Avis Budget Group Big Data Success Story
Client:Avis Budget Group
- Maximize customer value
- Meet customer service expectations
- A new Marketing Sciences Organization
- A new customer value model
- Improved customer loyalty
- Improved profitability
- Increased revenue by $200 million
Technology is disrupting the rental car business. In a post-recession market, intense competition is forcing companies to offer new and better services to customers. The resulting touch-screen kiosks, mobile apps and car-sharing options are recent proof of a global $50 billion industry’s innovation awakening.
For Avis Budget Group, a leading global vehicle rental services company, and the only one operating two truly global brands, a new emphasis on technology, data analytics and marketing could hold the key to achieving significant growth.
A post-recession plan
Back in 2009, nobody was talking about big data. In the midst of the Great Recession, with millions of jobs lost in the United States between Sept. 2008 and Sept. 2009, companies were cutting back significantly on employee expenses such as business travel, and the uncertain economic outlook led many consumers to postpone or cancel their leisure travel plans.
The recession’s toll on travel meant a reduced demand for rental cars at airports, which lowered revenue for rental car companies. But instead of keeping their heads down until the economic storm passed, executives at Parsippany, N.J.-based Avis Budget began formulating a plan to identify new opportunities and grow their business using customer data.
“The recession was the time to revise our strategic thinking, and say, ‘When we come out of this, and we will come out of it, what is the investment that our company should make in order to enhance the post-recession customer’s experience and drive loyalty, revenue and profit for the company,’” says Tom Gartland, president of North America at Avis Budget Group.
“When we first started talking about a customer relationship management (CRM) and loyalty program, the car rental industry was seen by many as a commodity business,” he says. “We had the opportunity to change that paradigm, that by the right customer execution, service excellence and an enhanced loyalty program, we would be seen by our potential clients as different from competitors.”
In the information age, data is a valuable asset. Research firm IDC is predicting a big data market that will grow revenue at 31.7% a year until it hits the $23.8 billion mark in 2016. For companies such as Avis Budget, the potential to mine their data — and derive actionable marketing insights — is practically limitless.
CSC defines big data as data that consists of large volumes, high velocity or variety. Avis Budget’s challenge concerned elements of all three components. The company had significant volumes of transaction data that needed to be analyzed for real-time actions (offers, service treatments, etc.) and an accelerating volume of unstructured data coming in from its website, call center, emails and social media channels.
Working with a big data team from CSC, Avis Budget began one of the most important programs in the company’s history.
Their first goal: grow market share. “Avis is the leader in commercial car rental in North America,” Gartland says. “We have the No. 1 position when we talk about car rental for commercial travelers and a 64% share of their wallet. But we still have the opportunity for an additional 36%.”
The same is true of Budget. “Budget is more of a leisure brand, and we have about 45% share of wallet with the normal Budget client,” he says. “How do we capture that incremental 55% share of wallet, so in their decision set they’re always thinking of using the Budget brand? If we could do that, we could add over two billion dollars of incremental revenue to the North American business.”
A customer-centric plan
The result of Avis Budget’s strategic planning during the downturn gave birth to the company’s focus on CRM. A customer value segmentation roadmap would be the starting point. CSC was chosen to help implement a program that would enable Avis Budget to derive new insights from their customer data and take informed channel-specific actions to market programs and services.
“Before we arrived and started to work with Avis, the company was a transaction-based company,” says Alex Black, a senior partner in CSC’s Big Data and Analytics practice. “Avis had a lot of transaction information but none of it was aggregated by customer.”
CSC’s initial work with Avis Budget was to help it define and implement a customer-led, service-driven vision. Both the Avis and Budget brands would benefit from the program.
“What we were focusing on was to start with a customer valuation approach,” says Black. “Let’s build a model, determine who the most valuable customers are and figure out how to concentrate on them by doing some extra special things.
That meant a lot of data work, a lot of campaign-management work and a full program that included really transforming the entire organization.”