Merchants New CEO Talks Mobility, Growth Strategy January 2018, By Mike Antich
Prior being named CEO of Merchants Fleet Management, Keegan provided stratgegic guidance to the company about its long-term growth strategy. Photo courtesy of Merchants Fleet Management. On Jan. 1, 2018, Merchants Fleet Management started off the year with Brendan P. Keegan as its chief executive officer (CEO). Keegan served in an interim capacity since Oct.1, 2017, after former CEO Glen Villano stepped down, having served in the position since February 2012. Prior to taking the top job, Keegan served as an advisor to the company’s board of directors, providing strategic guidance about the long-term growth strategy for Merchants. AF interviewed Keegan to learn more about his views of the fleet market and goals as the CEO of Merchants Fleet Management. Below are excerpts from the interview. Keegan is a five-time president and CEO having led multiple large, global private-equity backed companies. Over nine years ago, as lead of Worldwide TechServices, Brendan first met Merchants as a large enterprise client. AF: Congratulations on your new position as CEO of Merchants Fleet Management. You bring with you a very unique perspective by being an advisor to the company’s board of directors, where you provided strategic guidance. Second, you were a past fleet client, giving you firsthand experience of Merchants service capabilities and products. Keegan: I remember it was nine years ago when I had moved from Dallas to New Hampshire to take over management of Worldwide Tech Services, a technology services company with 10,000 employees and contractors in 150 countries. We had about 500 vans and Honda Civics. Merchants really taught us how to manage our fleet, they sent a team to our office to work with our fleet manager and truly partnered with us in managing our fleet in regards to maintenance, fuel, registration, and so on. Merchants really helped us not only manage the fleet well, but they also helped us get our internal fleet operations in line. At the time we signed with Merchants, I worked closely with (Chairman of the Board) Gary Singer and that is when the strong bond with Merchants began. I was a client for several years, and the relationship continued to build and most recently I joined the Merchants board of advisors and also delivered service to Merchants as a business partner.
At a Glance Calendar-year 2017 was a record year for Merchants Fleet Management across all of its divisions. The long-term strategy is to double the size of Merchants Fleet Management over the next five years. Merchants is looking to hire up to 100 people over the next two years at its New Hampshire corporate headquarters and its expanded Chicago location. Mobility will accelerate growth in the fleet industry, and Merchants believes that the companies that grow and succeed will be the ones that move with it. As a client, I had a chance to see the flexibility offered by Merchants. Where most leasing companies would have told us no, Merchants said yes. We really built a good partnership over those couple of years.
Over the next two years, I got to see firsthand the service Merchants offers. Merchants definitely helped us save a tremendous amount of money in things that we weren’t doing properly with our fleet. AF: Usually when people think of a change of leadership they think of a change of direction or change of strategy. Is that the case, or is it going to be steady as it goes? Keegan: I’d say it’s not the case, it’s not going to be steady as it goes; it’s going to be accelerating forward. Merchants has made a tremendous investment into technology and into the talent management of the company. The market has reacted very positively over the past 36 months to the company’s continued move upstream, without forgetting any of its downstream customers. The company strategy is to pick up steam and go at a faster pace than they’ve currently been going. That includes everything from raising capital to continuing to push technology. I’ve spent most of my career in the financial services and technology fields. I started as an engineer with an engineering degree. Anybody in the market that’s not looking at fleet management through a technology lens is going to be left behind. If we think of technology, we think of mobility. I think those that bring it to the forefront will have a chance to really accelerate. AF: Do you see mobility as one of the growth segments for your business? Keegan: Actually, it currently is a segment of our business. We’ve been doing mobility for years, but calling it a slightly different name. There’s one particular unit in the company, our short-term leasing product, which is all about mobility. What you’ll see is Merchants packaging it with a technology focus and bringing it to market as mobility. Right now that’s not how we necessarily talk about it. But, in the future, it’s how we will talk about it. What I find appealing about Merchants is it really built a great platform from which to accelerate its growth. They’ve done the right things in the technology area and they’ve done the right things with attracting the best talent. AF: Could you share with our readers some additional specifics about your strategy to achieve long-term growth plans are for Merchants?
Merchants Fleet Management is looking to hire upward of 100 people over the next two years. Photo courtesy of Merchants Fleet Management. Keegan: The long-term strategy is to double the company over the next five years. Our plan is to continue doing what we’ve been doing and that’s doing a great job of servicing clients and to do a great job of being flexible on the front-end with clients. We understand that no one is interested in a cookie-cutter approach. Each customer is looking for something that makes us a good opportunity for them. That’s where Merchants, and I say this as a former client, really excelled, and it was why I joined Merchants. That’s been a hallmark of the company. In doubling over the next five years, it’s continuing to do what it does best with clients: listening to clients, servicing clients well, adding additional services as they’ve been doing, and continuing to invest in best-practice technology that provides a new view into the fleet for customers. AF: What type of additional services do you foresee Merchants adding in the future? Keegan: You’ll see us bring our mobility offering to our existing fleet customers that we haven’t brought it to. We will continue to listen to our clients needs and develop services that they require. Our focus will be to provide more services to our existing clients and offer stand-alone services to new clients. We’re just going to push on doing them more often and faster. AF: Is mobility one of the major expansion areas that you envision for the company to achieve a doubling in size in the next five years? Keegan: Mobility will be expanding because if you listen to the market that’s what some customers are looking for. Merchants isn’t going to be immune to market trends. And one of the strengths of Merchants is the relationships they have with the clients, the intimate knowledge they have of the clients, and how when clients ask for something that’s a bit to the right or left, Merchants is extremely nimble in being able to offer it. As we look out over the next five years, we’ll see changes. Mobility will accelerate in the fleet industry, and the companies that grow and succeed will be the ones that move with it.
