Fleet Management Software: When Will I See a Return on Investment?
Fleet management software has become a popular platform for many companies because of its impact on efficiency, productivity, and profitability. According to research, 64% of fleet managers used a fleet tracking solution in 2021 — an 8.5% increase from 2020. But one of the main questions fleet managers have when considering this type of platform is the ROI.
Just how long does it take to see a return on investment on fleet management software? That’s exactly what we’ll tackle in this post. In it, we’ll examine recent data to identify how long it typically takes to see a positive ROI, explain the specific benefits of using this technology, and look at a couple of real-life examples of fleets that have had great results after implementing it. Let’s dive in.
What the Data Says about fleet management software
A joint survey performed by ABI research and Verizon Connect made some compelling findings regarding how long it takes fleets, on average, to recoup their money and increase their profits after implementing fleet management software. They found that 86% of fleets see a positive ROI within a year or less, and 44% see it within six months or less. By these numbers, the vast majority of fleets (nearly nine out of 10) will get their money back within a year of using fleet management software. And nearly half see it even sooner, within six months.
This means there’s not a prolonged wait time, and most fleet managers can expect tangible results within a reasonable period. Further, 64% of respondents that participated in the study found fleet management software to be ‘very’ or ‘extremely’ beneficial to their business. While the exact results will vary from company to company, this technology has a solid impact across the board.
“These results demonstrate in hard numbers, the transformational effect using fleet management solutions can have,” writes Peter Mitchell, senior vice president and general manager at Verizon Connect. “Many companies have been financially stretched during the pandemic. Fleet management technologies allow a dramatic reduction in costs while also enabling companies to get more work done. Equally as important, these technologies also help prioritize safety, increase customer satisfaction, and promote sustainability through reduced fuel usage.”
The bottom line is that, in most cases, you can expect to see a positive ROI within a year max.
The Key Benefits of Fleet Management Software
Now that we know how long it takes to see a return on investment, let’s break down the specific ways fleets save. While the precise benefits differ from platform to platform and depend on the exact features, here are some core benefits of this technology:
Excessive idling is a serious problem for many of today’s fleets. It’s not uncommon for the average fleet vehicle to idle for two, three, or even four hours each day — something that’s not only bad for the environment but also profitability. After all, any time spent idling results in 0 mph. And if you have a large fleet with hundreds or thousands of vehicles idling for multiple hours a day, it can take a massive chunk out of your profitability.
One of the more notable features of fleet management software like VQ Efficiency is idle reduction, which significantly reduces the idle rate of a vehicle without harming its ventilation or heating performance. After a quick set up which can be done in just 30 minutes, it results in far less fuel being burned and less harmful gas being released into the atmosphere. Besides that, it also provides you with detailed information on the idle performance of fleet drivers so you can see who’s idling at an acceptable level and who needs to improve.
So, over time, you can curb inefficiencies and provide educational opportunities to dramatically cut back on idling and keep it at a bare minimum.
Another common issue that hurts fuel efficiency is speeding. Once drivers go beyond 55 mph, fuel efficiency begins to drop. And if you have a large fleet of drivers that consistently reach speeds of 70 mph or more, it can take a toll on your profitability. Not to mention, it presents safety risks as well. Although most fleets have strict guidelines set in their policy stating drivers shouldn’t drive beyond [X] mph, it’s naive to expect 100% of drivers to abide by those guidelines 100% of the time, especially when they’ve got tight deadlines.
Using a speed governor, another key feature of fleet management, is a surefire way to prevent speeding to improve fuel efficiency and keep drivers safer. After installation, it restricts the maximum speed a driver can go based on what’s stated in your fleet’s policy. So, if your maximum speed limit is 55 mph, you have complete peace of mind that drivers won’t surpass that. And the best part is that it eliminates the need for driver modification.
Third, there’s GPS tracking which allows for more efficient routing and rerouting, while also improving communication and tracking productivity. Most fleet managers will agree there’s a lot more to getting a driver efficiently from point A to point B than just selecting the shortest path on a GPS map. There’s a nearly infinite number of ever-changing variables including traffic congestion, road construction, vehicle accidents, and client hours – just to name a few.
With fleet management software, your drivers will always be provided with the optimal route based on current conditions. And when variables change, they’ll instantly be rerouted so they can reach their destination in the least amount of time while using the least amount of gas.
In turn, this can lead to a significant improvement in both productivity and profitability, which factors in heavily to getting a quick return on investment on fleet management software.
Two Real-Life Examples
Now that we know how long it takes companies to see a positive ROI on fleet management software and some of the key benefits, let’s look at two real-life examples of fleets that have had success with it.
First, there’s Frontier Communications, one of America’s leading telecommunications companies. After running a 15-month pilot program on 140 of their vehicles, they saw an 18.9% reduction in gallons of fuel consumed per hour in their newest vehicles and a 6-12% reduction in their older vehicles. This translated into them saving $390 per vehicle per year. And when full implementation of this technology is complete across Frontier’s 5,000 fleet vehicles, they anticipate $2 million in annual fuel savings.
The second example is the Port St. Lucie Police Department of Port St. Lucie, Florida. Two months after using fleet management software, they:
- Saved $40 per vehicle per month in fuel
- Reduced their overall fuel costs by 12%
- Reduced carbon emissions by 200 lbs.
Because of the positive results they saw, they now plan on unrolling a wide-scale implementation of this technology across their entire 300-vehicle fleet.
Boosting Profitability with Fleet Management Software
Because of the impact fleet management software has proven to have on profitability, as well as productivity and safety, it’s something a growing number of fleets are choosing to use. And by and large, most see a positive ROI within a short period of time. To recap, 86% of fleets see a return on investment within one year, and 44% see it within six months. While the exact results will vary, that’s a good baseline for what you can expect.