Fleets achieve positive ROI with fleet tracking technology
The uptick in fleet technology adoption from 2021 underscores the continued need for fleets to meet customer demands...
Read moreInflation, supply chain constraints, fuel price fluctuations and an ongoing labor shortage have created an environment where organizations must make every penny count. Fleet managers are facing more pressure than ever to make sure every investment promotes operational improvements and adding to the overall bottom line.
From helping to improve customer service, to increasing driver productivity and enabling better routing, fleet management software can play an integral role in streamlining operations. It can also significantly contribute to measurable return on investment (ROI), both in terms of the technology investment itself and cost savings that can be achieved across several critical business areas.
To determine true ROI, however, you must first define it within a fleet management system. Next, identify the key areas to measure.
ROI is a ratio between net profit and the cost of an investment. A high ROI means the benefits of a solution compare well to its cost. In fleet management, this is usually a calculation of the savings that a fleet tracking solution can help an organization realize, divided by the cost of implementing the solution.
Our 2022 Fleet Technology Trends Report revealed that 90% of organizations using a fleet management solution found it beneficial.
Also impressive, many organizations who had implemented the technology achieved a return on investment (ROI) in less than one year. This holds true for organizations across multiple industries:
While these figures underscore the value of investing in fleet management technology, there’s more to the telematics-driven ROI story. This year, organizations were forced to grapple with unprecedented challenges. Survey respondents clearly indicated that GPS tracking can have a positive impact on business operations and cost centers.
The data showed that most survey respondents saw increased improvement in critical areas such as customer service (48%), productivity (46%) and routing (42%). Respondents also reported decreases in fuel, accident and labor costs.
Fuel management
By using a fleet tracking system, companies saw a 10% average decrease in fuel costs. This was higher or lower when broken out by industry:
Accidents
With telematics, organizations reported an 14% average decrease in accident costs. By industry, the decreases achieved were as follows:
Labor
Post-GPS technology implementation, organizations reported a 10% average decrease in labor costs. Here are those decreases by specific industry:
Your organization can realize many of the same benefits, simply by adopting, or upgrading to, the right GPS tracking technology. While determining the ROI of a new fleet management software purchase can involve many factors, one formula you can use for calculating ROI in general is:
ROI = (Gain of Investment) – (Cost of Investment) / (Cost of Investment).
The key is recognizing what factors apply to your company for both gains of investment and cost of investment. Here’s a checklist we’ve created to help you determine what to consider in your ROI calculation.
Potential gains of investment
While the sum of the potential gains from a fleet management solution investment can be hard to determine, concrete metrics like average mpg and increased billable hours can be used to calculate total annual savings per fleet vehicle.
These are some of the potential gains you could see from a fleet management solution:
Cost of investment
These are the expenses you can expect to incur from a fleet management technology implementation:
Rising customer expectations, increased technical complexity and a competitive landscape can put stress on any organization. GPS fleet tracking can help you more successfully navigate these challenges and improve operational factors that affect ROI.
Request a demo at your convenience to learn more about how telematics can impact costs and efficiencies for your organization.
Tags: Cost control, Data & Analytics, Fuel cost management, Safety, Team Management
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