« Back to articles

Top 5 ways a route planner can increase your profit margin

Discussing how route planning software like EasyRoutes can significantly enhance the profitability of delivery services.

Your all-in-one local delivery app for Shopify

Table of Contents

  • Introduction
  • How to Boost Your Earning
  • 5 Ways Routing Software Can Help You Make More Money
  • Consider EasyRoutes as your Route Planner

Introduction

Every business, including yours, should strive for a higher profit margin. However, many delivery services make only a small profit. What is the reason for this? Let’s dig in, and learn how a route planner should be a key piece of software when looking to increase your profit margin.

The most common reason delivery business make a small profit is is that many companies believe that raising sales is the only way to boost profit margins. However, that is incorrect.

If you want to increase sales, you’ll almost certainly need to hire a new salesperson. That means you must devote time, money, and effort to finding the best sales representative for your company. But all of that time and money spent does not always mean that you hired the right person.

Suppose you did recruit the proper person: a successful sales representative. Your sales are now increasing. To meet the growing demand, you’ll need to purchase new vehicles and hire new drivers. Your overhead then rises.

But what if you overestimate demand or sales drop off unexpectedly? You have new trucks, but no customer demand to pay for them.

Let’s have a look at the math.

According to a study conducted by the Stern’s School of Business at New York University, the typical American transportation company has a net income profit margin of 3.88 percent.

Let’s say your company is successful and generates $1 million in revenue. Your company only makes $38,800 in profit per year with a profit margin of 3.88 percent. Your efforts, investments, and accepted risk only yield about four cents on the dollar.

To continue with the same scenario, your sales professional does a fantastic job and boosts sales by 25%. Congratulations, your company’s sales have reached $1,250,000. Despite all of your extra effort, you’ll only be able to claim a profit of $48,500.

Is the extra $9,700 profit truly worth all of the extra effort and risk? There just isn’t enough of a profit margin to provide your company a competitive advantage.

Let’s have a look at additional driver. We’ll take a conservative approach and say this driver is willing to work for $50,000 in his or her first year. But, what vehicle will this new driver be driving?

So you’ll need a second van, which will most certainly cost more than $30,000. During the first year, a van consumes an average of $70,000 in fuel. Then there is scheduled maintenance, unscheduled repair, permits, licenses, and toll costs.

Your operating costs will rise in tandem with your sales. The increase in sales eventually leads to the breaching of barriers, such as the quantity of labor that your drivers can complete. As a result, now is the time to hire more drivers, purchase more vehicles, and so on. Oh, and if your fleet grows large enough, you’ll need to think about hiring mechanics as well.

So, here’s the reality: if your profit margin is already low, increasing your firm could easily eat into that profit margin, putting your company in the red.

Do you think you’ll be able to maintain your lower profit margins while boosting sales? Of course, you can concentrate on boosting sales, but at the end of the day, boosting profit margins is a better way to make money.

Because no matter how much your sales improve, if your profit margin is minimal, you will not make more money.

How a Route Planner can Boost Your Earnings

You may raise your revenues in a more straightforward approach by improving operational efficiency with products like a route planner app.

Many firms still use pen and paper to plan their routes, as well as legacy software (decades old) or free route planners like Google Maps or Apple Maps. As a result, their paths are naturally clogged. You simply cannot guarantee that the routes planned are 100 percent accurate.

Your drivers are frustrated by erroneous routes, which reduces their productivity. There will be delivery delays. This, in turn, has an impact on consumer happiness and income.

The hiring procedure is another reason why most firms do not have an efficient route planning procedure in place. They hire managers or executives who lack the necessary transportation industry experience. This results in no innovation and the continued usage of manual processes.

This results in a loss of income and earnings when compared to more efficient procedures. This is especially true in small, family-owned enterprises, when the owner has only recently stepped into the job and lacks the essential expertise or training.

When a route planner is in place, however, such situations are avoided.

It’s been shown that combining a delivery route planner with a smartphone GPS monitoring feature can increase efficiency by 30% or more while increasing profit margins to 5.447 percent. This implies you won’t have to incur more costs as a result of increasing sales. You can maximize your profit margin by using the same team and cars.

With the original $1,000,000 in sales as an example, you can profit $54,470. That means a 1.5 percent improvement in profit margin can boost net profit by 25%. Where does all that money go? That’s right, straight to your bank account!

So think about it. What impact would this have on your local, regional, and national competitors? What advantage will an extra 1.5 percent profit margin give you over your competitors?

Let’s look at some of the ways that planning and routing software can help you save time, effort, and money.

