The differences between a car subscription and a car rental business

While car rental companies have unique advantages when launching a car subscription service, there are a few differences between running the two mobility services. Loopit discusses the three differences and why it is important for rental companies to keep these three differences in mind, particularly when building out their operational processes.

George Skentzos

Head of Customer Experience

Published on 

November 8, 2022


Last updated on 

November 8, 2022

Key Takeaways

Car rental companies looking to add subscription as part of their wider mobility offering hold two unique advantages. Firstly, their experience and existing operations in managing vehicle logistics will translate to competencies in the procurement, servicing, maintenance and disposal of vehicles; and secondly they possess working knowledge of how to monetise and provide value to individuals across their lifecycle. Despite the perceived similarities between car rental and car subscription, there are key differences that must be considered. It is important for rental companies to keep these differences in mind, particularly when these will determine how operational processes are set. This guide will outline the three differences to keep in mind as well as recommend the ways to set your car subscription business up for success. 

1. More frequent customer touch points for onboarding and transactions

Unlike car rental where customers set a pickup date, drive for a short period of time and then return the vehicle; car subscription is less linear and involves a more complex back-forth relationship between the car subscription business and the subscriber. Car rental businesses entering into the car subscription market need to be mindful of this dynamic relationship which involves more touch points from start to finish, including: 

  • Onboarding new subscribers with an online subscription booking process - including know-your-customer (KYC) and credit assessments, sending and signing digital agreements and  booking vehicle pickup or delivery
  • Managing recurring payments and invoices, including the issuing of credit notes 
  • Requesting details from subscribers where necessary such as updating credit card details for failed payments 
  • Bundling in subscription add ons such as additional driver policy or liability protection 
  • Changing, pausing or cancelling subscription plans
  • Swapping vehicles
  • Processing one off charges/transactions  such as toll usages as well as mileage overages
  • Managing digital claims in the event of an incident

2. Higher level of automation and customer self-service

To ensure long-term scalability, car subscription businesses must execute all touchpoints that allows for both: 

  • Automation of tasks such as the management of recurring payments, invoicing, KYC and credit checks.
  • Customer self-service where necessary such as for subscribers viewing an invoice, making a payment and updating their payment details securely online. 

In addition to the above, it is also important to maintain all records of information to be maintained in a single source of truth so as to ensure multiple team members are on the same page. With records including customer details, charges, invoices, identity documents, contracts, agreements and manual notes; it becomes a logical decision for businesses to manage their car subscription operations with systems rather than people to minimise the room for  potential human errors.  This becomes imperative as businesses look to scale their subscription fleet meaning more subscribers and vehicles to manage.

3. Transition from fixed yearly terms to flexible weekly terms

The final difference between a car subscription service and a car rental business is that car subscription operates on flexible weekly terms. Subscribers looking to take full advantage of the flexibility of car subscription may find themselves in the following situations: 

  • Pausing their subscription due to change in lifestyle such as travelling overseas for work 
  • Swapping vehicles due to seasonal changes
  • Upgrading or downgrading their subscription plan 

Subscribers have an expectation that these demands can be met swiftly by their car subscription provider; calling for businesses to strongly consider implementing a system that can achieve this. 

How Loopit can help you deliver an exceptional customer experience 

In a market heralded as being innovative, many new entrants find themselves overly invested in making their subscription offering the most innovative whether that be through the latest electric vehicles or a mobile app.

While these may be important to the customer experience, the newness of car subscription demands for greater transparency and support across every stage of the subscription lifecycle. Car rental companies looking to offer their own car subscription service, must ensure these unique touchpoints are being met with robust systems that can offer a degree of automation and self-service. Fortunately, a car subscription software like Loopit, has the capability to enable businesses of all sizes to launch and scale their subscription service cohesively all under the one platform. If car subscription is on your business roadmap, get in touch to learn how Loopit can help configure your own unique go-to-market strategy:

About the author
George is the Head of Marketing and Customer Experience at Loopit. Having originally started his career as a motoring journalist and founding team member for one of Australia's top automotive startups, George has a strong passion for automotive, business and growth marketing.
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