Case Memo 2
Olympic Rent-A-Car U.S.: Customer Loyalty Battles
In response to Enterprise Rent-a-Car’s new customer loyalty rewards program, Laura Walkins, should follow the industry leader by adopting a dollar based reward system and focus on targeting business travellers. But in doing so Olympic needs to be careful not to enter into a price war with Enterprise. To avoid the risk of this happening, Olympic should look to diversify and differentiate their rewards program to steal a share of the business traveller market.
Olympic’s current performance is greatly contributed to by its strong presence in the airport rental segment as well as its goal to be the cheapest provider of car rentals. About half of industry revenue is generated from airports. From this approximately 80 percent of revenue is derived from business rentals. However, only 20 percent of travellers who rented at airports were business travellers. This breakdown demonstrates how important it is to capture the loyalty of the business customer market. Business travel customers are more inclined to choose a car rental business that offers the best incentives in the loyalty program. So if Olympic decide to scrap the loyalty program it would almost certainly be detrimental to the long term prospects of the company.
Olympic’s Medalist Rewards Program appears to have been marketed well, playing on the founder who was an Olympic medallist. The concept captures the customer and is perceived to be a strong brand. Olympic also offers the cheapest rental option to their customers. In terms of Olympic’s strategy for B2C they are doing particularly well because the type of purchase has a high involvement which involves the customer actively filtering through information for the best price. The B2C market is likely to base their decision primarily on price and quality, the areas where Olympic are competitive. The weakness, though, is that the rewards program isn’t capturing enough of the business customer market. This
In response to Enterprise Rent-a-Car’s new customer loyalty rewards program, Laura Walkins, should follow the industry leader by adopting a dollar based reward system and focus on targeting business travellers. But in doing so Olympic needs to be careful not to enter into a price war with Enterprise. To avoid the risk of this happening, Olympic should look to diversify and differentiate their rewards program to steal a share of the business traveller market.
Olympic’s current performance is greatly contributed to by its strong presence in the airport rental segment as well as its goal to be the cheapest provider of car rentals. About half of industry revenue is generated from airports. From this approximately 80 percent of revenue is derived from business rentals. However, only 20 percent of travellers who rented at airports were business travellers. This breakdown demonstrates how important it is to capture the loyalty of the business customer market. Business travel customers are more inclined to choose a car rental business that offers the best incentives in the loyalty program. So if Olympic decide to scrap the loyalty program it would almost certainly be detrimental to the long term prospects of the company.
Olympic’s Medalist Rewards Program appears to have been marketed well, playing on the founder who was an Olympic medallist. The concept captures the customer and is perceived to be a strong brand. Olympic also offers the cheapest rental option to their customers. In terms of Olympic’s strategy for B2C they are doing particularly well because the type of purchase has a high involvement which involves the customer actively filtering through information for the best price. The B2C market is likely to base their decision primarily on price and quality, the areas where Olympic are competitive. The weakness, though, is that the rewards program isn’t capturing enough of the business customer market. This