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Management

Car rental companies ride the third wave

Tuesday, 05 December 2006

With one in three UK homes having access to the Internet, more and more purchases by consumers and businesses are being made online. Car rental companies are certainly feeling the effects of this phenomenon. Avis reports They say that massive leaps in human development come in distinct stages. Indeed, economic historians describe them as ‘waves’. The first wave was the Agrarian revolution, when through simple crop rotation man increased the production of food; the second wave was theIndustrial revolution, which again saw a huge step forward in the evolution of society. Today, these same historians refer to a third wave – the Technology revolution.

The development of the World Wide Web, email, Intranets and PC-based technology has revolutionised our lives, just as the first two waves of advancement did in their time. Today, one in three UK homes has access to the Internet, and more and more business people and consumers are conducting many of their business and purchasing activities through technology.

And it is this Technological revolution that has changed the face of car rental. Car rental is one of the most competitive industries in the world with household brand names, such as Avis, Hertz, Alamo and Budget, fighting against younger player,s such as easycar and Holiday Autos. For these brands, establishing a relationship with their customer, anticipating their needs and supplying them with innovative solutions is vital, if they want to survive and prosper in the competitive world of the 21st century.

The development of the Internet has made a huge impact on the world of car rental and how customers, corporate and consumers, are conducting business with the likes of Hertz and Alamo.

Since the first car rental company established a website in 1996 – in this case Avis – every major car rental company has reported a huge trend towards web-based enquiries and bookings. Easycar and Holidays Autos, both of whom have put a big emphasis on driving customers towards the Web, have undoubtedly led this trend.

Today, of the 500 most visited travel transport-related websites (which includes airlines, train companies) the leading car rental companies, such as Hertz, Alamo and Avis, all feature in the top 50. And the evidence is that the consumer is scouring the Web looking for the best deals, the most convenient options and the best range of features available.

Competitive Intelligence provided by Hitwise, which tracks the behaviour of over eight million UK Internet users, shows that visitors to the websites of Avis, Hertz, National, easycar and Holiday Autos, tend to move between a number of competitor sites when searching for the best car rental deal.

The knock-on effect of this trend to use the Internet is that the car rental companies are embracing technology wholeheartedly as a key strategic cornerstone. They see it as a way to grow their business, while reducing their cost base and increasing efficiency.

Migrating customers on to the Internet to book is a priority for all the car rental companies, clearly illustrated by the dizzying array of incentives and discounts offered by them all for online bookings. Even the traditional perceptions about car rental (such as, the complexity of the product because of the different ranges of vehicle and insurance options, not to mention the plethora of taxes and airport surcharges) are being simplified by the car rental companies who now provide ‘total’ packages, which include all the basics required to drive away a car when booked through their websites.

e-Customer Relationship Management (eCRM)

The customer data that is captured through the web bookings is being used to develop relationships with the customer and to anticipate the customer’s requirements.

Tactical offers, designed to stimulate the market at key times of the year or in certain regions of the country, or indeed the world, are highlighted by email alerts to the customer. Email newsletters are being used to ensure brand loyalty and feedback is being encouraged to help develop new features and anticipate requirements. As systems get more sophisticated these offers will be tailored to the customer so that only news of offers that meet the customer’s lifestyle profile will be highlighted.

Improving the booking process

For many corporate organisations and travel partners the car rental companies are using technology to provide a more enhanced service. Car rental companies are providing tailored online booking tools, (called Microsites by Avis). These sites can be built and maintained by the car rental company, involve no cost to the corporate/travel partner and can be co-branded to adopt the look and feel of the partners website or intranet. Online booking tools can also be tailored to a corporate’s travel policy requirements, such as defaulting automatically to permissible choice of car, insurance rates and other options. Bookings for delivery and collection can be made automatically and the car rental company can supply detailed management information to the client, which helps the client run their business more efficiently.

Other technologies are also helping the car rental companies to provide an enhanced seamless booking process. For instance, a technology called XML (eXtensible Mark-up Language) is being used as part of a partnership between the airline flyBe and the car rental company Avis to anticipate the requirements of customers. As Catherine Rawson, director of distribution for Avis Europe plc, explains: “XML allows us to use the information from the flyBe.com flight booking to provide a seamless quotation for car rental. They can see quotes for a range of car groups from Avis and can book from there in one click.” This technology is definitely the shape of things to come.

While technology is leading what economists call the third wave, there is no doubt that the car rental industry has recognised the strategic importance of technology and the Internet, and is busy utilising it to help build unique relationships with its customers and consolidate brand loyalty. No doubt, given all the advantages for both customer and car rental company, the players such as Holiday Autos, easycar, Hertz, Avis and the other car rental companies, will continue to encourage customers to increasingly do business with them over the Internet.

(This article was originally published in Director of Finance 2004 edition)