Image Is Everything
Ed Goldfinger: Chief Financial Officer, Zipcar
by Carol Vinzant
In a country built on status and consumption, Zipcar sells the anti-product. An Internet-based car-sharing system, Zipcar persuades people not to buy an automobile. Instead, Zipsters pay an annual membership fee and rent cool vehicles by the day, or even the hour. The price includes insurance and gas, and it’s simple to use: Members make their reservations online, swipe their Zipcards over a box on the windshield and, well, zip off. Gone are rental-car lines, gotcha fees and generic sedans.
Started in 2000 as a somewhat altruistic project by Robin Chase, a graduate of MIT’s Sloan School of Management, and Antje Danielson, a Ph.D. post-doc at Harvard, Zipcar, taking inspiration from eco-friendly car-sharing services in Europe, hoped to reduce the driving and congestion that clogs cities. If people had a car to use when they needed it, the pair reasoned, maybe they wouldn’t bother owning one — thus taking fewer trips and wasting less gas. The quirky Zipcars — almost exclusively Volkswagen Bugs — and lifestyle worked fine on college campuses. But by 2003, Zipcar had only 3,000 members. Capturing a broader audience, one for whom the environmental impact was perhaps a nice side benefit but not the main motivation, required a tactical shift. “What we’ve done over time, and it has been challenging, is make the car more mainstream,” says Zipcar chief financial officer Ed Goldfinger from his Cambridge, Massachusetts, office.
They began by switching the kinds of cars on offer. Instead of the novelty VWs that screamed “tree hugger,” Zipcar brought fun, edgier cars — Mini Coopers, Priuses, BMWs — into its fleet. Chase, the CEO, sought to make the entire proposition more convenient, expanding the company’s reach in its primary market, campuses, by cutting deals with Harvard and MIT, trading car access for parking spaces. Now Zipcar has a presence on 70 campuses across the country, and colleges themselves are helping sell the concept as a way to cut down on the number of parking spaces they have to maintain.
“These days we find universities coming to us,” Goldfinger says. “They’re all trying to solve problems of congestion.” Rapid growth followed, almost all of it fueled by viral marketing. Zipcar eschews the traditional advertising its conventional car-rental rivals have perfected, focusing instead on constant image upgrades that it feels give current members something to tell their friends about. That meant improvements to its Web site, such as adding a member-orientation video. Buzz drives growth: Zipcar’s membership in New York has grown by more than 50 percent each year since the company’s first Manhattan outpost opened in 2003. “There’s a critical-mass viral explosion at some point,” Goldfinger says. “It becomes more socially acceptable that this is a smart thing to do.”
Another key strategy: converting people to non–car ownership at a young age. In half the colleges on which it has a presence, Zipcar permits students who are just 18 to become members — a big deal, since most rental companies don’t rent to anyone under 21 or 25, or levy substantial fees if they do. “It works out well in the long term, because [in college is] when people tend to set their habits,” Goldfinger says. “College students tend to move to cities. They look around and say, ‘I already have a Zipcard — maybe I don’t need to buy a car.’ ” It also reinforces Zipcar as a cool youth brand, deemphasizing its original tree-hugger image somewhat.
“I think it’s going to get huge,” says David Brook, a car-sharing consultant, blogger and industry veteran. “Gas prices aren’t going down anytime soon. In cities, car parking isn’t getting any easier.”
After a merger with its former West Coast rival Flexcar last October, Zipcar expects to generate $100 million in revenue this year from its 200,000 members. The company aims to increase membership numbers tenfold over the next five years, a goal that will require developing new market segments.
To that end, it’s currently pursuing real-estate developers who will trade garage parking spaces for green credibility and a tenant perk — and also more flexibility (more options in the summer, congestion pricing for peak driving times) to better maintain the balance between cars and people.
Executive Summary:
• Cars for All: Zipcar started as an offbeat, eco-friendly dot-com that sought to bring car sharing to the United States.
• Low Costs: The company went mainstream with an image makeover, emphasizing the things that matter most to consumers: cost and convenience.
• People Are Talking: Growth has been driven by buzz. By making the brand cool, word-of-mouth marketing has proved to be very effective.