Hertz, you’re not Number 1 with me anymore

What are you doing to make your customers feel special?

All successful product managers must be successful at attracting and keeping customers. One tool to assist with this task is a customer loyalty program. All customer loyalty programs provide some benefit to encourage repeat business. For example, American Airline’s AAdvantage program, one of the first such programs, provides miles to earn free trips, early boarding and other benefits to make you feel “special” and continue flying with them. The AAdvantage program is one of the reasons why I almost exclusively fly American Airlines. That’s because there is a reciprocal relationship between my purchases and the quality of the service that I receive.

Recently I had an experience that caused me to think about the reciprocal relationship between provider and customer.

I joined the Hertz #1 Club loyalty program around 1983. One of the key benefits of the #1 Club was that you didn’t have to stop at the counter; you could go straight to your car. At the time, this was an exclusive perquisite of Hertz and I was very happy when my company made an agreement with Hertz that allowed me to join the #1 Club for free (Hertz charged a fee to belong to the #1 Club).

For most of the last twenty-odd years, I was a happy #1 Club customer. I made almost all of my car rentals with Hertz (it was the exclusive provider for my company for many of those years) and I enjoyed going straight to my car under the awnings. I even occasionally got an upgrade to a better car or free satellite radio. I was a complacent customer and I didn’t seriously consider renting from another company (especially after a disastrous personal rental at Alamo.) I don’t rent often enough to make it in to the upper tier of the #1 Club, but I was renting at least five or six rentals a year.

Over the years things changed. First, my company negotiated similar agreements with other car rental companies such as Enterprise, National and Avis. Second, the other car rental agencies started providing similar benefits to the Hertz #1 Club. Third, due to the poor economic conditions, my company mandated the use of compact cars instead of the mid-size cars I usually rented. I largely ignored these changes and continued to rent exclusively from Hertz.

Last month I took a brief trip to Raleigh, NC. Like usual. I rented a car from Hertz. When the bus dropped me off at the rental lot, I hiked to the far end of the lot to the uncovered space where my unassuming compact car waited in the sun.

At that moment I had a revelation: my twenty eight years of loyalty to Hertz wasn’t really getting me much. The relationship was no longer reciprocal.

As I thought about it, I realized that over the past few years, I had had this same experience many times: another crummy Hertz car at the far end of the lot.  I couldn’t remember when I had last gotten any special treatment from Hertz like a complementary upgrade. Part of this is due to the forced move to compact cars as my understanding is that Hertz does not provide complementary upgrades for people renting compact cars. But upgrades aside, I couldn’t really think of any other way that Hertz had let me know that they valued my business. They had gotten complacent and didn’t make me feel “special” anymore.

Now, I’ve been a product manager for many years, so I know the worst thing that can happen is to have an unhappy customer that doesn’t bother to tell you that they are unhappy. So, I navigated the complexities of the Hertz site to open an online complaint.

I stated my disappointment with my perceived lack of reciprocity in my relationship with Hertz. After all, I was loyal for twenty plus years, shouldn’t Hertz be loyal to me?

Mind you, I wasn’t really mad at Hertz, just disappointed. I expected a courteous acknowledgment of my complaint and perhaps a little better attention in the future.

Unfortunately, that’s not the way it played out.

First, was the response to my initial online complaint, or rather the lack there of. I didn’t receive a response, zip, nada, nothing other than the automated response that said your complaint had been logged.

So, after three weeks or so, I sat down and wrote a letter to the CEO. A real letter. Snail mail.  You know, one of those things you put in a physical box and wait for the post office to pick up and deliver it. In the age of email, I usually find that when you send a physical letter to somebody it gets their attention.

Well I did get their attention, kind of. After several days, I received an email from a functionary at Hertz in “Executive Customer Service”. I won’t bore you with her prose, but to summarize, she said:

  • We already responded to you
  • Upgrades are subject to availability (No mention of the compact car limitation)
  • Here’s a twenty five dollar coupon

So, what was wrong with this response? Well for starters it came via email. I went to the trouble of sending a physical letter (after I didn’t get an email response). At that point a phone call (they do have my contact info after all) followed up by a physical letter would have been appropriate.

