Score One for Texan Independence

In his characteristic Texas drawl, Dave Capps readily admits that his approach to running his business doesn’t conform to all of the best-practices tenets in the car rental industry. For starters, Capps Van & Car Rental offers commission to all employees who answer incoming calls and book reservations. This applies to all associates—it doesn’t matter whether the employee is a car washer or an accountant. Counter agents also earn commission for opening and closing rentals. But the company doesn’t offer commission for counter product sales.

Though agents are trained to offer damage waivers and supplemental liability insurance, they don’t pursue a sale further after a customer’s initial no. What’s more, Capps has rejected the use of revenue management systems in favor of simply offering peak and off-peak rates.

Some industry experts would undoubtedly dispute Capps’ philosophy on sales and pricing. But there’s no denying that Dallas-based Capps Van & Car Rental has found a niche in the local market. In the past year, the company has opened 4 new locations. Capps now has a total of 19 stores in six states: Texas (13 stores), Oklahoma, New Mexico, Kansas, Missouri and Arizona. More are on the way. Capps recently opened a location in Mesa, Ariz.. Two more stores in the Phoenix area are scheduled to open by fall.

Today, the company employs 300 full-time and part-time employees. Company revenue in 2005 is expected to top $40 million. The company fleet this year will peak at 6,500. In 2006, Capps plans to purchase 10,000 new vehicles, nearly all of them from General Motors. And at a time when many car rental companies have dropped full-size passenger vans from their fleets entirely, Capps has built much of his business around that vehicle class. All vans, none of which are older than six months, come equipped with GM’s StabiliTrak system. Clients include churches, schools, athletic leagues, community organizations and families heading off for a vacation.

“Industry consultants will probably say I’m crazy,” Capps says with a grin. “But we like to do things differently here. We know what our customers want.”

And perhaps what they don’t want. Capps says he has forgone revenue management because many of his customers perceive dramatic rate swings as unfair and arbitrary. He also thinks many customers are turned off by aggressive sales tactics at the counter. “If we have to make our profit off selling damage waivers and insurance products, we’re in the wrong business,” Capps says.

The company’s commission structure for reservations helps ensure that employees answer the phone quickly — even when the call center is overloaded with inquiries. When money is at stake, employees are more likely to dive for the phone than to wait for someone else to answer it, says Dave Cox, vice president of operations. And many customers prefer talking to a real-life person instead of following automated prompts.

While responding to phone queries, employees often encourage customers to come to the lot to see the vehicles in person. The offer shows potential customers that Capps has nothing to hide. Whenever customers take up the offer and visit, they almost always end up booking a rental, Cox says. On-site vehicle display is a major component of the company’s marketing plan, along with Yellow Pages, Web marketing, billboards and direct mail campaigns. All employees are trained to take reservations. Even Capps himself has a reservations phone on his desk. If a call goes unanswered, it will eventually reach the very top of the company’s organizational chart.

In this era of industry consolidation, there certainly aren’t many independents in the midst of a growth spurt. But Capps Van & Car Rental is—and the company’s ascent has gone largely unnoticed by the industry.

“Our goal is to continue expanding West, particularly in the Southwest in the next three years,” Capps says.

Capps’ father launched the rental company back in 1972 as an adjunct to his Dallas gas station and used car lot. The fleet, initially financed by family members’ personal loans, numbered just six cars. Growth came gradually over the years until 1991, when Capps bought out his father’s share of the company and ramped up expansion plans.

Capps is the company president and CEO. In addition to Cox, Capps’ senior management team includes Steve Chaney, director of rental operations. There are also seven senior location managers, all of whom have been with the company at least 10 years.

CONTINUED:  Score One for Texan Independence
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