Hertz Europe: A Case Study in Constraint-Based Innovation
Hertz Europe have taken a new approach to innovation. They have worked with Amigo to deliver projects that address long-standing, core business problems. These projects are characterised by low risk, low complexity, high upside and fast delivery. They have become exemplars for the rest of the business by demonstrating that perennial problems can be solved with real evidence.
The Amigo platform has enabled an agile approach to the customer experience online, a prerequisite for product and service innovation. Amigo’s technology lets teams with limited or no IT resource deliver new customer journeys with all the power of the modern web. Given the range of possibilities opened up by this technology, the key to enabling innovation is the deliberate imposition and acceptance of strict constraints.
Constraint-based innovation departs from the two most common approaches to enterprise innovation, innovation labs and digital transformation projects. It advocates for small teams within existing business units running ambitious experiments under budgetary, time, technical, scope and human resource constraints.
By accepting these constraints, projects are much more likely to garner initial support, complete, and to encourage imitation rather than rejection across organisational boundaries. This is because each constraint dramatically shrinks risk. The risk of failure is lower if a project is less expensive, less internally disruptive, and reliant on fewer external stakeholders.
This case study demonstrates that constraint-based innovation is the preferable approach for a large enterprise like Hertz. 72% of corporate strategists say their company’s digital efforts are missing revenue expectations. The exemplary projects Hertz run with Amigo frequently hit double digits in return on investment within weeks and incurring little risk.
Book and Join
- delivery cycle: 2 weeks
- markets: UK, Europe, Asia, Oceania, South America
- business effects: revenue per visitor up 12.1%, loyalty enrolment up 59.6%
How Hertz increased loyalty scheme enrolment by 60% while improving revenue per visitor to win hundreds of thousands in directly-attributable additional incremental revenue.
It would come as no surprise to anyone in the travel sector that increasing sign-ups up to the membership program would be a strategic objective for Hertz. As price comparison websites and aggregators rapidly commoditise the industry, customer lifetime value is falling as digital acquisition costs gradually rise. Savvy, high-information customers are taking pride in shopping around for the best deals and diluting brand value.
The Hertz brand is storied and strong. Yet customers booking through a website are hyper-focussed on their job-to-be-done. They are unlikely to sign-up to a rewards program, however much positive association they may hold for the brand, if it means navigating away from their core booking path.
Hertz used Amigo to test a new digital journey. It integrated the loyalty scheme sign-up into the checkout path. Beginning by notifying users that members not only pay lower prices but also do not have to spend as much time at pick-up locations, the journey firstly introduces the value proposition to the user. It then builds enrolment into the checkout path as a simple opt-in, rather than a lengthy form-filling exercise that takes place on another page.
The Amigo platform made this experiment possible by handling underlying complications. It made it easy to map data from disparate systems without requiring changes to or integration with back-end legacy IT.
The Amigo platform enabled a split test of the new journey against the standard digital experience. Using the Amigo Stats Engine in integration with Google Analytics, we proved that Revenue per Visitor increased by 12.1% and enrolment in the loyalty scheme by almost 60%.
Once the journey had been proven to work, Amigo enabled its rapid rollout to multiple global markets thanks to both its global reach (leveraging Google Cloud Platform) and ability to handle with ease differences in language, regulation, service design, and technical infrastructure.
- delivery cycle: 1 week
- markets: London Gatwick Airport
- business effects: MVP with real customers 18-24 months ahead of schedule
Constraint-based innovation and the Amigo platform let Hertz’s marketers solve problems in an innovative fashion, but they also create new possibilities. Another exemplary project concerned the first steps towards the launch of an ambitious new customer journey. If delivered successfully, this project would lead the market in rental convenience.
Keyless entry could allow Hertz customers to rent cars without even picking up a key at the desk. This would of course do even more to address the key customer frustration identified by the marketing team, the friction around queuing at the desk, filling out paperwork and so on.
Hertz wanted to pilot this new technology using a single keyless-enabled car. In the best agile and experimental fashion they knew that they ought to test the tech with real customers making real bookings but to start on a small subset. This would allow the ambitious project to take first steps with the lowest possible risk.
