Driving towards sustainable profitability: transportation service providers and customer relationship management

Purpose - The paper aims to highlight the focus on short-term profitability by transportation service providers in a notoriously cyclical business, often at the expense of developing customer loyalty. It urges transportation service providers to use customer relationship management tools and customer emotions to generate long-term profitability.Design methodology approach - The insights into the marketing aspects of the transportation services industry were developed based on interviews and discussions with more than 50 transportation industry specialists, representing service providers and buyers.Findings - The transportation services industry is a cyclical business and, in the post-2001 economic recovery, carriers have focused, as in previous cycles, on short-term profitability. They are not investing in customers offering potential future growth, and are dropping currently unprofitable customers in favour of those offering the most profit per lane today. Customer relationship management techniques, especially those based on customer emotions, can be used by the transportation service providers to generate customer loyalty, allowing them to grow with their customers and smooth out the peaks and valleys of the business.Research limitations implications - The research was constrained by limited access to quantitative data from the carriers and buyers and limited ability to publish data due to reasons of confidentiality.Practical implications - The paper highlights the need for transportation service providers to use customer relationship management techniques and generate and sustain customer loyalty to drive their long-term profitability.Originality value - Relationship-based marketing has been a neglected function for transportation service providers. This paper provides a rationale for the transportation service industry to adopt customer relationship management techniques, successfully used in financial and other services, and presents some CRM methods, especially those based on customer emotions.