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December 1, 2005
By
Scott Deaver, executive vice president of marketing, as told to Colin Beasty
,
Secret of My Success: Cendant Car Rental Group
Why did you turn to a CRM consultancy? We needed to segment our car rental users. Most of our CRM and branding were based on many years of tracking research in the car industry. While it was valuable, it was strictly behavioral. We knew a lot about our customers' car rental behavior, and we knew something about car rental behavior in the industry in general, but we didn't know nearly enough to effectively market and position our brands. In addition, in the end of 2002 Cendant bought Budget Rent-A-Car. We already owned Avis. We now had two entries into the car rental space, and [we] wanted to grow both companies in a relatively closed competitive environment. We needed to understand the dynamics of how customer decisions were made to make both companies grow at once and to figure out how to position our brands and marketing efforts. Specifically, we needed to define and maintain a loyalty strategy with both brands. Avis has had a lot of success in the area of customer loyalty. We wanted that customer loyalty to remain strong for Avis, but we were concerned that changing distribution channels would also change customer behavior. For example, Web sites like Orbitz and Expedia were changing the dynamics of car rental, such as how decisions were made and how customers behave. We needed to understand what motivated our customers to decide the way they decided.
How did you select a consultancy? We conducted an elaborate RFP process. We talked to a lot of different consultancies and got a lot of different proposed solutions, ranging from pure research solutions to pure consulting solutions. Chadwick Martin Bailey (CMB) offered a lot of both, and that's something we really liked. What we also liked about CMB was that they were primarily researchers who had a thoughtful, open-ended approach to their research. We felt we weren't just hiring a consultant. From the beginning they were willing to approach our problems from multiple angles at once. They didn't approach it as, "Here is the study you want to do, now go do it." They thought of several different ways to come at the problems we wanted to solve.
What advice or best practices did Chadwick Martin Bailey offer to help you better understand your customers? CMB implemented a three-part strategic segmentation framework that mapped the current market positions of both of our brands and their competitors relative to preference-based segments. We conducted an in-depth research project that included a number of customer surveys that identified the highest potential positioning for each of our brands based on overall segment potential so we could better position our brands to capture those segments. Last, they delivered market simulations that projected market preferences based on how competitors might respond.
What have been the main rewards? It helped us position our brand so both companies could grow. It helped us find demand in the market that was tailored for both of the products offered by Avis and Budget. Now we can see how best to win users from our competitors. It gave us insight into creating and cementing loyalty among our largest volume of customers. We've been able to identify what percentage of the market makes their decision on price alone. Different groups of people base their decisions on different criteria: automobile, service, safety, etc. They helped us to understand what criteria each group of customers use to make their decisions. Finally, they taught us how to improve our products and communication so customers knew we had the car rental solution they were looking for. By the end of 2004, we began to see growth and by 2005 we had robust growth in both brands. We feel like the knowledge gained from that study has been a key part of what's made us succeed.
Lessons Learned
Choose a consultancy carefully. Different consultancies offer different services. Some are strong in technology, others in research, still others in strategy. Make sure to select a consultancy that will best serve your needs.
Understand how your company's brands are perceived in the marketplace. If a company markets more than one product type, understanding how your customers perceive those products versus the competition's is critical for positioning them in the marketplace.
Attack the problem from multiple angles. A single problem doesn't necessarily necessitate a single solution. When turning to a consultancy, make sure it offers multiple solutions for each problem. It ensures success in the long run.
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