Driving Dependence

Car rental companies see giving independence as a way to achieve loyalty

IT’S A BURDEN SHARED by rental car agencies and parents of teenagers alike: How do you build a relationship with someone who only stops in for the car keys and is gone? Someone who seems to desire the least amount of contact and the most independence? Rental car execs and parents would likely agree on a tack: Give their respective patrons what they want with the least possible interference. Give them independence, win their dependence. And just to be sure, reward them for their loyalty.

One would assume this detachment would be easier for rental car agencies, most of which offer express services to win customer loyalty. Whether it’s Alamo Quicksilver, Avis Wizard, Budget Perfect Drive Fastbreak, Hertz # 1 Club Gold or National Emerald Club, the premise is basically the same: At the outset, a customer states his rental preferences and payment method, then signs a rental agreement. The agency stores these in a personal profile. Then the customer need only tell the agency which location he’ll be arriving at on which day, and the car and keys will be ready – often waiting in the parking lot. The return process is typically just as efficient.

This focus on express service is justified. A J.D. Power and Associates survey of rental car customers in May 2000 revealed that the car pick-up process continues to be the single most important factor contributing to travelers’ satisfaction with the agency, followed by the return process. Michael Taylor, director of travel services at J.D. Power and Associates, notes, “Our study shows that consumers will switch rental car companies if they are forced to wait too long.”

But with Enterprise, Avis, National and Hertz all scoring above-average in overall customer satisfaction, some agencies are trying to differentiate themselves by enriching the value of their loyalty programs. National Emerald Club, Hertz #1 Club Gold and Budget Perfect Drive are three programs in particular whose membership advantages go beyond express services.

For one, these agencies are giving members more voice in their individual accounts online. National and Budget both re-launched their Web sites in 2000 with features that allow loyalty program members to make a reservation essentially with one click. Once a member has entered his car preferences and payment method, the Web sites store the information for all subsequent bookings. Members thereafter only need to enter a pickup and dropoff location and a date, and the reservation is made. In the case of Nationalcar.com, One-Click Reservations has contributed to a 100% increase in bookings from April to December 2000, according to Maria Menendez, senior vice president of strategic marketing for ANC Rental.

Each of these three programs offers awards for rental. Airline miles continue to be a staple, though agencies across the board have reduced the ratio of miles earned to dollars spent in the past couple of years, according to WebFlyer.com. Rental car executives report that a growing number of loyalty program members are using their points toward car rentals or upgrades instead, in part because the airlines are discouraging their own frequent flyer members from redeeming miles points for car rentals. Hertz, National and Budget all allow members to redeem points toward rentals and upgrades.

Hertz and Budget, the former being a premium brand and the latter a value brand, have been most aggressive in their award points programs, both awarding members one point for every dollar spent on a rental. Additionally, Hertz and Budget are both allowing members to redeem awards points for bookings made through their Web sites. Budget is even giving an incentive to members to book through its site, awarding them extra points.

Both Hertz and Budget also allowed customers to redeem points toward merchandise, though Hertz phased out its sports merchandise awards in mid-2000. Business Travel News reported that even though one- third of Hertz redemptions were for these gifts, the agency considered it too expensive to fulfill these orders. In its place, Hertz joined the AOL AAdvantage loyalty program last November.

Budget continues to differentiate its loyalty program by allowing members to redeem points for merchandise and non-travel services. Perfect Drive members can redeem points toward golf clubs, Bolle eyewear, stays at vacation resorts, and even spa and massage services through SpaWish.com. And if members are just short of the number of points needed to claim an award, Budget lets them purchase points at 10 cents apiece.

National, more dependent on its corporate customers than other agencies, has put premium services above award points. The agency earns more than half of its revenues from corporate clients, and boasts half of Fortune 500 companies as clients. So the agency lets Emerald Club members select not just the type of car but the exact car they want, right down to model and color. Also, Emerald Club members enjoy the same benefits when they rent cars for leisure travel at discounted leisure rates. By marketing leisure rentals to its business customers, National is trying to get a larger share of its customers’ rental car dollars. Menendez says the agency has spent close to $10 million since 1998 in a CRM initiative to know and track its customers better and present them with more relevant information and offers.

Hertz is also working to better recognize and retain its best customers. In 2000, the agency added two new tiers to its #1 Club Gold: a FiveStar and President’s Circle level. Customers attain the top-tier President’s Circle status by completing 40 or more rentals within a 12-month period. This level provides guaranteed availability of a vehicle with a two-hour minimum advance reservation, a guaranteed upgrade and a vehicle parked closest to the parking lot exit. President’s Circle members also receive a 25% bonus on awards points and a birthday gift of 500 awards points.

Even value brand Budget has an upper-level tier for its most valuable corporate customers. Perfect Drive Optimum offers such benefits as being escorted from the airport gate to the rental car, says Krista Musur, Internet marketing manager. She adds that loyalty program members are the agency’s most valuable customers, generally renting more often, but specifically renting more often through the company’s Web site, its least-expensive distribution channel. But their value goes beyond profit. “They also tell us the most about the site and our business,” she says. “We have a survey on our site. Perfect Drive customers give us feedback every day.”

With a few clicks of the mouse, established customers of Budget Rent a Car Corp. can rent an automobile online. Both Budget e-customers and help desk personnel access the same database, making the technology behind the reservation system the backbone for outstanding customer service. “About 10% of Budget’s customers are e-customers,” says Mary Lou Johnson, vice president of electronic distribution systems. “But even those customers occasionally require the assistance of our 24/7 help desk. Corporate clients, associates and travel agents have equal access to our information. Depending on their individual needs, the information may not be in the same format, but the source of the information is.” Budget developed proprietary “middleware” technology to meet the needs of its customers – both internal and external. An application server sits between the Budget site and the mainframe. “We work closely with vendors,” says Johnson, “but we do not use off-the-shelf solutions. External databases needed to run our business are part of our internal solution.” Budget’s site was launched last October, and Johnson attributes its success to Budget’s customers. Future enhancements will address globalization issues, personalization and wireless access. “Technology is not the limiting factor to our success,” she says. “If we listen to our customers, we will be successful.”