Car rentals evolved, but loyalty programs still in style

Dan Knudsen and Bill Baker know the car rental business.

Heck, they were in on the ground floor of the first car rental loyalty program when it was conceived in the then-Bloomington headquarters of National Car Rental 25 years ago.

At the time, Knudsen was director of marketing for National. Baker was general counsel, whose role was to write the business rules for the program.

"We had new owners, new management and a team with an aggressive agenda," recalled Knudsen. "We did it in 10 1/2 weeks."

Thus was born National's Emerald Club, a loyalty program that eventually added the select-your-own-vehicle Emerald Lane to its frequent-traveler options, and still exists.

"In those days everyone looked at volume, not where the customer came from," Knudsen said.

But thanks to loyalty operations such as the Lacek Group, which tracks loyalty programs for rental car companies, there is now detailed knowledge of customer traits, habits and wants.

In addition to National, which is now based in St. Louis under the Enterprise Holdings umbrella, Lacek also tracks rental loyalty programs for Enterprise Rent-A-Car and Alamo Rent A Car, which are also part of the holding company.

The two sat down last week for a telephone interview with the Star Tribune on the eve of the 25th anniversary of the Emerald Club's debut to talk about the rental car business.

QAs a loyalty marketing firm, which kind of information do you track and provide for renters?

Knudsen: We track driver's license and credit card expiration dates on members' profiles, but no other information from those licenses and cards, to allow us to remind members to update their rental profile online before their next rental. Our members benefit by continuing to experience a smooth rental experience rather than having to stop at the counter or exit booth to update their profile.

We also collect data such as rental locations and dates, number of rentals, car type rented, etc., to allow us to provide members with timely and relevant messages and offers. For instance, members who are close to an award or the next elite tier level would receive a different message than someone who has just reached an elite level, or another who just had their first car rental with us. In the end, increased relevance results in increased member engagement and loyalty.

Knudsen: The Emerald Isle became the standard for the Emerald Club. It was the glue that held the company together. Today they don't charge a fee [It cost $50 to belong in the beginning.] Today it's mostly for the corporate traveler who rents frequently. They know the drill. It's been a great friend of frequent travelers for many years.

Baker: The Emerald Club, Enterprise Plus, Alamo Insider -- we're delighted as a company to have them all.

QHow is the car rental world different today?

Knudsen: It is so different today. A lot of that has to do with the Web, with mobile. Today you can be online while you are flying and an e-mail reservation confirmation can be sent to you while you are in the air. There's also a greater proliferation of programs out there. People pick the ones they want to concentrate on. Travelers belong to 2.5 or 2.6 programs on average and they get used to doing business a certain way. It's our job to get people to consolidate those transactions.

Baker: We want the ability to deliver choice when service is the differentiation including a nice car, counter bypass and compliance with corporate travel policy.

Knudsen: Frequent rental was always attributable to business travel, but we've found a lot of people in recent years, particularly those in neighborhoods [who rent at locations other than airports] are not business renters but are consumers who want to be rewarded for loyalty and frequency. They rent while their car might be in the shop or if they are driving a long distance and don't want to put the miles on their family car.

QWhat will consumers want next?

Knudsen: There is no simple answer to that. The reward is something they want. Free airline tickets have withstood the test of time. Keeping it simple and relevant to the core service makes sense to people. We understand that.

Baker: When it is time to redeem a reward, people don't want to be hassled.