Secondly, it’s never good form to start out a response to an unhappy customer with “We already responded to you”. At least they could have acknowledged that their response might have gotten lost. So the net effect is that only a couple paragraphs into the response and I getting a little angry.

Next, they didn’t acknowledge my actual complaint about the lack of differentiating service, but instead focused on the lack of upgrades. Since they didn’t acknowledge the limitation in not providing complementary upgrades for clients renting compact cars it just made the discussion about upgrades annoying.

The twenty five dollar coupon however moved me firmly into the “mad” category.

But “wait” you might say, they offered you money-that should make it alright, shouldn’t it?

Well nowhere in my letter did I complain about the cost of the rentals. To be honest I don’t really care that much about the cost as long as the rates are reasonable because my company pays for it anyway.

In fact, I don’t know what I would do with the coupon on a business rental. If I rented a mid-size car and used the coupon to pay the difference I’d be in violation of my company policy to only rent compact cars. And if I just apply the twenty five dollars to a compact car rental, while that is nice for my company accountants but I’d be the one that would have to go through the additional hassle of figuring out how to apply the coupon.

In other words, the response didn’t address my issues and the proposed solution (the coupon) actually would make my travel more difficult. At best, the coupon would benefit my company, not me.

The more that I thought about it, the more angry I got. In my somewhat irrational view, my twenty eight years of loyalty was repaid with an offer for an inconvenient 86 cents a year. Yes, I know that may not be a rational response, but customers aren’t always rational.

My response was to open new customer loyalty accounts with Enterprise, Avis and National. I will be renting my next car (today) from National. We’ll see how special they make me feel. While I won’t rule out renting from Hertz in the future, they are going to have to earn my business back.

So what are the lessons for a product manager?

Well the first lesson is that you need to continually reevaluate the value that you provide to your customers. The unique advantages or benefits for using your product can be eroded over time as the competition provides similar benefits. In the UNIX computer industry we call this “Jacks or Better” (an allusion to playing poker): features that were once clear advantages over the competition become the table stakes to be in the game as your competitors provide similar capabilities.

Second, you need periodically ask yourself. What am I doing to retain my customers – to make them feel special about using my product? What can I do to improve the perception of my product by the people who actually use my product?

If your product is used in a corporate environment, the person using your product doesn’t actually pay for the product, but they often strongly influence which products are purchased. Pay attention to the person using your product.

Finally it’s pretty clear that how you respond to a customer complaint can dramatically color the relationship you have with your customer. A sloppy or callous response can be the nudge that moves your customer to consider trying out one of your competitors.

In my next blog I’ll write about a company that took the right actions to make me a rabidly loyal customer even when their product had some serious flaws.


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About Jay Kruemcke

Jay has had more than twenty years of experience in the information technology industry. Starting from a rather humble beginning at IBM, Jay became a mainframe systems support programmer. Eventually Jay joined the AIX operating systems development team early in that product's development. Jay leveraged technical skills that he built in systems management to establish himself as a member of the IBM Austin Executive Briefing Center. His expertise in systems management with the SAP ERP system enabled his first product management role, as the owner of the Tivoli management product for SAP. Over the next three years he established that product as a success with the help of a strong development team. Jay returned to AIX in a product management position initially focusing on managing new requirements for the AIX operating system. Jay established himself as a subject manager expert in AIX and Power Systems virtualization and became a frequent guest at conferences around the world. Jay succumbed to the dark side and spent four years in IBM marketing in which he introduced AIX version 6 and AIX version 7 and many product innovations including the first every open beta program for an AIX release and a significant restructuring of the AIX offering structure and prices. Jay was part of the cloud software development organization and and focused on managing development engagements for clients deploying clouds using Power Systems servers with PowerVC and related products. In March of 2016, Jay retired from IBM and started in a new role as a product manager for SUSE, the Open Software company. Jay new focus is on enterprise Linux for POWER and ARM processor based systems. The postings on this site solely reflect the personal views of the author and do not necessarily represent the views, positions, strategies or opinions of my employer. Follow me on twitter @mr_sles, @cloudrancher and @chromeaix.
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One Response to Hertz, you’re not Number 1 with me anymore

  1. Tamara says:

    Howdy! I’m at work browsing your blog from my new iphone! Just wanted to say
    I love reading through your blog and look forward to all your posts!
    Carry on the excellent work!

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