Hertz embraced the “scope constraint” the demand that innovations should start on the smallest possible subset of customers necessary to validate a hypothesis. This lowered the operational risk to Hertz of trying out the Keyless car program and allowed an innovative project to get off the ground quickly and safely.
- delivery cycle: 8 weeks
- markets: UK, Europe
- business effects: CX project stalled for three years delivered in weeks and for around 10% of cost
Embracing the “team constraint,” the demand that projects should cross as few internal boundaries as possible, has let Hertz prototype new customer experiences live and prove their return on investment. Hertz’s “Vehicle View” project provides a striking example.
Hertz’s marketers used Amigo’s platform to transform online vehicle selection without touching the IT team. While this might initially sound surprising, the results can speak for themselves. A project that had stalled for three years went live within a couple of months.
The Amigo platform supported a new interface at the vehicle selection page. It gave the customer new options to filter available vehicles, edit their itinerary more easily and explore their options with redesigned vehicle information boxes.
The new vehicle view also let the Hertz team reorder how vehicles appear on the page according to their business logic. This was a high priority for revenue optimisation as cars had previously only been sorted by price. The new interface also loaded and responded faster than the underlying page.
This project was handled by Amigo in ten weeks from receipt of the specification. The Hertz team received the fully-featured customer journey in their testing environment and amended it multiple times in an agile working relationship with the Amigo team.
The Amigo-powered Vehicle View was A/B tested against the current page to give an accurate measurement of its effect on revenue.
The seasonal sale
- delivery cycle: 4 days
- markets: UK +7 EU territories
- business effects: confirmed 11.6% increase in transaction rate within 22 days of launch
The speed constraint forces innovators to solve problems creatively. Hertz run a seasonal sale. This is obviously time-sensitive. The discount becomes available, in different amounts, to customers at the majority of Hertz destinations.
However, they soon noticed that only a small proportion of eligible customers were taking advantage of the sale. The discount code was accessed off-site and needed to be copied-and-pasted into one of a number of different fields at the start of the booking journey.
Data from past sales had confirmed the advantages of the offer so it didn’t make sense to limit the sales’ audience inadvertently through a poor user experience. Applying sale discounts automatically for all eligible customers and reminding them of their discount through the online booking journey would, the team hypothesised, improve the likelihood of conversion by more than enough to offset the discounted price.
Re-engineering the website journey the long way around was not an option for a time-pressed team. Marketing priorities don’t get to the front of development roadmaps.
The Amigo platform provided the option to deliver a new online journey on top of the existing website and sale system. The team quickly designed and delivered a new user experience which brought all eligible users into the sale automatically and reminded them of their discount through the journey.
In 22 days, the new journey was confirmed by an AB test to be responsible for an 11.6% increase in transaction rate, equating to hundreds of thousands in directly-attributable additional revenue across seven European territories. Hertz now use the same journey to improve the effectiveness of every seasonal sale.
- delivery cycle: 1 week
- markets: select eligible EU destinations
- business effects: enhanced service offering for high-value customers, project delivered ahead of schedule, customer experience development as proportion of project cost slashed to <1%
Hertz enhance their service by offering free in-car WiFi to certain customers. Amigo delivers the necessary digital customer journey.
Offering free Wifi is a large operational undertaking that crosses many internal boundaries. With Amigo, Hertz manage the customer-facing part of the project simply and quickly, without letting it interfere with the underlying logistics.
The free WiFi offer requires sophisticated constraints on the experiment’s audience. Eligibility is calculated according to multiple factors, including basket size, location, rental duration and so on. Amigo’s platform handles this advanced user segmentation with ease. Intelligent use of information about customers and their bookings, rather than simple accumulation of data, enables Hertz to put the customer at the centre of their agile, strategic innovation projects.
We have been able to test new ideas in order to improve the online customer journey with a lot of flexibility and agility. Something that would usually take a lot of IT effort has been set up within weeks and within a short period of time we have results which we can trust and act on. The Amigo team are great to work with and have provided many creative ideas to push our hypothesis even further.
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