Marketing
Driving engagement with everyday value: Role of car rentals in modern retail membership programs
Keeping members consistently engaged and capturing long-term loyalty that translates to increased sales and customer lifetime value is a perennial challenge. But there is an often-overlooked tool retail membership programs can use.
December 12, 2024 by Aleksander Kaczmarek — VP of Loyalty Partnerships, CarTrawler
Membership programs across the U.S. are thriving. Costco and Sam's Club have posted double-digit growth in recent years, Walmart+ recently surpassed 20 million members, and Target Circle 360 has attracted tens of millions in the relatively short time since its launch. The secret to their success? Practical benefits — free delivery, fuel savings, and member-exclusive discounts — that meet the realities of daily life.
Yet despite their popularity, keeping members consistently engaged and capturing the kind of long-term loyalty that translates to increased sales and customer lifetime value is a perennial challenge. But there is an often-overlooked tool retail membership programs can use to drive engagement, deliver everyday value to members, and offer exclusive savings that keep their brand top-of-mind: car rentals.
The massive potential of car rentals
A recent CarTrawler report, "Driving Loyalty: Market Insights on Car Rentals & Reward Programs," based on a survey of over 3,500 American consumers (including 2,000 respondents who had rented a car in the past 12 months) revealed 60 million U.S. loyalty program members rent a car every year. Of those, which also include retail membership program participants, 66% rent cars at least twice per year and spend an average of $404 per trip.
This is clearly a large and lucrative market, but loyalty and membership programs have yet to fully tap into this potential consumer base. Only 12% of Americans who rented a car in the past year did so through a loyalty program, revealing a significant opportunity within this market. With total US spending on car rentals projected to reach $44.7 billion by 2028, the potential is clear — and massive, as "Driving Loyalty" estimates this to be a $20 billion opportunity for loyalty programs. But offering rentals alone won't drive success. Retail membership programs must deliver high-quality, high-value car rental options that align with customer needs.
Courting everyday renters
Counterintuitively, consumers' need for car rentals isn't exclusively tied to travel. In fact, 24% of car rentals are for everyday purposes, such as moving, visiting family, or weekend trips. This is why 63% of everyday car rentals are picked up at local branches rather than airports or major travel hubs. The size and makeup of the everyday rental segment suggest that there is real, consistent demand for convenient rental options, and if a retail loyalty program provides this benefit to its members, they are likely to engage with that program even when they're not currently shopping with the brand.
Everyday renters tend to be more value-conscious than those renting a car for a vacation or business travel, with 54% ranking "lowest prices" as one of the top three most important factors when choosing a car rental, compared to 47% of travel renters. They are also less likely to use an online travel agency (OTA) for their car rental booking, making them ideal targets for retail membership programs that are not overtly associated with vacation or business travel planning and simultaneously uniquely capable of offering deep, exclusive discounts.
Leveraging the power of the closed user group
As large as many retail membership programs are, in terms of the total volume of members, they are still technically closed user groups — meaning members must log in to access rewards. This puts these programs in a position to offer exclusive member-only discounts, points, or cashback that can be sourced directly from car rental suppliers. A few of the best-performing retail membership programs, like BJ's and Sam's Club, already capitalize on this advantage, promoting discounts of up to 35% off to their members.
This creates clear added value for members who want or need to rent a car — an option not typically available via OTAs and other channels. Accessing this value is a top priority for loyalty program members: 42% rank member-only discounts in their top three criteria, highlighting just how much program members value exclusive rates made possible by closed user group pricing.
Retail membership programs considering integrating car rentals as a reward or expanding their car rental booking options should prioritize giving their customers the best experience. From searching for the right car to accessing the best price and having good, responsive customer service or returning the vehicle, experience is everything. A positive experience will encourage members to return to their programs to book car rentals again and again.
How can membership programs deliver this experience? Personalization is one way. Consider that 55% of car renters under 50 are more likely to choose EVs, compared to just 27% of those aged 50 and older. Retail membership programs can leverage their member data to promote EVs to the member segments most likely to prefer them and highlight other rental types to older members. Integrating flexible payment options is another aspect of a positive member experience, as 63% of loyalty program members regularly use a combination of points and cash for redemptions, revealing a strong preference for versatile payment methods that maximize the value of their points.
When retail membership programs combine these capabilities with the right variety of car rental options, prioritize engaging everyday members who crave everyday value, and lean into their closed user group advantage, they can reap the full benefit of car rentals as a high-upside reward option that drives engagement, quite literally, year-round.
About Aleksander Kaczmarek
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