Remember when getting upgraded to a bigger rental car was, well, an upgrade?

Excerpted from Direct, “Thrifty Marketing for Thrifty Times: A Car rental case history” By Ken Magill, Dec 1, 2008

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When gas prices skyrocketed this summer, Dollar Thrifty Automotive Group — along with the rest of the car-rental industry — faced a tough marketing challenge: What to do when customers’ demand for economy cars soars and the fleet simply isn’t built to meet that demand.

“Consumer behavior has really changed a lot for us with high gas prices,” says Chris Payne of Dollar Thrifty … “There are road warriors who like to get the best deal they can. [Before gas prices went up] they would reserve a smaller car than they really needed knowing we’d probably sell out and they’d get a bigger car at no extra cost. Now people are saying, ‘Wait a minute — I reserved a smaller car and you want to give me that gas guzzler? Forget it, I don’t want it.’ Four-dollar gas definitely was a tipping point.”

As a result, the company found itself in a rough spot. “You just can’t change your fleet overnight … It’s the same issue the manufacturers have had, where for a while Detroit was pumping out all these SUVs and minivans and everybody thought bigger was better.” Moreover, he says, the cost of cars to rental companies has gone way up, so these firms have been forced to keep their vehicles longer, making fleet changes even more difficult.

“Think about running a business where the cost of your commodity has gone up by 50% twice in the last two years … All the companies have been holding on to cars for from 12 to 14 months. It used to be we’d hold on to them for about nine …”

To overcome the challenge, Dollar Thrifty began running regular e-mail promotions on larger and luxury vehicles … the company’s two brands — Thrifty Car Rental and Dollar Rent a Car — have 1.8 million and 1.3 million opted-in e-mail subscribers, respectively … The average opt-out rate for a Dollar Thrifty mailing is .12% — “which is amazingly low … we’re reaching a very targeted audience … ” Also, he says, the average mailing generates most of its activity within 72 hours and brings in over $1 million in revenue.

“Dollar Thrifty is a perfect example of a company that’s built a successful permission-based marketing program … By providing subscribers with content that’s directly relevant and valuable to them, Dollar Thrifty is able to increase revenue while keeping opt-outs incredibly low” … 

Dollar Thrifty also created a chart to be given to customers at rental counters. With it, customers can cross-reference the gas consumption of smaller vehicles against larger ones and figure out how much more they’d end up spending on an upgrade.

“What we’ve found is that consumers’ perceptions are way out of whack on the gas thing … families of five are showing up having rented an economy car because it was the best price they could find online … They’re forgoing comfort to save a few bucks, but they’re not saving as much as they think. In some cases, they’re literally spending a dollar or two more for the entire rental.”

Anecdotally at least, Payne says the program is working … As of this writing in October when gas prices had dropped, Dollar Thrifty customers remained cost conscious and the chart was still being used.

“It’s still helpful,” Payne says. “People are getting hit in a lot of areas and anything they can do to cut costs, they’ll do …”

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One Response to “Remember when getting upgraded to a bigger rental car was, well, an upgrade?”

  1. yusufgreen Says:

    Interesting Read! Very detailed blog.
    Thanks for sharing

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