For auto marketers, a lesson in how to play nicely with disruptors.
Shelby Clark is selling an idea, as much as a service. The former Kiva.org executive thinks digital technology has disrupted American car culture so much that instead of buying a new car many people will pay to rent their neighbor’s car. Clark is the founder and chief community officer of RelayRides, a tech-enabled ride-sharing matchmaker. The one-year-old startup connects car owners who want to rent out their idle autos with carless folks who need a vehicle for a few hours.
You’d think carmakers would hate this idea, since such car sharing tends to reduce driving and car ownership. But times are changing.
General Motors invested nearly $3 million in RelayRides in Oct. 2011 and is partnering to use the GM OnStar technology to make RelayRides’ online process easier. So far, the startup has raised about $13 million from multiple investors including Google Ventures.
In early 2012 RelayRides will expand beyond Boston and San Francisco and will start marketing its program directly to GM car owners. Clark sees these developments as a sign of how traditional car marketers are dealing with the shifting U.S. car culture, which goes beyond increasing their digital ads. He talks to ClickZ about the online sensibilities that have affected Americans’ attachment to their cars -- and why General Motors cares.
ClickZ: Can you give us a quick summary of how RelayRides works?
Shelby Clark: It’s a peer-to-peer car-sharing online marketplace that allows individual car owners to rent out their vehicles. Let’s say you live in a city and your car is often unused. There are people in your neighborhood who usually take the train to get around but could use a car on the weekends. The RelayRides site lists your location, your hourly fee (usually $5 to $9) and the hours the car is available. Participants make reservations and RelayRides handles the details. As the car owner you get 65 percent of the fee. The biggest hurdle for such [peer-to-peer car renting] is getting insurance, and our service takes care of that.
CZ: How many people participate in your service and who are they?
SC: We operate in Boston and San Francisco: we have a total of 200 car owners and 5,000 borrowers. Growth has been more rapid in San Francisco. The median age of our participants is 33 to 36; they tend to be well-educated men and women who are interested in trying out new ideas. Most borrowers can afford to buy a car, but choose not to. Owners are people who rationally view their auto as a functional object that gets them from point A to point B. They do not see their car as an extension of themselves. People who name their cars would not be in our target audience.
Both owners and borrowers share another characteristic. They are conscious about their community, each side sees itself as helping the other side. Both side love the idea of money going back into the local community, they are excited about doing good for their neighbors.
CZ: How does that emotional connection – to the community rather than to the cars they drive or borrow – play into the way you market your service?
SC: Our goals are to build awareness and trust. We build awareness with online search and display ads as well as out-of-home ads at bus shelters, metro stations and on buses. But you can’t explain the idea and build trust in an ad, so we use PR and word-of-mouth marketing for that. We are also developing a referral program, which will launch soon. We don’t really use social media for marketing to outsiders, but we find it effective as a way to engage with our existing community of customers.
CZ: What are the benefits to GM to partner and invest in your startup?
SC: At first it seems like a paradox. Car sharing results in 40 percent fewer miles being driven and can delay a person’s decision to purchase a car. People drive more efficiently when there is a cost each time they use the car.
But we had conversations with many carmakers. The automotive industry seems to have accepted that there has been a permanent shift in consumer behavior, as society gets more urban. They see that the sharing phenomenon is accelerating. GM wants to understand and build relationships with the people who use our service.
The way it will work is that any GM car owner who lists his car on the RelayRides marketplace can link his OnStar and RelayRides accounts. This allows a borrower to reserve and unlock a GM car with nothing more than a mobile phone. The partnership makes 15 million existing GM cars "RelayRides ready" with no additional technology needed in the car. As a result, if borrowers ever need to buy a car in the future, they will be familiar with GM cars.
CZ: What do mainstream marketers need to learn about the shared ownership movement?
SC: Consumers perceptions are changing dramatically. They are rejecting the idea of traditional ownership in favor of access. To pay as you use something seems smarter economically. Technology is helping, by making the sharing process, which used to be [logistically] clunky into a system that is seamless and easy. Added to that is the global recession. Instead of wanting to cut back, people want a smarter way to consume.
Finally, online communities make it easier for people to build relationships and trust people they haven’t met in person. Those online relationships move to the offline world, allowing for a willingness to share. These days a consumer’s [or brands’] online reputation is used to establish its reputation elsewhere - it follows them. If they misbehave, it follows them as well, so there’s more accountability, more willingness to share.
Marketers should not see the situation as an either/or situation—access or ownership. The challenge is for the incumbent industry players to play nicely with the disruptors.
CZ: We have to ask, do you own a car?
SC: I used to be a member of the Zipcar car-sharing service and liked to rent Mini Cooper convertibles. Now I’m in San Francisco and I wanted to try owning a car, so I bought a Mini. I offer it on RelayRides and make an average of $200 a month. But demand is going up. Last month I got $400.
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Joan Voight is a Contributing Editor to ClickZ. Based in the San Francisco Bay Area, she has covered online and offline media, marketing and advertising since the mid-1990s for several business publications. She spent nine years at Adweek magazine, where she was San Francisco bureau chief, national senior writer and contributing reporter.
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