibility – and is something you need to be doing for your homepage if you are a single location business. If you have multiple-locations, then you need to ensure the names of the cities you are located in are prominent on your Location pages.
What you can do to improve your SEO?
Based on these learnings, these are actions you can take to improve your SEO in order of importance:
Provide all of the essential information a customer needs to contact you on your website in your footer, on your location pages if you have multiple locations, and on your contact page.
Use headlines to accurately describe your categories and products. Your skid steer rentals category page should be named “Skid Steer Rentals.”
Use your homepage to showcase your top categories, products, and why customers should rent from you.
Ensure your product page is easily navigable, you have specific information about your rental products, and that selecting equipment and the date that your equipment is available is simple for a customer.
How is Sunbelt using Google Ads to grow its business?
Every large equipment rental business uses Google Ads to bring in more customers due to their targeting, cost-effectiveness and bidding adjustments, and ability to easily measure results.
United Rentals and Sunbelt are no different.
Over the last two years, United Rentals has spent about $130k/month with Sunbelt around $81k/month. Their budget noticeably slows down in the winter while they increase spending late Q1 and Q2 to meet the growing demand of the industry.
What is Sunbelt Rentals largest Google Ad campaign?
Using SEMRush, we can view Sunbelt Rental Ads, what types of keywords they are targeting, how often people search for keywords, and how many keywords each ad is targeting.
Their largest ad targets about 100 different keywords and is being used nationally – they are using it to target cities all over the U.S. The ad copy mentions them nationwide and they use several keywords such as “equipment” and “tool rentals” that are generic, yet applicable to their customers.
And – a few of the keywords that they are targeting with this ad. Notice that they are targeting broader keywords such as “tool rentals” and “equipment rentals” as well as specific rental product keywords such as “mini skid steer rental” and “bulldozer rental.”
How can you apply Sunbelt Rentals’ tactics in your own Google Ads?
Developing your own Google Ads campaign is going to be necessary if there is a nearby Sunbelt Rentals.
However, you don’t need a massive budget. Remember – Sunbelt is targeting customers nationwide. Your budget will naturally be smaller, but that doesn’t mean it can’t be effective. By targeting keywords specific to your region you can focus only on local customers and your smaller budget can make an impact.
What to keep in mind as you begin creating your Google Ad campaigns – weave in value propositions about your business that you know Sunbelt Rentals cannot match. Mention that you are locally-owned and independent, for example.
How is Sunbelt Rentals using paid social media advertising?
Along with their SEO and search marketing strategies, Sunbelt Rentals also uses paid social media ads to target customers and boost their online brand awareness on Meta’s platform: Facebook and Instagram.
Sunbelt Rentals’ ad campaigns consist of a variety of social media display ads, sharing Sunbelt’s distinctive and eye-catching visual branding.
In each campaign, you’ll find a mix of different ad types. Some are positioned higher in their sales funnel featuring content to peak customers interest – not necessarily to buy as in the case with their Most Rented Winter Tools and Equipment ad.
These ads feature links to Sunbelt’s helpful guides and blog posts, offering useful information about topics like improving airflow and climate control at commercial job sites, or maintaining high indoor air quality. They also cover often-timely subjects of interest to their audience, like reducing the carbon footprint for commercial job sites, or issues like current shortages of much-needed HVAC equipment.
Other ads are more directly product- and sales-oriented, linking out to landing pages for Sunbelt’s products and services. But, these ads also follow the strategic play of painting the picture that Sunbelt Rentals is the place to go for expertise – as exemplified by the last 3 words of this ad: “with expert advice.”
Building visibility around guides and blog topics is a strategic play that Sunbelt is making to portray itself as the go-to resource for all things equipment rental. And, there’s no reason why you cannot do the same for your market.
Be your region’s go-to expert for all things equipment rental
Be like Sunbelt, but for your region. You have the upper hand of being able to target your region at a hyper-local level that will be unlikely to be targeted by a national incumbent like United Rentals.
