- Signing Bonus – The most common incentive structure in the fleet management services marketplace is a signing bonus for new providers or a retainer bonus from incumbents. This is essentially upfront funds, either in the form of a check or an account credit, granted upon contract execution. Depending on the size of your fleet, we have seen these bonuses upwards of a million dollars. Certain Fleet Management Companies (FMCs) offer signing bonuses to buy the business, typically, your program fees from these providers will come at a slightly higher cost than their competition. Upfront funds are a great solution if you a looking to achieve hard-dollar savings as soon as possible.
- Services Rebates – Rebates on particular service programs are also common. Generally, these rebates apply to participation in a fuel card program and by driving maintenance services to national account maintenance & parts providers (think Michelin, Pep Boys, Jiffy Lube, etc.…). These rebates are assessed as a percent of the periodic spend with the participating providers and are typically applied as an account credit on a quarterly basis. Some FMCs are open to more or less frequent credit disbursements, whatever will work for your firm. If your current fuel card solution does not come with an incentive, ask for one! The same goes for your fleet maintenance program, make sure you are getting the most for your money by asking for a national accounts rebate. Service agreements more than a few years old may not include these rebates.
- Annual Loyalty Incentives – A less common and maybe more unique incentive is the annual loyalty bonus. These bonuses are applied each year on the anniversary of the contract execution date. They are commonly tied to a certain level of annual unit acquisition and/or the annual average number of units enrolled in service programs, but we have also seen them offered without these caveats. This type of incentive helps reduce the cost of service program enrollment throughout the duration of the agreement. If your firm prefers open-ended contracts, this may be an ideal incentive for you.
- Unit Discounts – If you are enrolled in your FMC’s leasing program, the FMC acts as the dealership to provide your fleet with new vehicles. This means the automobile manufacturer (OEM) extends dealership guaranteed revenue to the FMC (Holdback, Floorplan, Distant Delivery, etc.…), you can ask for this back. There two primary unit discount structures: flat fee/percent and triple net. The flat fee/percent structure allows the FMC to keep all OEM funding and applies either a flat dollar discount or a percent based on the invoiced cost of the unit as a reduction in capital cost. Triple net pricing essentially passes through certain portions of the OEM funding and typically comes with an additional credit. For example, you may negotiate holdback, floorplan, and a $50 credit as a reduction in capital cost per unit. The triple net scenario provides more clarity into the funds the FMC is receiving from the OEM to sell/lease units to your firm.
You should have at least one of the aforementioned incentives included in your fleet management contract. With the ever-changing list of service providers and technologies available, make sure to ask for a creative approach to fleet management service program incentives.
Source One has assisted multiple clients in various market sectors to achieve savings and execute contracts with the best-fit service partners. We have the market intelligence and tactical know-how to get you the perfect solution tailored to your firm’s needs. Our team members are consistently posting about fleet topics, check out our recent posts on selecting light fleet automobile manufacturers, tips for fleet sourcing, and tips on OEM fleet sourcing. Contact our fleet management sourcing experts to learn how you can optimizing your fleet budget!