The car rental industry has developed by fulfilling one basic need of the customer – mobility on demand. It is providing the experience of car ownership, that the target customer is accustomed to anywhere in the word. The value proposition is to remove the hassle of calling a cab at a price point that makes it viable.
In the last few decades, the car rental market has hit $60 bn mark, growing at 4 per cent CAGR. However, it is now at a critical juncture of being disrupted. The two forces that will disrupt the industry are Cab Hailing apps like Uber and Lyft at this point of time and autonomous vehicles in the not so distant future.
The success of Cab Hailing services can be attributed to providing a better experience to the customers than the alternative. They are taking a very specific segment of customer away from the car rental companies. Only on the basis of providing a better and a hassle free experience.
What impact will autonomous vehicles have on this industry is yet to be seen, however, I believe it will disrupt the business.
If this industry has to survive the next ten years, it needs to innovate. They need to innovate on the business model as well as the customer experience. Our Connected Traveller Survey shows they will need to create new customer journeys on how the customer experiences their services.
The industry has strides to make to improve customer satisfaction by enhancing their experience. The process of renting a car is currently delivered as a ‘service’ rather than an ‘experience.’ This needs to transform into a mobility experience.
One of the most precarious phases of a user’s journey is customer engagement. This is part of the journey when a prospective customer has the most potential to turn into a buying customer. The way an organisation achieves this conversion has an impact both on the top and bottom line of a business. Car rental companies need to identify new ways in which the customers can experience their services.
Innovation at car rental firm focuses on removing customer stress, therefore increasing engagement and improving customer loyalty. For example, car rental giant Avis is driving a digital transformation strategy with mobility at its heart, designed to conquer one of the biggest challenges car rentals firms face: improving customer satisfaction. Yet there is so much more they can do to improve their experience and meet the demands of the evolving environment they are in today.
It’s all in the data
Prior to connecting with a prospective customer and attempting to make a recommendation for a service or solution, a business must comprehend the demographic profile and what the needs are of the person in question. By using a strategic targeting plan, they can have personalised engagement with customers, which leads to higher levels of customer interaction and satisfaction. Each customer has a diverse profile which in turn effects the type of engagement they would respond best to. For example, the profile of a traveller who is going on a business trip would be vastly different from a family of travellers who are embarking on a holiday. Simply put, if a customer is travelling for leisure with their family and have small children, the first car that should be suggested to them when they request a rental should be larger and child friendly.
Accurate profiling of a customer is one of the key steps in the service process for all industries – according to Mckinsey’s survey, The Moment of Truth in Customer Service, 70 per cent of the buying experience is based on how customers feel they are being treated. The only way to treat customers the way they want to be treated is to understand their needs.
Car rental businesses have the data, and now they need to utilise it. From the type of car they prefer, to the time period they need the vehicle for or the reason they need it for, organisations have the capabilities to identify their various customer types and why they need to be served. By using their existing customer records, including online and offline customer feedback, they can identify customer profiles and generate ‘buyer personas’ using advanced analytics techniques. Using these data-driven tools, a business can develop the most effective engagement model to reach a more precise, better targeted audience.
Improve end-to-end customer experience across channels
Once an organisation understands its customers, it is important for providers to have a omni-channel strategy plan which targets the various channels which engage with customers. Each channel which exists should be able to offer customers an essential service. Simply, every channel used should serve a purpose.
When a customer is evaluating their car rental options, the primary channel they are on is usually a digital channel, such as a smartphone or tablet, where they are looking for information. In contrast, when a customer is ready to make a purchase there is usually a combination of online and offline channels they use to go through with their transactions. Each channel should be set up to deal with a customer’s individual, personalised request.
Customers value being seen as individuals. Organisations have access to enough data to give customers that experience and offer targeted services to have them keep coming back. For example, car rental providers have the ability to detect customer’s location, using location detection technologies. Using this data-element, the entire customer experience can be improved across all channels as they have the ability, and data, to target customers across various channels with promotions or deals, therefor offering a personalised car rental experience. As an organisation uses these tools to digitise the customer experience they can also use these tools to digitise the workforce.
Ways to digitise the workforce
There are different ways for the industry to effectively join the digital era. From adapting automation, to providing a connected experience, to using data effectively, digitising the workforce can take place in many in forms. For this industry, taking steps to simply automate the vehicle checkout and return processes reduces customer wait times, which enhances the customer experience leading to an improvement in an organisations bottom-line performance.
Contracts can be organised and signed automatically online, and customers are able to get on the road the moment they have reached the rental station. In fact, in a truly automated, connected car ecosystem a vehicle does not need to go to the rental station and can directly be picked up from the parking lot where it is parked. This provides benefits for the industry as organisations save money on resources and their staff are enabled to focus on other tasks. For customers, they are able to surpass waiting times and carry on with their journey with less admin hassle leading to a higher likelihood of renting with the same business again.
In the car rental industry an essential service which must be provided is speedy support for emergencies. Organisations can provide this through instant customer service options such as chat bots and by using sensor technology to send proactive notifications of a faulty situation with the car o the necessary parties. Offering real time support for customers while simultaneously alerting roadside aid, or the service centre, are some of the steps which create loyal customers. Knowing there is access to immediate help and support through a trusted service provider can seal the deal.
The present Car Rental business model is from the pre cab hailing, ride sharing era. The success of these services is proof that the car rental industry too needs to adapt. The days of renting per day and returning to a rental station may soon be over. The industry will need to proactively evolve their business model to the evolving preferences of their customers.
The industry is at a technological tipping point – it must embrace incoming technology to compete against the new, disruptive, business-models which are entering their market or risk being left behind. The survival of rental providers will depend on the speed they can identify and respond to the constantly evolving demands of the market.
The importance of customer experience is undeniable and the entire customer lifecycle has shown it can make or break a purchase. It is time for car rental providers to look at improving their services to reach their customers in a fast, efficient, personalised way over all channels.
Karan Rao, Senior Consultant & Program Director of Travel, Transportation and Hospitality, Mindtree