For example, create a blog content strategy that targets your market and build awareness through social ads. If you reside in a market such as Denver, you could create a blog about “The Most Useful Winter Equipment Rentals for Denver Homeowners” and run ads targeting Denver homeowners. As a local business, you know what your region needs in a way that Sunbelt cannot.
Where Sunbelt might call themselves the expert, you can label yourself as the “local Denver expert ready to help.” By positioning yourself as the local expert and creating helpful content specific to your region, you can set yourself up as the go-to for all things equipment rental.
Grow your business with Quipli
Quipli is an all-in-one equipment rental software solution. Quipli’s software integrates your inventory management, scheduling & booking, accounting, payments and more so that your business is seamless.
Quipli also offers digital marketing solutions to help grow your rental business.
Key performance indicators (KPIs) are an essential part of any business in any industry, and equipment rental is no exception.
In the spirit of the old adage “what gets measured gets managed,” you first need to know exactly what you want to measure, and why those specific KPIs are the most impactful. Is it driving revenue? Customer happiness? Retaining customers and expanding with them? Winning new ones? Managing cash flow and optimizing asset utilization?
So here’s the scoop on KPIs – how they work, what your options are, and which ones you need to be tracking if you’re in the equipment rental business.
A Quick Refresher: What Is a KPI, and How Is It Used?
The fundamental principle underlying key performance indicators (KPIs) is that you need something measurable. You can’t estimate or just feel things out in the world of business.You need to know what works and what doesn’t if you’re going to succeed.
KPIs are the specific data points you’re using to measure your success. While revenue is a huge part of it, there are other things along the way that you also need to measure to make sure you’re able to make that revenue.
In equipment rental, margins can become tight, and breaking even on equipment is important. It’s a unique industry with unique needs.
Whether you’re looking into equipment rental KPIs, regardless of the equipment type, the common factor is that the factors that they represent are going to be solid and measurable.
So what makes for a good KPI, one that’s worth measuring?
The right KPIs will have certain characteristics:
Owned. People in your equipment rental company need to be responsible for overseeing, measuring, and refining KPIs. It needs to be obvious who to talk to if you need something relevant to them.
Understandable. Everyone working at your equipment rental company needs to understand what KPIs you’re using, and how they’re measured.
Actionable. You need your folks to know what to do to influence your KPIs. It needs to be something you can take action on.
Measurable. This is a big one. It has to be something you can directly measure and quantify. It can’t be something soft and vague.
Leading. Good KPIs help you predict and enhance how well your business does in the future.
Timely. You need to make sure you can keep the data for every KPI consistently up to date. (Our software is designed to help you do this.)
Strategic. KPIs need to be tied to something very important – your vision for your equipment rental business. How do you want to grow? Where do you want to be in five years? Do you want to expand your fleet? To grow and hire more employees? To make more money?
These are the most important aspects that, for your business, will help you figure out the right KPIs. A good KPI should meet these criteria.
KPIs aren’t just about where your company is right now. They’re about where you want to go.
The Three Key Types of KPI for Equipment Rental
There are three subtypes of KPI that are important for you to track:
Core business KPIs
Sales and marketing KPIs
Customer satisfaction KPIs
All of these are important for making sure your equipment rental business is successful. We’re going to break these core KPIs down category by category.
What are the Top 5 KPIs for an Equipment Rental Business?
The nature of a rental business model brings its own unique challenges. You have to manage things like availability and booking, not just inventory alone. Margins can become strained if you’re pricing your equipment wrong, or struggling to track your equipment.
Because equipment rental has these specific elements involved, you need to measure different things than a company that outright sells its product, or a business that offers a service rather than a product per se.
Here are the top KPIs that tend to bring the best results in the world of equipment rental:
Return on Investment
Net Profit
Time to Break Even
Stock to Rental Ratio
Income to Maintenance Ratio
Now, there are also other KPIs to track, which are more geared towards your sales and marketing efforts. You’ll read about those a bit further down.
The five above are the most important ones for your core business operations.
Whether you’re renting out heavy construction equipment or general tools and light equipment,, these are the ones that really matter.
