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Head Out on the Highway

“Head Out on the Highway”

How Enterprise Rent-A-Car uses customer satisfaction to drive profits

After the terrorist attacks of September 2001, thousands of people were stranded around the country without transportation.

"At corporate, we were struggling with how to respond, because our system isn’t set up to do one-way rentals," says M.W. "Sandy" Rogers, senior vice president of corporate strategy at Enterprise Rent-A-Car in St. Louis.

Enterprise employees took action and rented cars to customers, waiving or reimbursing drop-off fees. This meant managers had to send trucks to transport cars back to branches, fly employees to drive them back or sell the vehicles where they were. Because Enterprise managers are paid according to the profitability of their locations, they were essentially footing the bill for this decision. Yet helping customers was foremost in their minds.

"That grassroots response was customer satisfaction in action at Enterprise," says Rogers, speaking at a TEI Presidents’ Forum.

In 2003 nearly 80% of customers gave Enterprise a "top-box score" in surveys, meaning they were completely satisfied — not just somewhat satisfied.

Yet those marks weren’t always so high. Rogers discusses how Enterprise worked through some customer challenges during the 1990s.

Honing a measurement tool

In 2003 Enterprise’s annual revenue was nearly $7 billion; however, most of its growth has occurred in the last 15 years. In fact, in 1988 Enterprise was about one-tenth its current size.

As growth accelerated during the 1990s, customer satisfaction began to erode. In response, in 1993 Enterprise began to develop a new tool to measure customer satisfaction: the Enterprise Service Quality Index (ESQI).

No easy process, it took more than a year just to develop the questionnaire to be used. The first ESQI survey, conducted in July 1994, showed a vast spread between the strongest and weakest regional groups, indicating that customer satisfaction wasn’t a priority with all employees.

Initial surveys done at the regional level left too much room for interpretation, Rogers explains. Managers argued that their scores were affected by the size of their territory or location of their branches. So Enterprise dug deeper into the data, expanded the scope of ESQI and began collecting data by individual branches. It also surveyed customers by phone instead of mail to expedite results.

Even more important, the questionnaire was simplified. Instead of asking numerous questions about rental cars, their cleanliness, and the amount of time the rental process took, Enterprise just wanted to know one thing: Were customers completely satisfied?

As Enterprise analyzed survey results, it discovered that customers who were completely satisfied were three times more likely to be repeat customers than those who reported being "somewhat satisfied."

That information was an eye-opener, Rogers says: "It made it clear that customer satisfaction wasn’t a soft management issue. It was having a direct impact on the bottom line."

Giving ESQI some ‘teeth’

By 1996 Enterprise management began to trust ESQI, but still treated the data as "something that was nice to know." Fleet growth and profitability were the real metrics that drove the business.

Then came an officers’ meeting in 1996. The event was a celebration because Enterprise had recently passed Hertz to become No.1 in the car-rental industry. But the meeting became less festive when ESQI results were revealed: Scores were still well below where senior management wanted them to be.

Jack Taylor, who founded Enterprise in 1957, became visibly upset and issued a personal challenge to improve the low scores.

"That was a defining moment for Enterprise," Rogers says. "The experimental phase for ESQI had come to an end. We immediately began to look for ways to make this tool a part of the way that we managed the company."

Among changes, ESQI scores were soon used as a factor in employee recognition awards and advancement. What’s more, Enterprise published monthly rankings of branches so everyone knew who was best — and worst — in customer service.

Linking ESQI to promotions was especially effective because Enterprise had always been a company that promoted from within. "Now we were saying, your career will stall permanently unless you exceed customer’s expectations for service," Rogers says.

In 1998 an otherwise high-performing executive was passed over for a promotion because he fell short in ESQI.

"When this person didn’t get the nod, it sent a clear message: ESQI is for real," Rogers says. "Our goal is to build a sustainable business — not quick profits. And because we’re a service company, we know that long-term profitability is driven by repeat customers."

Once senior management put ‘teeth’ in the ESQI process, customer-satisfaction scores improved almost immediately.

"We had to relearn a lesson that was clear to Jack (Taylor) right from the start," Rogers says. "Enterprise may own a fleet of 630,000 vehicles, but we’re not really in the car business. We’re in the customer-satisfaction business — and that’s a trait that we have in common with every successful service business, large or small."

Writer: T.J. Becker