What Local Car Rental Customers Want

A new survey analyzing the local car rental market reveals data on price elasticity, loyalty and the importance of good customer service. Are you gaining your fair share of this important revenue stream?

In North America alone, recent statistics show that the local ­market (off-airport) car rental segment is comprised of nearly 12,500 locations — estimated to represent $11 billion in combined revenue among retail, insurance replacement, body shop and dealership-based car rental operators.

As part of collaborative research done in conjunction with Auto Rental News, the Frontline Performance Group (FPG), a Khoury Group Company, conducted a survey on the local market customer. The intent of the survey is to understand the local market customer and to give the rental operator insights to gain a larger share of this important revenue stream.

The results were presented by FPG at the 2012 Auto Rental Summit, which took place Oct. 29-30 in Hollywood, Fla.

Survey Methodology

In addition to more than 40 hours of independent research, FPG’s field team conducted 850 surveys among local market customers, branch managers and senior leadership at more than 65 corporate, licensee, independent and dealership-based stores in U.S. and Canadian markets.
Research was centered on three customer types: traditional retail, insurance replacement/service and repeat customer.

Survey questions were structured with the goal of providing evidence of the opportunities that exist in this emerging business segment, and to assist local market operators in creating “Urgency, Belief and Action” throughout their customer-facing service, sales team and operational staff.

Here are some extrapolations from the survey data.

Survey and Research Highlights

Among 850 surveys of local market customers, branch managers and senior leadership at more than 65 corporate, licensee, independent and dealership-based stores in U.S. and Canadian markets, the top reason cited for renting was because of service repair/insurance replacement of their regular vehicle.
Among 850 surveys of local market customers, branch managers and senior leadership at more than 65 corporate, licensee, independent and dealership-based stores in U.S. and Canadian markets, the top reason cited for renting was because of service repair/insurance replacement of their regular vehicle.

In general, local market customers are repeat customers. Branch managers stated that 61% of their customers are repeat renters, and the majority (58%) of local market customers rent three or more times a year. To book the car, customers called locally or were a walk-in/referral 69.8% of the time.

While 52% of survey respondents stated that the car rental company brand does not matter, 53% of local market customers stay loyal to one provider. Loyal customers say that their commitment is driven primarily by price (46.8%), branch location (28.8%) and the established personal relationship (22.8%).

(These “commitment drivers” involve primarily non-service/insurance replacement rentals, which have factors that affect choice such as contractual obligations with insurance companies and repair shops.)

Price was named as the primary decision factor by 49% of survey respondents.
Price was named as the primary decision factor by 49% of survey respondents.

The local market customer spends an average of $116 (pre-tax) for a three-day rental. If you can keep them loyal to your brand, it will pay off in price. The “loyal” customers, those who rent four or more times per year, will “brand hop” for a rental rate difference of $8 per day. Less frequent customers, those renting one to two times per year, will switch brands for as little as a rental rate difference of $3.50 per day.

For many, location won’t stand in the way of switching to another company: 47% of branch managers surveyed have three or more competitors within a five-minute drive of their location.

Providing customers with a good experience is essential to keeping them loyal. After price, getting good service was the second most important customer “want” (34%). The news of bad service will travel: 53% of customers who had a bad experience said they will tell six or more people about their travel (rental) provider.

CONTINUED:  What Local Car Rental Customers Want
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Comments

  1. eric gass [ January 16, 2013 @ 11:36AM ]

    Very insightful. Do you have date that shows the estimated size of the insurance market (total off a/p is $11B, what is insurance replacement?)

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