Car Club: Driving Social Mobility Forward

Enterprise Rent-A-Car (ERAC)

11. Sustainable Cities and Communities 12. Responsible Consumption and Production Flourish Prize Finalist - For Business as an Agent of World Benefit - Weatherhead School of Management

Overview

‘Car Club’ is an ERAC innovation that automates the car renting process. Through the ERAC Car Club app, customers can rent cars or vans in their area for short periods of time, giving customers a more cost effective and flexible alternative to renting a car in branch for a full day. Customers pay a £20 sign up fee, which is given back to them in credit, and car rentals start from £4.50 an hour.

It directly contributes to solving Sustainable Development Goal 11, as it encourages the use of low emission vehicles in cities making them more sustainable places to live. Additionally, the concept contributes to Social Mobility as it helps to bring communities together through giving people alternative, affordable travel options located where these communities need them most.

Authors

Lorna Murphy

Lorna Murphy

Lyndsay Gillan

Lyndsay Gillan

Samuel Da Silva Costa

Samuel Da Silva Costa

Stefanie Paterson

Stefanie Paterson

Emma Cartwright

Emma Cartwright

School

Glasgow Caledonian University

Glasgow Caledonian University

Professor

Alec Wersun

Alec Wersun

Innovation

Car Club seems closely aligned with the guiding principles we mentioned in the overview of the company, the most important being customers and “community feel…” Mr Darley explained. This is due to the multiple locations of the cars, and the respect which members show to each other by keeping the car clean and undamaged. This innovation is also addressing the trend in automation. Many companies in a wide range of industries are going automatic or self-servicing, and ERAC’s Car Club is giving this option to the car rental industry.

Car Club makes rentals far more accessible, as Mr Darley said they have created a “home city market”, meaning that most ERAC customers are within 15 minutes of a ‘branch’. Car Club currently has more than 9000 members in Scotland. The vehicles are available 24/7 and you only pay for the time you use. Reservations can be made at a moment’s notice and vehicles can be rented for just an hour or daily. Car Club is perfect for a range of different markets, from tourists to students, and the convenience of the innovation is a key factor for the company. Recognising the significance of the student market, Keith Stark (Scotland Manager of Car Club) states “Students and staff are a very important market for the car club. In Edinburgh, which is more established, we work with all the Colleges and Universities. Edinburgh University have in excess of 250 members with a large percentage of these having private memberships as well.

Car Club: Driving Social Mobility Forward

Inspiration

The inspiration behind the Car Club innovation was ultimately community focused. Mr Darley mentioned listening to customer demand to be one of the most important sources of inspiration, but also looking at what competitors are doing: “we’ve got a lot of respect for our competitors,” he says, especially the newer start-up businesses. A sense of community is achieved through Car Club’s vehicle locations in the community where people live and work. This makes it convenient for many people, and communities become a nicer environment with less congestion. It also offers an affordable service, opening the rental option for those who may not have previously had access, e.g. low-income groups. There was also a desire to do something a little more outside of the box, to offer a unique service that interests and engages customers.

The most important motivation, however, is automation. More services are becoming automated, as Mr Darley explained “automation seems to be a theme that customers want”. He used the example of Amazon and drone delivery as a new automated service, this trend is being seen across industries and the car rental industry should be no different. Smart phones have become a huge part of day to day life, therefore it is important to offer a car rental service which exploits the possibilities this offers, in the form of a smart phone app. This makes the rental option much easier as most people have access to smart phones while not everyone will have a car rental branch in easy reach.

Overall impact

The overall impact of the Car Club innovation is that it is a scalable concept. As transportation provider market leaders, ERAC is showing how ‘flexible convenience’ can support communities. This is achieved through reducing harm to the environment and by keeping costs low, so it is affordable for those who require this service. Mr Darley believes that the innovation is scalable and adaptable to other areas and countries. This shows how automation is the future across many industries. Car Club is one of the most exciting services offered with continual growth and evolution anticipated, resulting in more populous being supported for social mobility.

A challenge of the innovation is educating customers and staff about the automated service and app use. In response to this, ERAC are encouraging employee engagement through free corporate memberships and detailed reporting of the innovation. For customers, sign-up fees are converted into credit and 24-hour assistance is available. Mr Darley specifies customer choice and respect as being major factors of Car Club success, and environmental benefits are integrated with positive customer experience. The scope for introduction across industries is clear, as employers can shift travel funding to Car Club for immediate cost savings and effective participation in reducing environmental impacts. Car Club has a shared community asset with improved accessibility.

The interconnected nature of automation which is integral to Car Club facilitates data collection for reporting and communicating feedback, consolidating technology and service instantaneously for combined goals. The various aspects of the Car Club innovation are designed to maximise utilisation, effectiveness, and is representational of how the Sustainable Development Goals can be integrated with business to champion Global Compact Principles. ERAC is clearly “doing well by doing good”.


