Why a customer-centric retail model is key to beating digital competition
By Micah Friedman, senior director and consulting leader, travel and hospitality practice, Cognizant
The rental car industry is facing unprecedented competition from digital upstarts like Uber, Lyft, Blabla Car, and "on-demand" ride sharing services being explored by large automakers. These services essentially let travelers design their own transportation experience, deciding what they'll pay, with whom they'll drive (based on reviews from previous travelers) and in what type of vehicle.
Rental car companies can effectively respond to this competition by adopting the successful strategies and best practices digital retailers use to engage customers by offering a richer, customizable and frictionless experience.
These engagement strategies feature an elegant and consistent experience across multiple channels driven by intelligent and streamlined middle and back-end processes. The key best practice to success with this tack is deeply understanding what customers want and shaping new business and operating models to deliver on those needs and desires.
Adopting effective digital retail elements
Today's retailers use analytics to uncover and even anticipate their customers' needs and wants to the point where most consumers now expect this level of service from all service providers. Rental car companies could adopt this approach to create a single view of their customers' business and personal travel patterns, which often overlap. Then they can create offerings based on this broader customer persona that incorporate these key elements:
- Automation. Customer-facing processes should be automated whenever possible, e.g., once a customer has booked online, she should be able to check out at the airport with a swipe of a phone or app, just as retailers like Starbucks "accept phones" for payment. The technology, such as proximity beacons, Wi-Fi, and smartphone biometrics, exists to create robust automation solutions. Combining analytics with design thinking is necessary to ensure rental car companies identify and create automated functions their customers actually want and will use.
- Take the service to the customer. It's critical for customers to be able to engage rental car companies when and where they want via any channel and device. The Phocuswright-Cognizant Traveler Survey of more than 2,000 U.S. travelers, including nearly 1,000 frequent business travelers, indicated more than 68 percent of millennials use smartphones to book travel products, while 70 percent of frequent business travelers owned a wearable device, and 38 percent of those who didn't planned to buy one in the near future. Rental car companies must have great apps that work on these technologies and provide relevant features and information, such as the ability to complete reservations or ping a smartphone or wearable device when a flight lands to let the traveler know the parking lot/space number of their car.
- Use location-based and real-time technologies to drive promotion acceptance rates. With analytics, car rental companies can understand their customers' interests and preferences; mobile devices like wearables and smartphones can provide location data to help companies push offers relevant to a traveler's specific real-time circumstances. Such offers are more likely to be accepted and appreciated, vs. agents trying to upsell during a manual checkout process.
- Effective loyalty programs. Enhance these with real-time location data and analysis of past behaviors to offer more meaningful rewards and incentives — such as placing an age appropriate child seat in a rental vehicle ahead of time or by offering service and maintenance discounts with major car manufacturers.
- Price matching. Building in price-comparison features to mobile apps and websites will help ensure customers always get the best prices direct from the rental car company. Software bots can check and confirm pricing in real time so the customer rate can adjust automatically to match or beat competitor offerings.
- Broader service offerings. A detailed understanding of the rental car customer would support a "transportation as a service" model that views travel the way the consumer does: a journey that includes various stops and different transportation needs at each point. Car rental companies could offer bookings among alternative travel options, from commuter trains to bike rental stations to car sharing services. Ancillary services could be included, such as connections with a ski outfitter for a mountain trip, or with cultural institutions for an urban destination after a business trip.
- Optimize social media. Two-way social channels enable rental car companies to understand customers better as well as shape how customers perceive them. Social can also be a mechanism for customers to review their experiences in actual car models, information that helps other customers during booking and also provides the car rental company with data for use in fleet acquisition negotiations.
- Gamification. Retailers use gamification techniques to enhance customer engagement and improve employee performance. Rental car companies could offer incentives for leaving product reviews or achieving certain driving parameters (recorded with telematics), such as measured acceleration, and creating points and rewards for individuals or teams who reach or exceed a specific customer service performance measure.
Remain relevant with customer-designed business models
Rental car companies can improve their competitive position by delivering the experiences today's customers demand by offering retail-like features and functions, from automating check out to meeting travelers' real-time needs. Those that do so will differentiate themselves from their traditional and digital competitors and will be rewarded with deeper customer engagement and loyalty. The alternative is ceding customers, and revenues, to another company.