One of the hottest trends in the transportation field nowadays is that of “car sharing,” a/k/a short-term, neighborhood-distributed car rentals, a la Zipcar. (In some future RAIN blog piece, we’ll talk more about other trends like ride-share services (like Uber and Lyft) and urban bike-sharing programs (as written about on the front page of the Wall Street Journal, like Chicago’s Divvy).)
In Chicago, for several years we have had two competing services: Zipcar (recently, although I didn’t realize it until researching this sentence, acquired by Avis) and iGo (recently acquired by Enterprise Rent-a-Car and rebranded as Enterprise Car Share).
The way these services work is that users pay a small annual sign-up fee in exchange for a credit-card sized access card. The companies have cars scattered throughout the city (having rented a couple of reserved spaces each in parking lots in dozens of locations all over town).
The customer reserves a specific vehicle online (I, for example, like to use the blue Prius that is based behind an apartment building at Wilton & Waveland), in increments as short as an hour, for a price of about $7-15 per hour (depending on vehicle type), which, in one of its best features, includes gas and insurance.
For the individual with limited automotive needs — e.g., occasional trips to The Home Depot or to a picnic in a forest preserve — it’s a great alternative to car ownership, especially when supplanted for shorter trips with taxi rides from Uber and bike rides from Divvy.
Seeing this trend, other big players in the world of car rental are also trying to get in the game.
But it’s not as easy as it looks!
I had the misfortune recently of deciding to try Hertz’s new “Hertz 24/7” service instead. And my experience shows how legacy firms can have trouble offering a new type of product. (Metaphor alert: In a few paragraphs, we’ll be talking about legacy radio companies trying to offer a new type of radio product.)
I’m sure the bigwigs at Hertz saw these little upstart companies and said to themselves, “We’re a thousand times bigger than they are, with almost a century of expertise and loads of resources. To cover this category, we’ll just launch a duplicate service. How hard can it be?”
My first hiccup with Hertz 24/7 was trying to acquire the key fob that Hertz uses in lieu of an access card. Their website sent me to a dingy Hertz location near Wrigley Field to pick up my fob, the employees of which knew nothing about it and sent me to a different location to pick one up. (Fortunately, there was a Divvy bike rack nearby, so I was able to conveniently get to the second location.)
My second hiccup was trying to find my car. Whereas Zipcar and Enterprise Car Share have websites that show you quite clearly where your reserved car is located, Hertz’s website did not, leaving me to try to find my reserved Prius somewhere in a six-story parking garage.
My third hiccup was due to the fact that Hertz had not worked out how to get one’s car out of said parking garage — the automated garage was demanding $120 before it would open the gate to let me out. (Apparently the car had been in the garage for a couple of days since the last renter had returned it.) It took 30 minutes on the phone with Hertz, with my car blocking the garage exit throughout, to work this out. (Eventually, we agreed I’d charge the $120 on my personal credit card and Hertz would issue me a $120 credit on the same card, which seemed like an absurd solution to me, but it was the best solution we could come up with.)
My fourth and fifth hiccups I don’t even recall, but that’s just a mental block on my part. My sixth hiccup, however, I definitely recall: Hertz didn’t have a good system for establishing that I had returned the car. Two days later, I starting getting calls from Hertz wondering why I hadn’t returned it and asking for hundreds of dollars in late rental fees. Fortunately, eventually they found it, of course, but it wasn’t easy.
The lesson here is that there is a plethora of systems required to deliver a good customer experience for short-term, neighborhood-distributed car rentals. Specialist firms have spent years developing those systems, and Hertz wildly underestimated how hard it was going to be to compete.
And the same principle is true for personalizable online radio. Multi-billion-dollar legacy firms operating in the radio or music industries may think, “How hard can it be?”, but, in fact, it is indeed very hard.
Delivering a complicated product — delivering a separate, unique stream of music to each of tens of thousands of listeners simultaneously, informed by each individual’s previous song ratings — requires complex underlying systems that took the specialist firms years of trial and error (and focus!) to develop properly.
Both SiriusXM’s current personalizable radio product and Apple’s initial version of iTunes Radio are examples of products that were launched by multi-billion-dollar legacy firms that, while offering nowhere near as bad an experience as my experience with Hertz 24/7, didn’t set the world on fire.
Even Clear Channel’s iHeartRadio, which was eventually developed internally, needed to be kickstarted by the purchase of a technology firm called Thumbplay (for a rumored $30-50 million) to acquire the infrastructure for its personalizable radio component.
As I saw with Hertz, sometimes being the legacy firm is a detriment rather than a benefit.
And if, in your organization, someone asks “How hard can it be?”, your initial response should be “Possibly very.”