The American Rental Association (ARA) forecasts the equipment rental revenue to reach nearly $57.7 billion in 2023. IMARC Group expects the global construction equipment rental market to grow at a CAGR of 5.59% from 2023 to 2028. With a spike in the industry's development, you, as an equipment rental business, must be aware of the major forces driving the growth this year.
We at To-Increase have almost two decades of experience in offering rental-specific software embedded in Microsoft Dynamics 365 to streamline businesses in the equipment rental industry.
Based on our experience, we will share the top three trends you can expect in 2023 as an equipment rental company, so you can proactively gain a competitive edge
The equipment rental industry trends in 2023
Trend 1: Digitization and digital transformation
Cloud-based digitization will be worth $1 trillion by 2030, according to McKinsey, and is becoming a higher priority for the equipment rental industry. Digital transformation with a rental-specific ERP solution that can handle your operations end-to-end isn’t optional but necessary in today’s world.
Some digitalization trends of 2023 to keep an eye out for are:
i) Equipment tracking and internet of things (IoT)
Equipment tracking helps you stay updated in near real-time on the location and usage of your equipment. You can use barcodes, unique identifiers (UIDs), serialization, or GPS to track the location and movement of your assets in combination with IoT. Monitoring the exact usage (including any unauthorized usage) enables you to bill customers for using the equipment for additional time.
IoT and serialization also help with theft tracking, as the unique serial codes can be used to track and prove ownership of products.
ii) Artificial intelligence
Data is essential for an equipment rental business to thrive. Many equipment rental companies have loads of data available from each piece of equipment rented. You can apply machine learning and artificial intelligence technologies to this data to recommend related items to their customers, thereby increasing overall sales.
iii) Mobile connectivity
Ensuring your assets are always fit for hire, with timely repairs, checks, and upgrades, quickens the entire rental process – and mobile connectivity provides just that. A mobile app that connects your field engineers and technicians with access to data anytime and anywhere helps with proper equipment maintenance, anticipating breakdowns, timely transport, managing schedule changes, utilizing geo-navigation facilities, and reducing paperwork.
iv) Analytics based on KPIs
Advanced analytics can offer you industry-specific KPIs and BI capabilities to track the performance of each piece of equipment you’ve rented. You can leverage analytics to get insights into asset performance, utilization rates, booking trends, and more.
These analytics help you make calculated predictions about the demand and support data-driven decisions to increase the accuracy of your financial planning and budgeting.
Trend 2: Newer and repositioned business models
The equipment rental market, just like any other industry, is constantly evolving. To stay competitively agile, you must align better with the market trends.
Some major disruptors that are introducing new business models in 2023 are:
i) Time-based consumption
The pandemic forced unexpected closedowns of many equipment suppliers. This led to a volatile situation in the market that has increased the preference of construction project owners and contractors to rent out on a need basis rather than buy equipment or long-term rental contracts.
Charging your equipment on time-based consumption allows you to have dynamic rental rates where equipment can be rented hourly, daily, weekly, or monthly.
ii) Sustainability and circular economy
With global consciousness increasing around being environmental-friendly, it is wise to upgrade your sustainability game as an equipment rental industry. This has motivated a swifter shift to the circular model, which involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products by extending their useful life and revenue-producing capabilities.
Focus on how your fleet can lower waste, emissions, and carbon footprint. You can take measures for better maintenance to extend your equipment's life before replacing or disposing of it. The circular economy also lays the foundation for manufacturers to include the 'Product-as-a-Service' model in their business.
Electrification of construction equipment is in its early stages, but Grand View Research reports that the electric vehicle market size is expected to reach $42.70 billion by 2030. There is a shift toward using battery technology and electric machinery, which is predicted to lower maintenance, procurement, and operating costs.
The electric revolution in the equipment rental industry is sure to come, and it's only better to get ahead of this trend to keep up.
iv) Move from a traditional approach to innovation
Digitization has brought about newer processes in the industry, such as fuel optimization and uptime contracts. Businesses are looking to include more innovation to differentiate them from their competition. There is more collaboration among their suppliers and customers to identify new opportunities and technologies.
Some examples of innovation include offering advanced machinery with sensors, offering heavy equipment with professional operators and drivers, providing on-site maintenance with mobile applications, and implementing anti-theft measures with serialization.
Trend 3: Improving customer experience and service
As a business renting equipment or products to multiple parties, you always want to be at the top of your game regarding customer satisfaction. To ensure you have happy customers, you need detailed and personal insight into each of your customers. Be it understanding customer acquisition, customer retention, tracking the customer's buying patterns, or having visibility into your customers' lead to cash cycle.
Some trends with which you can improve customer experience in 2023 are:
i) Speed up delivery, pickups, and returns
Planning is the most critical aspect of an equipment rental business, which, if done right, can ensure a smooth rental process. You can improve customer service by offering quick equipment delivery with a proper planning dashboard.
The return process can also be sped up through scanning technology that efficiently allocates equipment based on the barcode, supports self-checkout, and manages mass returns.
ii) Focus on online bookings
Building customer loyalty to ensure customers return to your business is a top priority for rental business owners in 2023. One way to go about this is by empowering your customers with a customer portal and online bookings. This makes your customers more self-sufficient and speeds up the sales and rental processes.
According to Statista, the amount people spend on mobile commerce to fulfill their needs is expected to increase by 22.3% in 2023. The shift to e-commerce is real, and digital rentals will only increase.
iii) Automate invoicing procedures
Following manual processes to invoice customers is now obsolete. Every rental business must have an automated billing system with end-to-end financial capability. Invoice automation allows you to have all your contracts, renewals, invoices, and credits in a central location.
You can make quick decisions with the rapid calculation of rental rates while allocating equipment for customer orders, thereby increasing the potential utilization of each asset. You can also combine multiple invoices into a single bill with consolidated invoicing, ensuring timely payments and improving cash flow.
iv) Customer relationship management
Your sales team requires real-time access to intelligent information offered by the CRM to obtain the correct information about the customer. Direct access to the rental equipment data shortens the sales cycle and improves quoting accuracy.
The combination of the right ERP and CRM solution can manage your rental business from lead to cash. It also provides insight into customer behavior, which you can leverage to grow your rental business. If you haven't already invested in a CRM solution, now is the time.
How can you boost your equipment rental business this year?
Here are some steps you can take to make 2023 your best year yet:
1. Invest in cloud-based software
2. Automate all processes in your business through digital transformation
3. Introduce new techniques in your business strategy to have a competitive edge
4. Explore solutions that can support you with the latest advancements in technology
How can we help you become technologically agile as a manufacturing company?
If you’re looking for a solution that can support you with all the above-discussed equipment rental trends and more, we can help. At To-Increase, we strongly believe in making the journey to streamlining business processes easier and quicker for customers. For the same, we offer DynaRent, a rental-specific software solution embedded in Microsoft Dynamics 365 for Finance and Supply Chain Management.
If you’re interested in a straightforward solution that saves you costs, improves efficiency, and ensures evergreen software for your business, DynaRent could be an option worth considering. You can check the solution factsheet to learn more about DynaRent. Alternatively, peek into our eBook if you want to explore digital transformation in the rental industry further.