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. [PAGEBREAK] Specializing Fuels Success
To what does Capps attribute his company’s current success?
“In healthcare, general practitioners don’t make as much money as specialists—and the same is true in car rental,” Capps says. “We specialize. We don’t chase the airport business like everyone else. We concentrate on doing what the big companies either won’t do, can’t do, or just aren’t good at.”
That means guaranteeing that when a customer reserves a particular vehicle, that vehicle is ready to go when the customer arrives at the counter. If the vehicle booked is a van, that van’s seating configuration will match what the customer requested at the time of the reservation.
“If we reserve it, then we have the vehicle there—even if we have to transfer it from another location in another city. There are no ifs, ands or buts,” Capps says.
But does making such a guarantee result in lower utilization rates?
“Utilization is important for any car rental company,” Capps says. “But we tend to look more at revenue per unit. If you have 100% utilization but you’re charging $10 a day, you’re not doing well.”
The company also places strong emphasis on keeping vehicles clean. With a fleet dominated by full-size vans, minivans and SUVs, that’s not an easy task. That’s one reason why Capps rules out cramped quarters in strip malls when he’s looking for commercial properties for new locations.
Keeping vans clean and well maintained isn’t just time-consuming; it requires adequate space. Employees are trained to clean and inspect all the nooks and crannies that might otherwise go unnoticed, Chaney says.
In addition to vans, minivans and pickup trucks (all white for remarketing purposes), the company’s fleet includes the Chevrolet Suburban, Chevrolet Trailblazer, Pontiac Grand Prix and Chevrolet Malibu.
Filling Special Requests
Flexibility in customer service also helps separate Capps Van & Car Rental from competitors, Capps says. The company is willing to accommodate nearly any special customer request—for the right price. Larger competitors are more likely to flatly reject an unusual request because it violates corporate policy. Procedures tend to be more standardized and strictly enforced in major corporations.
“Most rental or leasing companies have only one way they do business and one way jobs are invoiced,” Capps says. “But we’ll do just about whatever customers request as long as they pay us enough money. And we have that reputation throughout Texas.”
That reputation dates back to the company’s beginnings. For example, in 1979, the company won over a major corporate client after filling an unusual request from Ross Perot’s Electronic Data Systems (EDS). Perot had just directed a successful rescue of two EDS employees taken hostage by the Iranian government. EDS wanted to rent a couple of sports cars as gifts for the freed hostages, but couldn’t find a rental company with sports cars. When EDS contacted Capps, the rental company didn’t say no. In fact, Capps went out and purchased two 260Zs.
“They were impressed that we would actually do that, and we started renting cars to EDS on a regular basis for employees coming into town for training,” Capps recalls.
Recently, a customer contacted Capps about renting several SUVs for use by soldiers returning from Iraq. The client, who planned to offer the vehicles as prizes, wanted to cover them in patriotic decals—a request that prompted other rental companies to turn down the business. But Capps said yes, as long as the customer agreed to pay for any paint damage that might result. At the end of the rental, the decals were removed without any damage.
This approach to customer service allows Capps to take in business that others reject, helps foster strong customer relationships, and generates good word-of-mouth, Chaney says.
The company’s willingness to accommodate special requests continues to help the company sign big corporate accounts. Capps’ biggest corporate customer is Lowe’s, the national chain of hardware stores. Capps provides all the trucks that Lowe’s rents to its customers to haul big items purchased at the stores.
Capps also points to his company’s corporate culture as a competitive advantage. “Our mission statement is to make money and have fun,” Capps says with a laugh. An ideal employee has plenty of initiative and drive, tempered with a hearty sense of humor. Employee turnover is low, and new employees are often referred by existing employees. Many employees who leave the company for another job opportunity eventually come back, Capps notes.