Here’s a rundown of each of these KPIs – what they mean and why they matter.
Return on Investment
Return on investment (ROI) is a KPI that sees use across pretty much any industry, including yours. Why? Because it’s important. Indispensably so.
ROI is pretty simple: it’s the profit from your investment divided by the input costs. It demonstrates how much money you’ve made compared to how much you’ve spent.
This tends to be the primary KPI for just about any kind of business.
So how do you guarantee a good ROI in the rental industry? One major way you can do this is by focusing your fleet on high ROI equipment.
If you’re getting a low ROI on a piece of equipment, it can mean one of two things:
You’re not charging enough for people to rent it, and you need to raise the price.
The market is saturated, driving down the prices.
Market saturation can happen with all kinds of different equipment. It’s too widely available, with too many people offering it, and the high competition drives down the price. This means it takes too long to break even on the cost of the machine.
Look at ROI on each type of equipment you’re renting out. Look at what the market landscape might be like. If an item has a consistently low ROI, it might be time to discontinue offering it, and focus on the items in your fleet or inventory that are actually making you money.
Net Profit
“Profit is its own reward.” – the Ferengi aliens from Star Trek.
Optimizing your cash flow and profit leads to long term viability and success. This is as true for equipment rental as it is for traditional retail, a restaurant, or a law practice.
Time to Break Even
How long is it taking you to break even on the cost of a piece of equipment you bought?
How many times do you need to rent it, and at what price, for you to make your money back on what you spent to buy it?
If you’re not pricing your equipment right, or you’re buying at too high a price, you may need to reassess how you’re investing in that equipment, and what the market for it looks like.
One way to reduce the time to breaking even on equipment is to strategize carefully about who you’re buying it from. For most pieces, there are multiple companies that make the same kind of product. For example, both John Deere and Caterpillar offer very similar equipment.
Make sure you’re getting the best deal on what you’re buying, so it doesn’t take as long to recoup the expense.
Utilization Rate
Utilization rate is another KPI that you have to track in equipment rental. Maximizing time on rent is a critical path to running an efficient, profitable rental company. .
What it means is this – how much of your inventory is on rent at any given time?
It’s the total number of pieces of equipment in your inventory, divided by the number that are typically rented out at any time.
You want this number to be low. If it’s too high, that means that you have excess inventory.
Utilization rate is incredibly important in the equipment rental business. But it’s especially integral to heavy construction equipment, where downtime is even more costly given the higher price points and dollar value of equipment.
Equipment rental businesses have significant maintenance costs. It’s just part of this kind of business. Any kind of equipment – boats, bulldozers, bounce houses, any of it – undergoes regular wear and tear when your customers use it.
The income to maintenance ratio shows whether your revenue can cover your maintenance costs. It’s your income divided by your maintenance costs over any period.
One effective way to offset your maintenance costs is to charge customers extra – in the construction rental space, this is often 10-15% on top of the total – in exchange for a damage waiver.
That extra income can help you build a buffer fund that can cover the cost in a worst case scenario.
Especially for equipment that gets rented out long-term, it’s essential for the customers themselves to perform routine maintenance and keep your equipment in good shape.
If they aren’t doing that, or something goes wrong with a rental for that reason, this ratio can get out of hand fast.
Another way to help mitigate maintenance and repair costs is to make sure you document the condition of each piece of equipment, with photographs, both before and after each rental period.
That way, if they didn’t pay for a damage waiver and they’re at fault for serious damage to your equipment, you have photographic proof that they damaged it – smoothing out the process of sending them the repair bill.
These are the most important for core business operations. Now let’s talk about sales and marketing.
These five are The Big Ones. But there are others as well.
What Are the Top 5 Financial KPIs in Any Rental Business?
Debt to Equity Ratio
The ratio of debt to equity – that is, the total amount of debt that your company has, divided by your total equity – is a key indicator of how much financial leverage you have.
For equipment rental companies, an ideal ratio is generally considered to be around 3% or lower. This, however, is relatively uncommon. Many rental companies report ratios totaling as much as 50-70%.
