Trickery as a Business Model – Rental Cars

Customer service systems have improved so much in the past 20 years that we take for granted how arduous some things used to be. I was reminded yesterday when I had to pick up a hire car that not every industry has embraced the possible. Why? To maximise profit while the barriers to entry are still high. It made me wonder if one car rental brand is called Hertz on purpose!

The picture above is the line I was waiting in. It inspired this spur of the moment LinkedIn post which really seems to really have struck a nerve. Here’s what I posted below:

Dear Rental Car Industry: this is a queue from today. Most brands have it at the airport today & often. The problem isn’t a busy day, it’s that your rental process is stuck in 1989. We waited nearly an hour! I don’t buy for 1 second that this process couldn’t be all digital and all automated. A simple text with my car rego and bay number is all we need. Condition reports can be pics on drive out, insurance, copies of driver licenses and credit card details all can and should be automated. Let’s call it ‘sub-optimal’ – I could redesign this in a day & fix this in 2 weeks.

As I write this the post has had 73,157 views, had 978 reactions and 196 comments.

The comments on the LinkedIn post provided some deep insight into industry disruption, technology and CX. But more importantly, it was filled with many customer centric fixes, and startups in the process of doing so.

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The story doesn’t end there.

Once I finally got to the check-in counter, I was then asked if I wanted insurance, and that the excess for not choosing insurance was $5000. Seriously? I felt extorted. The risk of not taking the insurance seemed far too high not to proceed. The crazy bit is that it added more than $200 to my final rental price for a few days, which almost doubled what I had paid for when I booked it online. What is clear is that this isn’t offered at the time of booking online because it exposes the ‘real price’ during the booking process, when switching to an alternative is easier. It also seems as if the ‘analogue’ pick-up process is designed on purpose to perform this upsell to customers. (Oh, and I’m being generous with the term upsell).  The car I ended up getting wasn’t the one I ordered, either. It was in the same size class, and I am aware that the offer is ‘Car XYZ or similar’ when booked. This presents a major problem. I ordered our specific car on purpose because I know it fits our luggage and my surfboard. The one I got didn’t. I’m struggling to understand why any car rental firm wouldn’t have the exact same model of each car in each size category. Surely that wouldn’t not only reduce purchase price via negotiating power, but reduce also operating costs. Not to mention, customers would actually know what they are getting. Maybe it’s just a little bit too much commonsense here from the Sammatron? Other times I’ve even been ‘upgraded’ to larger cars, which isn’t really an upgrade in cities overseas where I want a small car on purpose because the streets are small and I’m unfamiliar with the roads. It does seem that this industry is entirely built on serving itself and its existing infrastructure instead of its customers.

The problem as I see it isn’t really the prices. It’s the process, lack of respect and lack of dignity they afford their customers. It’s the fact that it could provide a much better experience.

While some premium memberships and other firms and startups in this space offer a superior digital check-in process, it seems that a poor experience is most common. To the credit of Avis, their AP Commercial Director did reach out to discuss the issue and improvement plans. (I’ll update you on that in due course.)

Why do they get away with it?

As far as I can tell – this business has far more barriers to entry than taxis did. Firstly, a fleet of cars is required, and retail and parking space in airports comes at a super premium. This alone would keep out most players wanting to disrupt the space. Also, given that any alternative couldn’t be a pure SaaS play, most Venture Capitalists would shy away from funding a new disruptor. But buckle your seat belt, some big players are coming.

What’s coming soon

New competitors are about to arrive and it is not Uber, Lift, Didi, Hola, GoGet or new car rental startups. It’s the OEM Car Manufacturers themselves. As soon as autonomy arrives, and it is coming quicker than you think, they won’t just sell cars, they’ll be renting them too. By the trip, by the hour, the day and the month via subscriptions. Lucky for them, consumers have already been trained through ride sharing companies’ hard work.

Once cars can drive themselves, the car manufacturers can avoid the need for a retail space and a car park in an airport and simply summon a car to the kerbside of the airport to rent out. In fact, car manufacturers can do all sorts of interesting things like provide free rental to existing new car purchasers and sell cars via monthly subscriptions which are ‘location agnostic’. This is all with a massive pricing advantage given they won’t have to buy cars from third parties like rental incumbents do.

The Lesson? 

The lesson is simple, really. It’s very easy to assume that as soon as better technology becomes available, large corporations will adopt it. The opposite is most often the case. They tend to lag behind the potential of technology and customer expectations as long as possible. Especially when the barriers to entry are high. It’s also a good reminder that opportunities to improve an industry are everywhere and not dependent on new tech. They are mostly about lazy incumbents taking advantage of a glitch as long as they possibly can.

Cars will own themselves

You’ve probably heard about blockchain, but what we really need to understand is how blockchain can be used to fundamentally change what corporations are and how they can be run. Slight nerd warning for this entry – but I think you’re gonna dig it.

