Harvard Case - Zipcar: Influencing Customer Behavior
"Zipcar: Influencing Customer Behavior" Harvard business case study is written by Frances X. Frei. It deals with the challenges in the field of Service Management. The case study is 8 page(s) long and it was first published on : Jan 10, 2005
At Fern Fort University, we recommend Zipcar implement a multi-pronged strategy to influence customer behavior and drive sustainable growth. This includes optimizing their service design, leveraging technology for enhanced customer experience, and fostering a strong brand identity that resonates with their target audience.
2. Background
Zipcar, a pioneer in car-sharing services, faced challenges in 2006. Despite a strong value proposition and a growing customer base, the company struggled to achieve profitability and faced increasing competition. The case study focuses on Zipcar's efforts to understand and influence customer behavior to improve their business model and achieve sustainable growth.
The main protagonists of the case study are:
- Robin Chase: Founder and CEO of Zipcar, responsible for the company's vision and strategic direction.
- Scott Griffith: CEO of Zipcar after Robin Chase, focused on operational efficiency and market expansion.
- Zipcar's customers: A diverse group with varying needs and motivations for using car-sharing services.
3. Analysis of the Case Study
To analyze Zipcar's situation, we can utilize several frameworks:
a) Service Quality:
- SERVQUAL Model: Zipcar's service quality can be evaluated using the SERVQUAL model, focusing on tangible aspects like car condition and reservation systems, reliability in terms of car availability and timely service, responsiveness to customer inquiries, assurance through clear communication and safety measures, and empathy in understanding customer needs.
- Service Blueprinting: By mapping the customer journey, Zipcar can identify key touchpoints and potential pain points. This includes reservation, car access, driving experience, and customer support.
- Moment of Truth: Zipcar needs to focus on critical moments of truth, such as the initial registration process, car pickup and return, and customer interactions with support staff.
b) Customer Experience Management:
- Customer Journey Mapping: Zipcar needs to understand the complete customer experience, from initial awareness to post-rental satisfaction. This involves identifying customer needs, pain points, and opportunities for improvement.
- Service-Dominant Logic: Zipcar should shift its focus from providing a car-sharing service to creating value for customers. This involves understanding customer needs and co-creating solutions that address those needs.
c) Branding and Competitive Advantage:
- Branding: Zipcar needs to establish a strong brand identity that resonates with its target audience. This involves defining a clear value proposition, communicating its benefits effectively, and building a strong brand reputation.
- Competitive Advantage: Zipcar needs to differentiate itself from competitors by offering unique features, superior service quality, and a strong brand image. This can be achieved through innovative service offerings, targeted marketing campaigns, and a focus on customer experience.
d) Operational Efficiency:
- Service System Design: Zipcar needs to optimize its service system design to ensure efficient operations, including car allocation, maintenance, and customer support.
- Service Capacity Management: Zipcar needs to manage its service capacity effectively to ensure car availability and minimize waiting times. This involves forecasting demand, optimizing fleet size, and managing car locations.
- Service Productivity: Zipcar needs to improve its service productivity by streamlining processes, optimizing resource utilization, and leveraging technology.
4. Recommendations
To address Zipcar's challenges and achieve sustainable growth, we recommend the following:
a) Enhance Service Design and Quality:
- Streamline the reservation process: Simplify the online reservation system, offer mobile app integration, and provide real-time availability updates.
- Improve car availability and location: Optimize car allocation based on demand patterns, expand the fleet size, and strategically locate cars in high-demand areas.
- Enhance car maintenance and cleanliness: Implement rigorous car maintenance schedules, ensure clean and well-maintained vehicles, and provide regular inspections.
- Offer personalized customer service: Implement a customer relationship management (CRM) system to track customer preferences and provide personalized service recommendations.
- Develop a robust service recovery system: Establish clear procedures for addressing service failures, provide prompt and effective resolutions, and offer compensation for inconveniences.
b) Leverage Technology for Enhanced Customer Experience:
- Develop a user-friendly mobile app: Offer a comprehensive mobile app for reservations, car access, payment, customer support, and location tracking.
- Implement self-service technologies: Enable customers to manage their accounts, modify reservations, and access car information through online portals and mobile apps.
- Utilize data analytics to improve decision-making: Analyze customer data to identify trends, optimize service offerings, and personalize customer experiences.
- Invest in technology-enabled services: Explore opportunities for integrating technology into service delivery, such as automated car check-in/out systems and GPS-based navigation.
c) Build a Strong Brand Identity and Competitive Advantage:
- Develop a clear value proposition: Communicate the unique benefits of car-sharing, emphasizing convenience, affordability, and environmental sustainability.
- Target specific customer segments: Identify key target audiences, such as urban professionals, students, and environmentally conscious individuals, and tailor marketing messages accordingly.
- Create a strong brand image: Develop a consistent brand identity across all touchpoints, including marketing materials, website, and customer interactions.
- Foster a culture of innovation: Encourage experimentation and innovation in service offerings, technology, and marketing strategies.
d) Empower Employees and Foster a Service Culture:
- Provide employee training and development: Equip employees with the skills and knowledge necessary to deliver exceptional customer service.
- Implement employee empowerment programs: Encourage employees to take ownership of customer issues and make decisions that enhance customer satisfaction.
- Establish clear service standards and performance metrics: Define service expectations, measure employee performance, and provide feedback for continuous improvement.
- Recognize and reward employee excellence: Implement incentive programs and recognition schemes to motivate and reward employees for delivering exceptional customer service.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Zipcar's core competency lies in providing convenient and affordable car-sharing services. The recommendations align with this mission by focusing on improving service quality, leveraging technology, and building a strong brand identity.
- External customers and internal clients: The recommendations prioritize customer needs and satisfaction while also considering the needs of internal stakeholders, such as employees and investors.
- Competitors: The recommendations address the competitive landscape by focusing on differentiation, innovation, and customer experience.
- Attractiveness ' quantitative measures: The recommendations are expected to lead to increased customer satisfaction, improved operational efficiency, and ultimately, enhanced profitability.
6. Conclusion
By implementing these recommendations, Zipcar can effectively influence customer behavior, enhance service quality, and establish a strong competitive advantage in the car-sharing market. This will lead to increased customer loyalty, improved profitability, and sustainable growth.
7. Discussion
Other alternatives not selected include:
- Focusing solely on price competition: This could lead to a price war and erode profitability.
- Ignoring the importance of technology: This could result in a lack of innovation and a competitive disadvantage.
- Failing to address customer needs: This could lead to customer dissatisfaction and churn.
Risks and Key Assumptions:
- Implementation challenges: Implementing the recommendations requires significant resources and commitment.
- Customer acceptance: Customers may not readily adopt new technologies or service offerings.
- Competitive response: Competitors may react to Zipcar's initiatives, requiring adjustments to the strategy.
8. Next Steps
To implement the recommendations, Zipcar should:
- Develop a detailed implementation plan: This should include timelines, resource allocation, and key milestones.
- Pilot test new initiatives: Introduce new services and technologies on a limited basis before widespread rollout.
- Monitor progress and make adjustments: Continuously track performance metrics and make adjustments to the strategy as needed.
By taking these steps, Zipcar can position itself for continued success in the evolving car-sharing market.
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Case Description
At Zipcar, customers share the use of cars and, as a result, rely on each other for their service experience. Customers are required to keep the car clean and the gas tank full and to return the car on time. Told from the perspective of two customers: Sal Fishman, who has a car and is running late at an interview, and Anita Karr, who has just arrived at her reserved car's empty parking spot.
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