Business benefit

Car Club is an innovation and a long-term product development as it expands the current products that ERAC offers, and Mr Darley recognises it as a “growth area” for the business. Car Club improves the attractiveness of the business and is contributing to gaining an edge over competitors. By offering the short-term rental option, the product becomes more cost effective, therefore it is more accessible for lower-income customers. This gives ERAC a more extensive customer base and improved customer loyalty, which can lead to an increase in long-term revenue and creates a stronger brand image. It also shows that they are committed to inclusion and community engagement.

Car Club demonstrates that ERAC is dedicated to keeping their business up to date with the latest technologies, such as the trend in self-service options as mentioned above. Car club puts the customer in control; customer empowerment has been shown to improve customer loyalty. This also allows the business to respond to the competitive environment as failing to take advantage of new technologies can cause businesses to lose their edge. Car Club is based in communities, but ERAC also creates relationships with corporate companies to provide consultancy on whether Car Club access is needed for operations.

When asked about the future of the business, Mr Darley explained that ERAC is looking to become a “one-stop shop for your transport”. He compared their vision to Apple’s current position as their products consolidate a range of different services (iTunes, Apple Podcasts, iBooks etc) and this has enabled them to become the market leaders they are today. The Car Club innovation is a step towards this goal.

Although no figures are available to provide evidence of the economic benefit of Car Club to ERAC, there are many advantages for the company. Car Club has created the opportunity of a 24/7 revenue stream for ERAC due to the automation process of car rental. Customers can rent cars out with normal office opening times. With Car Club also being a year membership, it is creating loyal consumers, and encourages repeat use. The advantage of short term rental has also provided a new market segment and consumer base for the company. The innovation is contributing to the Smart City model and has also opened partnerships with companies such as councils, universities and private corporate companies.

Social and environmental benefit

The main impact of the innovation is, as Mr Darley mentioned, the phrase “Social Mobility”. In this context Social Mobility is providing short term access to a vehicle for members of the local community, providing an alternative transport solution. ERAC believes that owning a car is becoming increasingly expensive and within a city environment people are moving away from car ownership as they are more mindful of harmful emissions. However, there are occasions on which people still require short term car usage, such as a short business trip or doing a grocery shop.

This quote from Mr Darley sums up the market gap which Car Club is addressing:

So, it’s this unique thing where I don’t need to own a car but need a car occasionally. So, it’s for that small segment of people that don’t really want to have to worry about parking, car insurance, the big investment...”

Key values of the company are the customers and community, which are at the heart of the business model. They advise customers of the best transport option for them, whether this be public transport, car rental or Car Club hire. This may appear counter-intuitive; however, this builds up a foundation of trust between the company and the customer, providing long term customer relation foundations. “We're there when you need us.” (Enterprise, 2018).

The environmental impacts of Car Club are indirect as this is a mostly social innovation. However, this innovation still provides some important positive influences on the environment. This reduces congestion and the Car Club vehicles emissions are 34% lower than the national average. The vehicles that are used in Car Club are either hybrid or electric vehicles and are the lowest emitting vehicles of their categories.

ERAC negotiates agreements with councils to use car parking spaces for Car Club. Councils are welcoming Car Club as they believe that offering this innovative transport option is a way to aid their efforts in developing their Smart City objectives and reducing congestion in built-up areas. The Scottish Government has established clear goals towards to creation of Smart Cities, including reducing CO2 emissions, alleviating congestion and improved citizen engagement with the use of mobile technology. As we have already shown, Car Club meets these criteria.

Interview

Mark Darley, Group HR Manager Scotland and Northern Ireland

Photo of interviewee

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Enterprise Rent-A-Car (ERAC)

Enterprise Rent-A-Car (ERAC)

Stirling, UK

Business Website: https://www.enterprise.co.uk/en/home.html

Year Founded: 1957

Number of Employees: 10000+

As the only international car rental company to report on the Global Reporting Initiative standards, Enterprise Rent-A-Car (ERAC) has achieved awards including; UK Social Mobility Awards 2017, Business in the Community Leadership Award 2017 and Graduate Employer of the Year 2016.

Part of Enterprise Holdings, ERAC is a private, family-owned company which provides transportation solutions for a variety of needs. Its’ global turnover last year was USD 21.9 billion, with 93,000 employees. Within the UK there are approximately 5,000 employees and 330 are based in Scotland and Northern Ireland. It began trading in 1957 by the Taylor family, based in St. Louis, USA with 7 cars originally. This fleet has expanded to just under 2 million, with 70,000 vehicles in the UK. The values of looking after customers and listening to their input remains integral to this day. As a large organisation, company-wide goals include reduction in paper, water usage, greenhouse emissions, increased energy efficiency, work force development and a focus on product life-cycle regarding oil re-recycling and re-refining. The Car Club innovation encompasses these corporate goals.

Enterprise Holdings Corporate Social Responsibility Policy States:

“We believe that strong business growth is built on putting the needs of customers, the growth of employees and the health of local communities first.”