During the Age of Discovery, modern corporations were invented to remove personal risk from people taking financial risk. Ever since then, new forms of sovereignty have emerged. Of course, this confuses who owns what and who is actually responsible. There’s even a question mark over who owns your own face these days, as usage and collection of facial recognition data grows. What’s about to arrive is even weirder than that. Very soon, ‘things’, like cars, will be able to own themselves!

What makes this possible?

There are two innovations that make this possible. The first we all know about – self-driving cars. The tech is already here and it works – no explanation required. The second is the technologies most associated with cryptocurrencies: blockchain and Smart Contracts.

To understand where I am going with this, all you need to know is that we now have a technology which enables us to programme the behaviour of ‘things‘ like cars, to behave in certain ways, financially. So instead of people doing deals with other people and transacting – ‘things‘ will be able to do business with other ‘things‘.

We will be able to programme ‘things’ to interact with the world independently. For example, a self-drive car could be programmed to recharge or refuel with petrol when required, and then transact with another robot programmed to extract the requisite funds from the cars’ virtual wallet.

How will we do this?

In the near future we’ll have anInternet of Things’ kind of trading net. Let’s call it the ‘Tradenet‘. This Tradenet will be a bit like the internet as we know it, but instead of having virtual web addresses we visit online, it will have the actual physical location of real ‘things’ like cars registered to it. It will be an internet where we trade the usage of ‘things’. The Tradenet won’t be for all forms of commerce – only for ‘things’ that are commoditised so we know exactly what we will be getting. Every ‘thing’ on the Tradenet will be self-aware: what it is, where it is, how it’s used, who wants it, what its fees are, how it will advertise itself, and how to make contracts with other people and things, and essentially do contracts or ‘jobs’. ‘Things’ on the Tradenet will be self-employed. This will be a separate kind of internet that sits to the side of what we have now.

The Autonomous Economic Agent

A car on the Tradenet will become an autonomous economic agent. It will have an inbuilt set of instructions in its code which not only tells it what to do, but enables it to learn from its environment, constantly upgrading its knowledge and decision criteria.

So what might a Tradenet car do?

Firstly, it will be ‘born‘ into the market when someone buys it and puts it out to work. This could be a person, a corporation, a foundation, or even a charity. The car comes with a ‘mind of its own’. Even if two models of the same car are put on the market, after a time, like twins, they’ll evolve and behave differently, because of how they have learned to interact with the market.

The car will bid for work on the Tradenet, with the objective of, let’s say in this case, maximising profit. It will find the best routes to maximise profit, know where position iteself and the optimal times to get the most rides. When demand is low for people passengers, it will look for package deliveries or other forms of paid transport the Tradenet needs.

At night, it will go on the Tradenet and look for the cheapest car park to stop in overnight when demand is low. It then hits the road again early in the morning, hoping for long airport trips. It knows when it needs to be serviced and cleaned, as well as where and when it is least costly to perform these tasks.

During school holidays when the city becomes quiet, it drives itself up to the Gold Coast to do business with holiday makers. Around Christmas time when the the trucking industry has excess demand, it does trips between major cities hauling gifts for ecommerce purchases overnight. Zipping from Melbourne to Sydney overnight, the car then works in Sydney the next day… before making the overnight trip back to Melbourne the following day.

The car trades based on what it learns about the best routes with other Autonomous Economic Agent cars – for a fee!

Here’s the real kicker – when the car itself is too busy and market conditions are just right – it gives birth. It uses its excess profits to purchase a new baby car from the Tradenet. It buys the right car for the market, which may well be a different model to itself. When the new baby car arrives, the parent car downloads all that it knows to the child and puts it out to work. Of course, it teaches the child to learn from the mistakes the parent has made and hopes it does even better financially. The cars which learn the most will make the most money, as a quasi-autonomous corporate family. The more babies a car has, the more successful it is.

As the original car ages, it might even put itself into retirement. Or worse, its ‘kids’ collude to send it to the scrapyard as it is dragging down the car family’s profit. 🙁

Next Generation Corporations

Yes, our next iteration of the corporation is ‘things’ that act just like companies do, except there are no people involved in running them. People might have shares in Autonomous Economic Agents and as soon as self-drive cars are affordable and the regulations allow, this ownership model will follow.

The only question is, which entrepreneur will be first to the write the code to make it a reality?

 

The coming changes to your house

It’s easy to forget that the places we live in are a direct reflection of our current technology. We’ve all come a long way since we lived in cave 76 (That was for all the Mel Brookes fans), and we generally are living in houses built on top of the shoulders of giants. Great entrepreneurial, scientific and engineering minds which make the modern world very comfortable indeed. We are currently on the cusp of a quite a few physical changes appearing in our homes. Before we explore what they might be, let’s think about how long some of the current technologies in our homes have been around:

  • Letter Boxes – mail services started encouraging these to be installed in houses for deliveries in the mid 1800’s
  • Indoor Plumbing – In the 1860’s only 5% of American houses had running water, flush toilets were very uncommon until the mid 1900’s
  • Driveways – much less than 80 years old as a standard inclusion
  • Electricity – uncommon in suburban homes until the 1930’s
  • White goods – (electricity needed) were rare in modern economies until post WW2
  • Televisions – 1956 in Australia
  • VCR’s – the early 1980s
  • Home Computers – the mid 1980s
  • Internet – the mid 1990’s

There’s many more examples, but you get the picture – where we live changes based on the technological possibilities, and their facilitation requirements of the day. So let’s run a thought experiment on what will begin appearing in homes, based on the technologies about to arrive, and those already here and functioning.

