People Matter

On the eve of auto rental market consolidation, while the rest of the free world concentrates on how 93% of the North American market will soon be controlled by three companies, I couldn’t help but think of the opportunity that awaits the independent brands.

The opportunity first becomes apparent by understanding that the independents — the entrepreneurs in this industry — are alive and well and are filling the need for choice in car rental. This is manifested on Expedia, which has changed its matrix to display smaller brands on the first search results page. It is found in an article in the Sept/Oct 2012 issue of Budget Travel Magazine that highlights the independent car rental brands (“They Try Harder Too”).

That need for choice became clearer during our first-ever Auto Rental Summit in Hollywood, Fla. this week.

After flying into Ft. Lauderdale, I saw the independent brands such as Royal Rent-A-Car and E-Z Rent-A-Car with counters in the consolidated rental car facility alongside the big boys. Fox is just off airport and now has five locations in Florida, a testament to the brand’s growth in the state in less than two years.

The need for choice is evident in the pending Hertz sale of Advantage to Franchise Services of North America (FSNA), U-Save’s parent company. The Summit’s opening speaker, Bob Barton, is president and COO of FSNA.

This need for choice is an open door of opportunity. But how can the independents take advantage? That could be found during the presentation of Stuart Greif, who runs the JD Power and Associates Rental Car Satisfaction Study. It was two words on a single slide:

“People matter.”

Those two words became a theme that worked its way through the seminars, roundtables, networking and celebrating in Florida.

A smile matters. Greif gave metrics that correlate the number of staff interactions — with smiles — in the car rental experience to an increase in satisfaction. “How much does a warm smile cost?” Greif pointed out. It’s true — the name brands with the big pocketbooks don’t have a lock on smiles.

Now here’s the good news for the industry overall: While JD Power won’t disclose the results of the 2012 rental car satisfaction study until Nov. 8, Greif did reveal that the average satisfaction index score for the industry overall continues trending upward since the Recession. And coming out of the Recession, the car rental industry’s scores continue to improve at a better pace than those from the hotel and airline industries.

Last year, ACE Rent-A-Car, an independent, had the highest cumulative score in the survey. The folks at ACE will tell you they did it by concentrating on their people first.

Greif also mentioned another JD Power customer satisfaction study for the hotel industry. Ranking third overall — behind luxury brands Ritz Carlton and Four Seasons — is Drury Hotels, a family-owned, mid-scale chain based in the Midwest. Drury’s ranking is a testament to the fact that you can “compete asymmetrically with bigger brands,” Greif said.

Greif showed that as customer satisfaction increases, so does advocacy, loyalty and usage of that brand. This fact ties into data presented from a Frontline Performance Group survey on local market customers. For loyal customers, who rent four or more times a year, the price tipping point that would send them elsewhere is $8 a day. The tipping point for the less frequent customer, who rents one to two times a year, is $3.50.

The point is that if you can create a loyal customer then you do not have to compete directly with a major brand on price. That loyalty is built first and foremost by your people.

And that’s because people matter — a point that became especially evident in the acceptance speeches from the winners of the Auto Rental News Professional of the Year Awards, sponsored by American Express.

To hear Stacey Milliken, who works for Burgner Enterprises, the Dollar Thrifty franchisee in Nashville, and Elizabeth Alonso from Midway Car Rental in Southern California, is to experience excellent customer service come to life. (Veronica Weston of Avis Budget Group couldn’t travel because of Storm Sandy.) There are no words on paper that can capture their reactions to winning the award or the emotions in their speeches on their commitment to their companies and customers.

A rental car may be a commodity, but the people in this industry are not.

Originally posted on Business Fleet