Realistically, you may want to consider taking action if your debt to equity ratio exceeds around 20% or so. The more aggressive your company is about financing business growth with debt, the more open it becomes to the potential for financial problems.
Aging Accounts Receivable
This KPI refers to the number of accounts that have long payment times, and ideally, this metric should remain as low as possible.
A reliable invoicing solution like Quipli can help you with managing timely invoicing and payments.
You can also implement financial measures to help offset these problems, such as late payment fees, strict terms for financing, a discount for early payments, and other measures to help lower this metric.
Rental Rates & Revenue Generated
This metric assesses the total equipment revenue for a specific time period – often daily – versus the total amount of equipment revenue paid and rented during that time frame.
This helps benchmark results by day, month, quarter, and year.
Financial Utilization
Financial utilization is a very important metric for rental businesses’ finance and accounting departments. You want your equipment out on rent enough to generate adequate revenue to cover its expenses and loan debt.
That said, though, too high a utilization rate can also increase the equipment’s general wear and tear, driving up your maintenance and repair costs.
As an example, if you have a $25,000 piece of equipment that’s bringing in $23,000 per annum, it has a financial utilization rate of 92%.
While rates do vary depending on what kind of equipment you specialize in renting, typical recommended targets for financial utilization are around 65% for national enterprises, and 100% for small local rental businesses.
What Are the Top 5 KPIs for Sales and Marketing in An Equipment Rental Business?
For your core business to succeed, you need to make sure people know about you. You use sales and marketing to achieve that goal.
Your business needs customers in the first place. These KPIs are how you make sure you get them.
Change in Rental Business Value
Is your business worth more now? Take your total assets minus your debts at any point and compare them at different points in time. Has your business been growing consistently?
In the equipment rental industry, one of the biggest things you need to account for is depreciation. This is especially true in the construction rental industry, or any kind of vehicle rental.
Construction equipment, boats, and similar items depreciate quickly over time – just like cars do.
This needs to be accounted for in your financial calculations. The more time passes, the lower the ROI gets.
Equipment Rental Growth
Rental growth is a key sales and marketing KPI for the equipment rental industry.
It’s measured by taking the difference in revenue between this year and last year. Then, you take that number, and divide it by last year’s revenue.
If your business is doing well, you should get a result of at least 10%.
Customer Acquisition Cost
Your customer acquisition cost shows how much you’re paying to get new rental customers.
Any advertising and marketing incurs costs. This also applies to your sales team and your marketing agency.
You need to make sure that your sales and marketing campaigns and strategies are bringing in more money than you’re spending on them.
To calculate CAC, divide your total costs for sales and marketing. Then, divide it by the number of new customers that you’re successfully getting from those channels over a specific period of time. (Like a per month, per quarter, or per annum.)
This will give you your cost per new customer that you’re getting.
How much are you spending to bring in each new customer who rents from you? Are they spending more than you’re paying to get them to rent from you?
Further on, we’re going to talk more about business-to-business construction equipment rentals. This involves different methods of acquiring customers than most business-to-customer rentals, like wedding equipment rentals or kayak rentals.
Marketing revenue attribution is the measure of how much of your marketing spend goes to securing which equipment rental sales you’re making..
You can determine this by finding out how each customer found you and dividing the totals by total market spend.
So let’s break this down. Basically, you’re looking at the data from each type or channel you’re using for marketing and sales, and seeing which ones are bringing in the most revenue because they’re leading to most rentals. You’re comparing your spend for each campaign to the revenue it produced.
This makes sure you’re not spending your budget in the wrong places.
Traffic-to-Lead Ratio
So you’ve got marketing campaigns going. People are visiting your website. You’re getting clicks and traffic. That’s great!
But it’s not the whole story. You’re an equipment rental business, not a media company.
Traffic is worthless unless it converts.
You don’t just need people to visit your website. You need them to actually rent something from you.
Take your site’s total traffic, and divide it by the number of actual equipment rental sales that result from them.
This should be a low number. If the number is high, that means that people are visiting your site, but they’re not converting into actual customers.
