Case Studies

US Airport Car Rental Value Brand:
Market Strategy and Revenue Optimization

This case highlights our ability to work across functional boundaries and with outside information technology suppliers, focus senior management on relevant issues, and implement actionable predictive analytics capabilities in response.

The new owner of a value tier airport car rental brand which serves primarily leisure and independent business travelers at major US airports, asked us to review its capabilities in the following areas:

• Business/Marketing Strategy
• Revenue management and pricing
• Brand positioning
• Digital marketing
• Distribution and channel management

This brand had recently been spun off from a major vehicle rental holding company as part of a Federal Trade Commission consent decree. No longer serving its role as the value alternative within a multi brand portfolio, upon its divestiture the brand needed to stand alone and stake a viable position among a multitude of competing brands in a very crowded and mature marketplace. Further, the brand lacked sufficient infrastructure to support it and to afford its new owners a chance to generate acceptable financial returns.

We discovered several key issues for resolution, among them:

• Lack of brand awareness and almost no customer loyalty as measured by repeat rental activity
• Insufficient capabilities/value proposition in place to cultivate or build repeat business
• Reputation for below average customer satisfaction
• No strategy in place to strengthen its direct distribution channels, i.e. branded website
• Limited presence in negotiated rate segments and opaque channels, i.e. tour wholesale and OTAs such as Hotwire and Priceline
• Resulting over dependence on online travel agents and published retail rate products
• Engagement in “always first” dynamic pricing practices, often causing the industry retail rate umbrella to collapse during off-peak periods
• Vulnerability to adverse selection by high risk and high mileage customers
• Unusually high no show rates and close-in cancellations, forcing pricing managers to respond in many instances with ultra-low published retail rate changes to move distressed inventory
• Inability to disguise retail pricing moves in the electronic distribution marketplace
• Lack of confidence in fleet plans and forecasts, causing knee-jerk reactions in pricing strategies
• Net Promoter Scores at unacceptable levels

We employed internal and external data sets to generate breakthrough insights that helped pinpoint business base weakness, provided guidance on what the desired customer base required from both a pricing and service standpoint and enabled a micro target audience acquisition strategy. Key actions and resulting business benefits include:

• Introduction of a new brand position that directly supported a change in service delivery through the use of a real time front line initiative that empowered staffers to fix any and all issues at the time of rental
• Stabilization of a long-term decline in direct channel business, by working with internet search and technology partners to attract more shoppers to the branded web site
• Implementation of an innovative B2B program delivering “best rate guarantee” and expedited service delivery to drive premium business travel
• Improvement in ability to quickly track/identify and address customer service “pain points”
• Increase in repeat business through the implementation of a new and innovative rewards program
• Increase in Net Promoter Scores by 50% + in less than 6 months
• 20% reduction in the no-show rate, by working with channel partners to introduce “form of payment required” products and to strengthen related terms and conditions
• Reduction in salvage, damage and liability incidence/severity through adoption of modified rental rules, particularly those involving local renters and use of debit cards
  20%+ improvement in revenue per day and a double digit increase in revenue per available unit, brought about by strengthening the revenue management function and the pricing tools and new rate products introduced by it, all within a two-year period.