When it comes to marketing, Turo tries to make every dollar count.
The company — sometimes referred to as the “Airbnb of car rentals” — was founded in 2009 with operations in San Francisco and Boston, and has since expanded to more than 5,000 cities across the U.S., Canada, Germany, and the U.K. It competes not only against established car rental giants such as National, Enterprise, Dollar, Avis and Hertz, but also against similar peer-to-peer (P2P) car-sharing platforms such as Getaround.
Turo offers car owners, whom it calls “hosts,” a way to earn money sharing their vehicles with renters, or “guests,” who benefit from Turo’s broad selection of vehicles and potential savings compared with traditional car rental agencies.
An extensive report on the P2P car sharing industry published last year by the University of California, Berkeley, estimated that in 2017, about 2.9 million people in North America were participating in P2P car sharing across six different platforms with a combined fleet of 131,336 shared vehicles.
It’s easy to spend money on advertising, but it's a lot harder to find ROI-positive ways to spend those dollars.
Andrew Mok, chief marketing officer, Turo
Market smart
Car-sharing platform Turo is basing its marketing strategy off results from technology that analyzes its customer engagement and feedback. Read on for more ways your business can customize a marketing strategy.
“Shared mobility services have now become firmly integrated into urban transportation systems across the globe,” Susan Shaheen, professor in-residence, Civil and Environmental Engineering, at University of California, Berkeley, wrote in the report, which was co-authored with Elliot Martin of the Transportation Sustainability Research Center and Apaar Bansal of the Center for Transportation and Logistics. “Car-sharing, bike-sharing, ride-sourcing or transportation network companies [TNCs] and other systems now offer urban travelers access to transportation services that had long been previously only possible through personal vehicle ownership.”
‘Getting people comfortable with the concept’
As might be expected of an emerging service platform competing against established, deep-pocketed corporations, marketing is a crucial component of Turo’s business strategy. Marketing also presents a multifaceted challenge for Turo, as the company needs to appeal not only to consumers interested in the temporary use of a vehicle, but also to car owners, who must be convinced to put their property into the hands of strangers.
“For the hosts, the challenge is really getting people comfortable with the concept,” Andrew Mok, chief marketing officer at Turo, told CO—. “People have been sharing their homes, and renting out vacation homes — that's been around for a very long time — but this idea of giving your car keys to a stranger is completely new. We're inventing this paradigm from scratch.”
Much of the company’s efforts to convince car owners to share their vehicles revolves around the potential financial benefits, which can be enough to cover a monthly car payment. Mok said the average car owner on the Turo platform generates a little more than $600 per month for about 10 to 11 days of sharing.
Hosts are required to have third-party liability insurance, which Turo makes available in the U.S. through a partnership with Liberty Mutual for those car owners whose current insurance does not cover commercial use of the vehicle. Plans are available at three levels with different levels of reimbursement for damages.
At the same time, Turo also seeks to appeal to the pocketbooks of potential renters. It touts rates that are about 25% lower than traditional car rental costs, according to Mok.
In addition to the financial benefits Turo pitches to both owners and renters, the company is also seeking to reduce friction by making it easier to use the platform. This involves technology such as its Turo Go device, which car owners can install to allow keyless entry to their vehicles via the Turo mobile app. Turo Go eliminates the need for owners to meet the renters and physically hand over the keys.
“The whole experience is streamlined for both the guest and the host through the Turo app,” Mok said.
Using marketing analytics
“One of the biggest challenges confronting peer-to-peer car-sharing is education and outreach,” Shaheen of UC Berkeley told CO—. “While P2P car-sharing has grown, it is still relatively small compared to car rentals. Educating potential consumers of what the service is, how it operates, and getting the consumer into vehicles using less traditional procedures [going to a rental counter, for example] can be a challenge to expanding the use of P2P car-sharing.”
The company also uses data analytics extensively to optimize its marketing efforts. Turo leverages Custora, a technology that facilitates the segmentation of Turo’s customer base, and allows it to easily forecast the return on its marketing investment, defined as the ratio between customer lifetime value and customer acquisition cost, for each customer individually.
Turo can then use that information to tailor its communications with customers. A regular customer with a lifetime value of several thousand dollars might be presented with different offers or promotions than someone who appears to have used the service once and abandoned it, for example.
The company can then segment customers based on a range of variables, such as lifetime value level, geography or what type of car they prefer.
“That's the power of the platform,” said Mok. “We can analyze all of these segments … because everything is calculated at the most granular user level.”
Turo has tripled its return on investment (ROI) since implementing the Custora technology about five years ago, he said.
Custora also helps reduce customer churn by flagging those users who appear to be at risk of leaving the platform, so they can be targeted with special offers, for example.
Maximizing marketing efficiency is critical for a company competing against big-spending advertisers such as the car rental giants, not to mention other modern transportation alternatives such as Uber and Lyft.
“It's just a very, very noisy space,” said Mok. “It’s easy to spend money on advertising, but it's a lot harder to find ROI-positive ways to spend those dollars. We're constantly tweaking, and optimizing, and just trying to maximize the number of users we can acquire with every dollar that we spend.”
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
