Battle for the Hourlies: Hertz Seeking ZipCar Customers

In late 2008, Hertz entered the hourly car rental market with a service called Connect by Hertz.  Recently Hertz re-branded the service as “Hertz on Demand,” eliminated membership fees, cut hourly rates, and expanded the types of vehicles available through the service.  All of these changes are aimed squarely at zipcar.  For example, zipcar charges a $60 annual fee to take advantage of their service.  Why rebrand and cut fees?  Today zipcar’s 600,000 members worldwide is nearly 10 times Hertz levels.  Compete assessed the digital US presence of each brand to help set the stage for this “Battle of the Hourlies.”

Rental Car Traffic

Compete first looked at US domain-level site traffic for each site.  Units are unique visitors (UVs) which means no double-counting of consumers that visited the same site more than once in the same month.  Over the period show, hertz.com had seven visitors on average for each one zipcar.com UV.  And the Hertz advantage has accelerated in the most recent months.  Note that Hertz plans on converting its entire fleet to be hourly-compatible, which means all of its site traffic has the potential to represent demand for hourlies in the future.

Revenue Today, Customers of Tomorrow

Given the relatively low volume on the zipcar site today, what else could Hertz be after?  Incremental revenue is a logical answer as zipcar’s expected 2011 revenue is $240M.  But Hertz might also seek the relatively unique zipcar audience.  Compete behavioral data show that zipcar.com visitors are younger than Hertz.com visitors: 44% of zipcar.com visitors are under 34, vs. 37% for hertz.com.

Zipcar having a younger audience makes sense to the extent that younger people may only be able to afford a few hour’s worth of rental and are less likely to own a car, so more likely to need a car for shorter trips.  But zipcar’s handle on a younger audience also means they may be better connected with tomorrow’s full-day renters—people that might otherwise have to exposure to Hertz.

Drive, They Said

Hertz is one of the stalwarts in the traditional car rental space; zipcar is the stalwart in the hourly car rental space.  But despite zipcar’s track record and expected 2011 revenue it has yet to break even, which makes one wonder how Hertz can make money with no annual fees.  One way is by adding hourly capabilities to its current fleet, which means less investment in new vehicles (all zipcar vehicle buys are incremental).  And Hertz always has the option of re-instating fees once it has great membership enrollment momentum.  So how can Hertz get that momentum going?

  • First, identify the best locations for intercept messages.  This is done by understanding where zipcar visitors go across the internet (all sites, not just travel sites).  Referrals alone will be insufficient; this needs to be across sites days and sessions.
  • Second, quantify the behavioral characteristics of the zipcar visitor (and booker) to refine content in online and offline messaging to specifically influence zipcar shoppers.  This is done by measuring the extent to which zipcar visitors have behavioral categories that differ from hertz.com visitors.  Behavioral categories are collection of sites that together represent interest in a particular area, such as sports, eco, higher education, politics, etc.
  • Third, gauge the difficulty of the challenge by understanding the focus of zipcar.com visitors.  Focus can be measured by the extent to which zipcar visitors also visit car rental brand sites and/or car rental paths on Online Travel Agencies (OTAs).  The more focused they are on zipcar, the harder it will be to re-direct them.  This analysis could include a survey of zipcar fans (or Hertz avoiders) on their perceptions of each of the brands.

______________________________________________________________________________

About Lincoln Merrihew:
Lincoln Merrihew is the Vice President of Transportation at Millward Brown Digital. At Millward Brown Digital, Lincoln is responsible for steering the Transportation Team, which encompasses the automotive and travel practices. Before Lincoln joined the Millward Brown Digital team, he worked at TNS Custom leading the Automotive team, and then continued on there to lead business development for 10 different industry verticals. Lincoln's career aspiration is to create game-changing solutions and insights. Connect with Lincoln on LinkedIn.