These KPIs are the key to honing your marketing efforts. Next comes customer satisfaction.
Tracking these KPIs can help you bring in new leads. But what about returning customers?
What Are the Top 5 KPIs for Customer Satisfaction for Equipment Rental?
Customer satisfaction is unbelievably important for equipment rentals.
When you’ve got a customer that needs to rent a piece of equipment, there’s a strong chance that at some point, they’re going to need it again.
You want them to come back to you – not go to a competitor because you didn’t give them a good enough customer experience.
Keeping your customers satisfied means more return business, so keep a close eye on these customer satisfaction KPIs for equipment rental companies:
Customer Lifetime Value
Customer lifetime value refers to how much revenue you expect from each customer. A satisfied customer will come back when they need you again.
Divide your total revenue by your total number of individual customers. (All of them ever, not just the new ones.)
This gives you an average for how much money each customer usually spends with you. Are they coming back repeatedly to rent from you again? Or is it a low number suggesting that most of your customers are a one-and-done?
If you’re renting to businesses, not consumers, then CVC plays an even bigger role.
Social media. It’s been here for 15 years, and it’s not going anywhere. Businesses need a real presence there.
Your social media traffic numbers can indicate how your customers react to your business, and these values are available through any social media platform.
Now, social media engagement is a complex thing. A lot of companies try to measure traffic, or followers, or other stuff that doesn’t matter. These are called “vanity metrics.”
You could have 500,000 followers and get nothing but crickets.
You want people to like your posts, to comment on them, to share them. You want people to actually engage and talk back and forth with your brand, not just hit “Follow” then forget about you.
Satisfied customers tend to add you on social media. And guess what, if those satisfied customers are sharing your posts with their friends, they’re probably going to reach out to you next time they need to rent a piece of equipment.
Net Promoter Score
You can measure this KPI by asking customers how likely they are, on a scale of one to ten, to recommend your business to a friend and average the results.
One way to implement this is by creating a customer satisfaction survey to send to people after they’ve rented from you. (Quipli can help you do that.)
If you’re B2B, you might also consider having one of your sales reps call customers individually, to ask them for feedback about their experience.
Once you have enough of this information to work with, the next step is to analyze it. Compile your findings into a report.
Are customers happy with their rental experience? If not, why not? Are there any common recurring customer complaints or issues?
This information can be extremely valuable in helping your business grow and improve over time. If there’s anything you need to work on or fix, this is a great way to find out about it.
Customer Reviews
You can find customer reviews for your business on multiple platforms, and tracking those scores is a great way to gauge overall satisfaction
All of us have, at one point or another, decided against buying something from a company because they had a lot of bad reviews. The last thing you want is to be that company.
You generally want to make sure your total review score across various platforms – Google searches, online directories, your website – is at least a 4 out of 5.
Customer Churn Rate
This rate is the percentage of your customers who are first-time customers. A lower churn rate indicates more repeat business.
If your churn rate is too high, you might need to change what you’re doing to make sure that people come back again.
With that said, though, the hard reality of the business world is that you’re always going to have churn. You could be the best business in your entire industry, the creme de la creme of equipment rental, and you’d still lose the occasional customer.
You can work to lower your churn rate, but it’s never going to hit zero.
What you can do to offset churn, though, is to set goals for your sales team. Have them bring in a set number of new customers per month or per quarter. You need an influx of new customers to replace those that leave.
So far, we’ve mostly been talking about equipment rental in general. But if you’re renting out backhoes and bulldozers, well, that’s a totally different matter than someone who’s renting out kayaks or party equipment.
If your business rents out heavy construction equipment, this section is for you. This sector comes with its own unique needs, and there are some additional KPIs that you need to be measuring.
A big one is utilization. The more that a given piece of equipment rents out, the more money it makes for you. If it’s just sitting there in your warehouse and no one’s using it, all it’s doing is eating up your money.
Another thing that differs is how you approach customer acquisition cost. Customer lifetime value is much higher with B2B construction equipment rentals than it is for B2C companies.
We’re going to talk about each of these in detail.
