For Hertz's loyalty program, should we emphasize immediate rewards to drive short-term rentals or focus on long-term benefits to encourage customer retention?

Introduction

The trade-off we're examining for Hertz's loyalty program is whether to emphasize immediate rewards to drive short-term rentals or focus on long-term benefits to encourage customer retention. This decision is crucial for Hertz's customer engagement strategy and overall business performance. I'll analyze this trade-off by considering the impact on customer behavior, revenue, and long-term loyalty.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking Hertz might be facing increased competition in the car rental market. Could you share how our market share has trended over the past year?

Why it matters: Helps determine if we need to focus on acquisition or retention. Expected answer: Slight decline in market share. Impact on approach: Would lean towards immediate rewards to regain market share.

• User Impact: Based on customer feedback, I'm assuming our current loyalty program might not be meeting user expectations. Can you provide insights on our Net Promoter Score (NPS) for loyalty program members versus non-members?

Why it matters: Indicates the effectiveness of our current loyalty strategy. Expected answer: Higher NPS for members, but not significantly. Impact on approach: Would influence the balance between short-term and long-term benefits.

• Technical Feasibility: Considering potential system limitations, how flexible is our current loyalty program infrastructure to implement changes?

Why it matters: Determines the scope and timeline of potential solutions. Expected answer: Moderately flexible, with some legacy constraints. Impact on approach: Would affect the complexity and timeline of proposed changes.

• Resource Allocation: Given the importance of this decision, I'm curious about our capacity to implement changes. What resources (budget, team) are available for this initiative?

Why it matters: Helps scope the realistic extent of program modifications. Expected answer: Moderate budget, dedicated cross-functional team. Impact on approach: Would influence the scale and rollout strategy of the program changes.

• Timeline Constraints: Considering potential seasonal fluctuations in car rentals, are there any specific timeline constraints or upcoming high-demand periods we should be aware of?

Why it matters: Affects the urgency and phasing of our strategy. Expected answer: Peak summer season approaching in 3 months. Impact on approach: Might prioritize quick-win immediate rewards before the peak season.