Zipcar: A Green Company That Keeps America on the Go

A Green Company That Keeps America on the Go

Ruby Tuesday Pick of the Week: Zipcar
Why It’s a Gem: Harnessing cutting-edge technology has allowed one green-minded company to overtake – and take over – its competition
As the national zeitgeist begins to embrace both environmentalism and thriftiness, Zipcar finds itself at quite a profitable intersection. The rent-as-you-go car company has developed a business model so successful that they’ve convinced some Americans to give up their most prized possession: their cars.

Lynda Resnick: This week’s Ruby Tuesday, we’re speaking with Mark Norman, president and COO of Zipcar. Mark, can you describe for our readers your unique and amazing business model?

Mark Norman: We really think that cars-on-demand or car sharing is a better way to use a car. Our tagline is: “Wheels when you want them.” That’s having a car available at your fingertips — around the corner and around the clock. What does that mean? It’s a self-service business model, where you go online to reserve a car. Get in and go! We pay for all the gas and insurance, maintenance and home location parking, all with one low hourly or daily rate. A huge number [of customers, roughly 40%], avoid buying a car, or sell a car when they join. And they drive a lot less — about 70% less — because they take transit and walk or bike more.

LR: Zipcar is in how many cities now?

MN: We are in 13 metro markets in the U.S., Canada, and the UK. And we’re in over a hundred universities as well, so a number of other college towns on top of those 13 metro markets.

LR: I just think the idea is brilliant. Now, you were once Flexcar?

MN: Both Zipcar and Flexcar started about nine years ago, and Flexcar merged into Zipcar about a year and a half ago. Zipcar was quite a bit larger and a little heavier on the East Coast. Flexcar was a little better known on the West Coast, and together we’ve got a great international network of 6,000 vehicles and 275,000 members.

LR: Give me an idea of how much it costs an hour to get a car.

MN: The hourly rates are about $8-$10 for most vehicles, running up to $13 or $14 for a BMW or a Mini Cooper convertible. It might be $65-$85 a day, depending on the type of car and the city. You can book it a minute or a year in advance. The vast majority are booked the same day. That spontaneous element, like using your own car, of having wheels when you want them, is very powerful. People say it’s like dating a car instead of having to marry one.

LR: And it has a back seat! Now, technology of course plays a huge role in your business model.

MN: It does. Our system is fully proprietary, developed here in-house, so we’re pretty excited because that gives us real leverage of where the technology is going. First, for usability. We take a lot of pride in how easy our website is to use.

LR: It’s very user-friendly, and it’s just organic in the way you use it. I wanted to commend you on that.

Zipcar is available in 13 metro markets in the U.S., Canada, and the UK, including Chicago.
MN: Our members rave about it. I mean, it’s very simple and intuitive and exciting, so I thank you for your comments. We get that all the time, and it’s won awards, but the biggest award is from members telling other friends on how easy it is to use. So that’s a key benefit. But then certainly the technology that interfaces with the computers in the car, on opening the doors, to relay back the reservation time, mileage per trip, things like that. The whole backend technology of getting cars in the right place for where and when members want them is powerful, but that gives us a platform to grow going forward, and we’ve got a number of great innovations.

LR: Going green is big in the Obama Administration. There’s been lots of talk about green investments, in the stimulus package especially. Have you positioned Zipcar to take advantage of any of the government incentives?

MN: The different way to think about using a car, it really helps people make a behavioral change that makes life easier while saving and being more sustainable. The concept of letting go of your own car can seem like giving something up, but when you think of the access to 6,000 cars around the world, with all those different types, it’s a real benefit, and we’ve extended the same benefit thought-process. We were just down in D.C. yesterday, as a matter of fact, [and talking about] applying that same technology to government- or university-owned fleets of vehicles. By putting Zipcar software and hardware in the car, those same governments can have those assets used by more people, driving efficiency and more sustainability.

LR: So you would give or sell your technology to governments?

MN: Yes, they license it as a software, as a service, and that frees up big capital budgets.

LR: Of course! But have you put yourselves forward to get some incentives?

MN: Not ourselves. We’re working with cities so they can put themselves forward to use the technology to benefit those cities directly with federal funds. Pardon the pun, but we’re a vehicle.

LR: I think you’re wonderful. Are your sales up?

MN: Absolutely business is up. We were growing aggressively before the downturn, and we’re still growing at a good rate during the Great Recession. We think it’s because we’re a solution in good times and in bad.

LR: Your demographic profile: Can you tell me who the people are who tend to do use your services? Have you done any research to find out who your customers are?

MN: Absolutely. Two-thirds of the members are in their thirties and younger.

LR: Right, because of the college campuses it skews that way, I would think.

MN: Yes, young people in cities, but we’re seeing that definitely diversified with the reurbanization of downtowns. The bulk of the membership is between 25 and 45, higher income and education than you would see on average in the country or even in large cities. It’s a smart and savvy thing to do. It saves money, but it saves time, and there’s real value in that. This group can afford a car or two but says, “There’s got to be a better way to use a car, and I’m going to choose Zipcar.”

LR: Now, do you have any hybrids in your fleet?

MN: We have hundreds of hybrids in our fleet. In fact, we’ve been the early adopters of hybrids. We just announced a plug-in hybrid partnership with the city of San Francisco a couple of months ago, where we work with them and partners on the whole infrastructure to make new technologies more readily accessible by more people. Why? Because we share the cost and share the rest of the infrastructure with these other partners. So somebody sets up charging stations; the city then allocates visible parking and works with the local power company that draws on hydro and other forms of green power to exploit the latest technology to make it available to anybody for about nine dollars an hour.

Zipcar's vehicle options include trendy models such as the Mini Cooper.
LR: How are you growing your business?

MN: Members commonly come to us because they’ve heard about us from a friend. [Sometimes they’ve seen] a car or our convenient and welcoming parking spaces that say, on a big green sign, “Zipcars live here.” After that, we do a significant investment online and in a number of viral and community grassroots events that really help other members tell prospects and other members about the benefits of Zipcar membership, whether it’s discounts at local retailers or the access to a flexible fleet at your fingertips.

LR: But you have no formal marketing campaign.

MN: We don’t spend the kinds of money that Coca-Cola or big consumer brands –

LR: Of course you don’t. It’s not necessary. You should be growing by leaps and bounds, because this business makes so much sense. I’m a marketing professional, and when I see a business like this and I realize how easy it is to do, I want you to invest a little more in your marketing efforts because you’re first, but a lot of [first-to-market] companies don’t stay first because they don’t invest in their marketing. And it is such a huge idea, and media is so cheap today. I would love to see you expand that.

The recession offers you an opening that you wouldn’t have otherwise. If you decide to be a little more aggressive in your marketing, you’ll find that everything is a lot cheaper than it was before. I’m paying 30-40 cents on the dollar for effective media. And one of my favorite forms of media is billboards, because the only way to avoid them is to drive with your eyes closed, like the people in the backseat of my car do. With Zipcar, you can get rid of your car — there’s your headline. I think it would help you grow. I hope you grow your business, because you deserve to be successful.

MN: Thank you. And seriously, feel free to follow us on Twitter or be a fan on Facebook.

LR: I will. And you on me, okay? [Lynda’s Twitter and Facebook pages.]

MN: All right. Have a good day.

LR: All the best, honey