Utilization Rate: A Key Factor for Construction Equipment Rental Success
Your utilization rate is basically a measure of how many of your machines are currently on rent, versus how many total you have in your fleet.
You don’t want that number to be too high, with equipment collecting dust in a warehouse instead of out there making money for you. But, you don’t want it to be too low, either.
A good utilization rate to shoot for is 70-80%, with 75% being about ideal for construction rentals.
If your utilization rate is lower than 70%, then you’re not bringing in enough customers relative to how much equipment you have. Solving this could mean bringing in more customers through better sales tactics, or it could even mean selling off equipment that doesn’t have high enough demand to justify its cost.
But if it’s over around 80% or so, that’s also a problem.
Keep in mind that not all of your equipment is just sitting in storage.
Some of it might be under repair. Let’s say 5%, as an example.
Other equipment might be recently off rent, but undergoing routine maintenance before it can be rented out again.
That leaves 15% total that’s out of commission temporarily. This needs to be accounted for.
Too high a utilization rate means that you might not have a piece of equipment on hand when someone calls you asking to rent it. They’re not going to wait, so you essentially have to turn them away.
And the last thing any business wants to do is to turn away paying customers.
New deals can come in fast, especially if you’ve got a good sales team. A 75% utilization rate is perfect for keeping plenty of equipment on rent and making money, while still having enough inventory for the new customers that come in.
Fleet Age
Another KPI that’s relevant for heavy construction equipment rentals is fleet age – the general age of the vehicles in your rental fleet, in comparison to when the units first went into service.
This metric plays into maintenance for used and refurbished construction equipment, as well as for determining the value of your fleet in light of depreciation over time.
Fleet Apportionment
This KPI measures the partitioning of your fleet into a “base fleet,” and then an “other fleet” category.
“Base fleet” should generally refer to equipment that has rental activity across multiple time periods (e.g. weeks, months, quarters, or years). “Other fleet” generally includes changes to your equipment fleet – that is, units that were added, or that were sold off or eliminated.
This can give you meaningful insight into changes in revenue, and can also help you improve utilization data by restricting to your base fleet only.
Customer Acquisition Cost: The Power of a Great Sales Team
When people talk about customer acquisition cost, they’re referring to both marketing and sales. But the type of business you’re running, and the kind of customers you have, makes a big difference in where and how you’re acquiring those customers.
Let’s get real: you’re not landing that $2 million deal because someone saw a Facebook ad, or read a blog post on your website.
At that kind of level, in B2B construction rental, you’re looking at using knowledgeable professional sales representatives to cultivate real relationships with prospects and customers.
Paying a top-tier salesperson salary and commission brings a higher CAC than, say, running some Facebook ads. This cost, however, is well worth it if you have a strategic sales process in place.
Customer Lifetime Value: Building Long Term Customer Relationships
In construction equipment rental, you need to build long term relationships with satisfied customers who keep coming back to you.
For B2B rentals, you’re looking at a much higher CLV than with B2C rentals. You’re building a relationship with another business.
If you lose a customer – due to messing up with a rental, or your equipment failing unexpectedly – that means you’re losing a lot of money.
When you’re working with contracting outfits as a B2B renter, you need to be extremely responsive to customers. Sometimes, if something goes wrong, you’ll lose a lot less money if you take a short-term loss and do something like compensate them or pay to fix the problem.
Losing a customer in this industry is something you absolutely want to avoid.
What Software Tools Should I Use to Manage KPIs?
The most important aspect of implementing KPIs is to track them accurately and reliably.
A good way to do that is to use software that’s specifically designed to manage every aspect of your equipment rental business.
At Quipli, that’s where we come in.
Tracking by hand, juggling multiple apps and spreadsheets, can be exhausting and hard to maintain. Quipli puts everything in one place, from inventory tracking to digital marketing and business growth.
Everything you need for your business to thrive, all in one convenient, easy-to-use app you can access from anywhere.
With Quipli, tracking your KPIs has never been easier.
Touch base with us any time to find out more about what Quipli can do for you.
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