At Merchants’ size, we’re continuing to expand into larger fleets. I think what you’re seeing from some of the larger fleets is they’re looking for that unique value proposition. They’re looking for somebody that offers a bit more flexibility. That’s something we do really well.
Since 2015, Merchants has experienced steady growth of the total number of leased and managed units in its portfolio. Graphic courtesy of Merchants Fleet Management. AF: If you’re looking to double the growth of the company in the next five years, is there also going to be a corresponding increase in hiring of new talent to bring into the company? Keegan: There will be. That is one of the items that attracted me to join the company. In going through our 2018 business planning process, we’re looking to hire upward of 100 people over the next two years. We’re adding to our New Hampshire location and also expanding our Chicago location. We’re just going to continue to acquire the best talent that we possibly can to deliver a great service to our clients. What is nice is that I have the insight as a board member that we currently have some of the brightest minds in the industry on the team. Across our entire team, from our CFO to our VPs, to our general managers; everybody on the team has spent a significant portion of their career in fleet management. You could argue that I’m the outsider on the team. With some new strategic thinking and additional innovative thinking, it will allow us to leverage this industry experience and push forward. AF: About four years ago, Merchants purchased ALD Automotive USA. Is there an appetite within Merchants for additional acquisitions in the future? Keegan: We continue to look at acquisition opportunities. We have been looking at them in my short time back; we’ll continue to look at them. If they make sense for our customers, if they make sense for us, then we’ll pursue those. What is most important when considering acquisition is fit; will both organizations benefit, do our customer basses complement each other, do both companies have aligned philosophies. We want to have steady continuous growth and properly aligned acquisitions is part of that plan. AF: What’s your forecast for calendar-year 2018 in terms of the overall economy and the fleet market, in particular? Keegan: When we look at 2017 and just focus on North America, it’s been a very good year. We’ve had the best year in Merchants’ history, across all of our divisions. If I bring out my meteorologist forecaster side of me, I would expect the same next year with some acceleration in specific segments. In the past year, our short-term solutions, the Alamo division, our core fleet-management businesses have all trended up. They’ve been very strong. We’re continuing to add business with existing clients and continuing to add new clients. I think we have a greater opportunity in front of us than behind us. Over the past couple of years, we’ve had tremendous growth and that growth will only continue to move forward.
Photo courtesy of Merchants Fleet Management. AF: If you were to look at Merchants’ menu of services that are offered to its clients, what areas are the fastest growing and what areas are the most attractive to your clients? Keegan: I think areas that are most attractive, and the fastest growing is just the core fleet management of taking over fleets that are either currently owned or managed by others, but may not be managed in that flexible, customer-service oriented manner. We do very well in the mid-market and we’re continuing to move up. I think if someone is looking for high touch, if someone is looking for a partner that’s maybe a bit more progressive, then I think we do really well. I know when I was a client that’s what I was looking for. I was looking for somebody to be my business partner, knowing that at the core we were a technology company, not a fleet company, but we needed the fleet. I was looking for somebody to add value by having a consulting group, such as Merchants strategic consulting, that would tell us what we needed to do on our side to be more efficiently run, and to do a better job of managing our fleet. I think if a customer is just looking to outsource their fleet and isn’t looking for anything special, we’re probably no different than the next competitor, no better, no worse. If someone is looking for high expectations, technology-driven, innovative thinking, with a very close relationship with their leadership team right up through ownership, then I think Merchants is a company that a fleet professional should really take a look at. AF: What type of vocational markets find Merchants most appealing? I know you deal with a cross-section of industries and companies, but are there specific vocational segments that are attracted to you more so than others? Keegan: What I’ve seen as the trend in my time with the company is it’s not necessarily industry specific; it’s need specific. If someone’s looking for a bit more custom program, a high level of customer service, maybe being more important in the scheme of things as a customer, I think that has tended to be our stronger profile or more prevalent profile. As a board member, now CEO, every deal that I’ve looked at and said where are the trends, the trends are more to the high-touch customer looking for great service than it is industry specific. I can tell you as a customer a number of years ago, that’s how it felt to me. It felt as though we had that high touch. In my role as a board member, I continually saw that when we would hear from customers and get testimonials. That continued to be the mantra. I think service is something that’s really baked into the DNA of the company. It’s more about being the right fit. When I say fit, it’s more about somebody looking for a partner who is truly going to partner with them, and not just be their vendor, but their partner. That is more of what we tend to move toward and it continues to be a growing segment for us, versus somebody who’s just going to look for a vendor they can outsource to, sign off, and walk away. It’s really about that partnership and finding that right fit. AF: You have a tech background. What sort of enhancements or next generations for the Merchants’ fleet-management system do you envision? What types of investments are you looking to make in terms of technology? Keegan: You’re familiar with TotalView, our fleet management system. We currently have an 18-month roadmap for continued enhancements. We’ll continue to invest in that, we’ll accelerate some of that roadmap, bringing in functions earlier than we had planned; allowing us to continue to go upstream in the market. We’re also going to be continually tying in services, reporting, ordering, as well as mobility functions for our customers. Related: Merchants CEO Villano to Step Down
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