5 Ways a Route Planner Can Help You Make More Money

#1 A route planner saves hours when planning routes

One of the most major benefits of fleet route planning software is that it considerably reduces route planning time. You can design your journey in as little as 30 seconds!

When you’re used to painstakingly organizing your routes on paper, 30 seconds seems like a long time.

You simply need to upload a list of customer addresses that need to be visited. The intricate calculations will be handled by the vehicle route planning program, which will present you with an efficient route in about 30 seconds.

Most importantly, the planned route will take into account factors such as weather, traffic, one-way roads, sunrise/sunset, and other factors.

#2 A route planner helps drivers hit the road quicker

When manually planning routes, you must communicate the details of each route to each driver.

If you have a driver that is inexperienced with their delivery area, their work may become more challenging. You should make an extra effort to ensure that he or she understands all of the route’s minor intricacies. Otherwise there is a lot of wasted time for both you and the driver.

You can get around these issues by using dynamic route optimization software. You don’t need to explain routes to drivers because they can view them on their smartphones.

The GPS-generated map shows all of the route’s minor features, including each curve and road hazard. As a result, they won’t need to hold any team meetings because they’ll be given an optimized route before they even get on the road.

This saves you both time and allows the drivers to concentrate on becoming more productive for you.

#3 Route planners provide up-to-date and accurate route information

When creating routes, a map route planner takes into account all of the most recent revisions. As a result, your drivers are always up to date and have 100% accurate routes.

Even if you have to make adjustments in the middle of the day, a good route planner will change your driver’s route without affecting other customers’ predetermined drop-off timings.

You don’t need to feed new data about the routes into your GPS devices like you would with manual planning. You can even have a continual evaluation of route optimization with routing planner software. This maintains things in order and eliminates headaches for you.

Consider how much time and effort you could save if you did this!

#4 Increase driver visibility with a route planner

You won’t know where your drivers are at any given time if you use manual route planning. If they fail to deliver on time, you will learn about it only after receiving a client complaint.

However, with the help of planning and routing planner software that includes a GPS tracking capability, you can lessen your reliance on drivers telling you about their routes after; all the data is there for you..

You can track what your drivers are doing on the road in real time with a business GPS tracker. For instance, if they are speeding, spending excessive amounts of time at customer locations, making personal stops, and so on.

This allows you to maintain tight control over your drivers while also allowing you to provide constructive comments and gather supporting information in the event that you need to fire a driver.

#5 Resolve customer disputes with a route planner

Who like dealing with consumer complaints? No one. However, unfortunately, you may occasionally have to deal with angry customers.

It isn’t always the case that your company is to blame. Even if it a package was delivered on time, you may still get complaints accusing you of non-delivery or delayed delivery.

You can simply manage such complaints with delivery scheduling software. It includes all the information about the delivery, including the exact time the order was marked as delivered. A good route planner app also includes a Proof of Delivery tool, which protects your company from bogus complaints.

Once a delivery is made, your drivers can take photos of the evidence of delivery with their smartphones.

When a customer complains, you’ll be able to show them the facts in black and white. You’ll have written proof that the delivery was made on time using this information. This could come in handy if there are any disagreements later on. You will not only be able to resolve any client problems, but you will also be able to improve your client experience without any difficulties.

Consider EasyRoutes as your Route Planner

In a nutshell, instead of focusing just on increasing revenue, you should concentrate on enhancing the performance of each individual driver and your operations. Routing optimization software can assist you with this.

EasyRoutes turns your orders into optimized delivery routes you can share with your drivers or deliver yourself. The whole process takes seconds, as oppose to the hours it takes to manually plan routes. You can even generate more than one route at a time. Just select your orders, say how many routes you want it split into, and EasyRoutes does the rest!

EasyRoutes is a two-times Shopify Staff Pick. We are very well reviewed, well supported, and offer plans and free trials that support business of all sizes (including a free plan for business just starting out).

Learn more at Roundtrip.ai, or click the button below to get EasyRoutes on the Shopify App Store:

About Roundtrip

Roundtrip's mission is to equip every business with the software tools they need to deliver products to their customers in a delightful way. Thousands of Shopify merchants worldwide choose EasyRoutes to power their local deliveries across dozens of product categories, from meal kits and groceries to coffee, cupcakes, kibble, and so much more. Our easy-to-use route planning and delivery optimization app is certified Built for Shopify, a two-time Shopify staff pick, and the top rated local delivery app on the Shopify App Store.

"Excellent app that has helped our business a lot! Routes are much better organized and the Shopify integration has worked well so far."
Preggy Plus
Baby product delivery in Trinidad 🇹🇹
Designed to make deliveries easy