Drone delivery landing pads: With deliveries already happening they need to land somewhere. Apartment buildings are already being designed with them on rooftops, and your house will be no different. Maybe it will have an auto opening lid which closes over after the drop off has been made?

drone landing pads

Smart Toilet: I’ve written about this before – but we can expect it to be our health partner in life, and since Alaphabet had a patent approved on the smart bathroom last year, this is one of those realities which will surprise with its speed of arrival.

Smart shower: One that takes a photo of you everyday… not to invade your privacy, but to ensure it knows you have a dangerous sun spot long before you do.

All glass becomes web enabled screens: If you’ve always wanted a house with a view, well it’s about to come a lot cheaper than anyone expects. All the glass in our homes will become web enabled screens. The resolution of our windows will be indistinguishable from an actual view into the real world. All of a sudden anyone can have a real time, harbour view, which changes perspective on different windows in the house to give perfect perception in real time. Maybe those rich people with actual harbour mansions will make money selling their views via a live feed cam?

Charging stations in all driveways: Our driving future is all electric as is our entire economy. Expect every place cars stop will have a charging facility on hand. If they ever stop – I’ll probably send mine out to work for me when I’m not using it.

Virtual Reality Room: It will be a bit like the home office was, or maybe part of it. We’ll conduct meetings with work that feel so real, we’ll wonder why going to the office is even necessary. We’ll also use our VR rig to shop online for things we want to touch and experience. Our haptic gloves and suits will assist in the purchase process. We’ll also use it to choose hotel rooms, holidays, and even do exercise. In the latter case we’ll have a treadmill which keeps us stationary while we seemingly move around and explore other worlds

Of course the list of ‘new fixtures’ in the home will be longer as many forms of technology will change our habitat. And quite frankly that is the key – not that the technology makes it possible, but that entrepreneurs and emerging startups shine a path on what is possible and make us want it. This is where tomorrows economy will be made up from. Just like Bill Gates promised to put a computer on every desk in every home, and Jobs put one in your pocket, you can put something in our house as well – and you need not invent the thing in question. Exciting times ahead.

Here’s a little radio interview I did on this topic yesterday.

New Book – The Lessons School Forgot

Windows = Screens

If you think my raving on about screen culture is just a little too much. Then, get ready for more. In fact, look around at all the places in your life where you see glass and windows. Now imagine all of those panes as actual interactive screens which are web enabled as well as, well simple normal see through glass. Because this is coming, and it is coming much quicker than we thought it would.

The only job left to do now, is dream up the best data mashups based on the context of where the window is, because the technology evidenced below needs entrepreneurs underneath it to create real meaning and purpose.

[youtube=http://www.youtube.com/watch?v=0dIia553wVU]

My dad's chevy

Every now and again a brand crosses the chasm. A brand goes from being a thing, to being an emotional ingredient. These moments are usually personal, they are hard to capture and share. But occasionally it is captured, and it takes us to an entire new understanding of what is possible when we create things with the end user in mind. In this instance, the car was first created with driver in mind. And then, the acquisition was created with a dad in mind.

Another example of great narrative that would not be possible in the limited media of yesteryear. What a beautiful brand story to share – Kudos to all involved.

[youtube=http://www.youtube.com/watch?v=bz-nO6WvOYw]

twitter-follow-me13

 

Broken car = broken life

The title of this post is a philosophy I have. People often disagree siting financial hardship, opportunity, income, age… you name it. They can argue all they like but it is true. People who look after themselves, have pride and a solid work ethic have nice cars. Not necessarily expensive cars, but cars which are washed regularly, are tidy inside, and don’t have any obvious dings or fractures which are to be fixed.

Keeping a clean car doesn’t really cost any money, just a little bit of time and effort. In fact it usually saves people money, just like servicing a car does. Sure, cars get smashed, need repairs and are generally a necessary expense and not an asset. But like all things, delays in making it right will have a compound effect. Dints which aren’t fixed get rusty. Unserviced cars break down more often.  Trying to save money letting your car go, just costs money in the long run. People with unbroken lives know this. It also has an important impact on your own self worth and psyche. Not to mention other peoples opinions of you, rightly or wrongly.

Show me an adult with a broken car, and I’ll show you a person with a broken life. (students are the exception)

Below is a classic example. Both cars of similar style and age. The first is owned by a person with a broken life, the other with by a person with a great attitude.

Crappy car

Classic Car

Do the test for a week or two. Assess the people you know and the state of their vehicle. It tells a very clear story.

Startup blog says take pride in all you do and all you own and your life will be better.