Peter Talks Shop with Zipcar CEO Scott Griffith

by Peter Merholz
January 23, 2008

Scott Griffith, CEO of carsharing service Zipcar, will be speaking at UX Week 2008 in San Francisco. I spoke with Scott about the balance of user experience and business concerns in the design of Zipcar’s service. The conversation below excerpts about one-third of the full 40-minute conversation, to which we encourage you to listen!

Peter Merholz [PM]: Hello, I’m Peter Merholz, president of Adaptive Path, and with me I have Scott Griffith, chairman and CEO of the car sharing service Zipcar. Hello, Scott.

Scott Griffith [SG]: Hi, Peter.

PM: Scott will be speaking at UX Week 2008 in August in San Francisco and we’re very excited to have him. Car sharing is an emerging service, and by all accounts the design of the Zipcar service is one of the things that really sets it apart. You have a mission statement on your site that reads, “Our user experience strives to elegantly combine the promise of the Internet with wireless communication and online communities.” Would you elaborate a bit on what you mean when you say “user experience?”

SG: Our services are really a combination of wireless technology and automobiles that are parked around cities, allowing our user base to get access to a car 24 hours a day, seven days a week, for as little as an hour, without having to own a car. We think of it as a replacement to car ownership for people who live in cities and don’t need to drive a car every day or very often, but might need a car on short notice. What we’re providing is self-service, on-demand transportation.

What we’re trying to do is really think about the community of members that we’re developing, and combine that with wireless technology and the Internet so we can create a very simple-to-use community base. Our users tell us what they want, and we try to listen and provide it. Zipcar is uniquely a self-service business. What we’re trying to do is give you a very conveniently located automobile that doesn’t require human interaction or human intervention to get into it. And that requires a lot of technology in the background, but hopefully it is very simple to use for a member.

PM: In terms of the design of that service — you’ve got a lot of components — a web site, mobile (I don’t know if it’s SMS), you’ve got the cars themselves, and a call center. How explicit is the design of the service? How planned is it? What does Zipcar’s blueprint look like? Is it really refined and detailed, or is it a bit more organic?

SG: Well, we have one. We have a culture that we’ve tried to develop that, we hope, matches the brand that we deliver; and that’s all around self-service. The design is meant to be simple in nature, elegant, and self-service focused. It starts in the company’s culture and in the DNA of our brand. We’re very serious about keeping all of our user systems very simple, but we have a group internally that we call our product group. They focus on the lifetime experience that a member has with our service, from the first time they go to our web site through the last time they ever use one of our cars and decide not to be a member any more. They map that cycle and follow it; we’re constantly trying to refine and improve that map, that architecture. That timeline, by the way, lasts for typically four or five years, our members stay with us for multiple years.

We think about that whole experience as they use the cars for the first time or review their online billing for the first time. They might have a problem on the side of the road, to refuel the car, get into an accident; these are all experiences that we have to deal with, because we’re treating these cars very much like car ownership, but you’re just buying it one hour at a time.

PM: I think that one thing that would be interesting, especially for the people who are listening to this, is getting a better sense of the product group you mentioned. How many people are working on it, and what are the roles involved in it?

SG: It’s a small team — four people in total — and they work collaboratively with the engineering team. Often their key impact is on the online, wireless, or other tools that we’re building for our membership base to use. But often they’re also looking at our call center and how that experience going, or what the in-vehicle experience looks like. For example, last year we refreshed our in-car materials, and we now call it our co-pilot. It’s a plastic laminated series of cards that are all held together in a little ring binder for all the of the questions you might have about our service and the many ways you can answers them. It’s meant to be simple and fun. Any time we’re thinking about changing that experience, the product group focuses on it.

They also work collaboratively with our engineers if there is a technology implementation. We have a wonderful set of about eight or nine engineers who are really culturally aligned with the self-service, keeping it simple model. Many of them use the service on a regular basis and they’re very intrigued by the self-service simplicity idea.

PM: I know the service has evolved in many interesting ways, particularly in terms of growth into new cities. Has it been a matter of continual incremental changes, or has it been a matter of more quantum leaps in terms of the experience that the drivers would have? What has been the evolution of the service?

SG: There have been some quantum leaps, and I’d say there’s always an evolutionary process in the background. One thing that we’ve done is really started to employ what Toyota calls their kaizen techniques. Anyone in the company can raise their hand and say, “I see an inefficient process,” or “I see a user experience issue,” and if we call a meeting and really review how we’re doing it now and review how we can improve it, that through better systems, better processes, or some unique application of the technology we’re not using yet, we could really change either the consistency of the delivery of our service, our member experience, or improve it overall.

We’ve done that many times now, and we’ve run many kaizen opportunities inside the company. We think we’re one of the few companies that are using that technique in a service business. It’s much more common to see that in a manufacturing or factory environment.

PM: I’ve read about the kaizen and the factory floor thing where someone can literally pull a rope and stop production if something’s going wrong. What is the mechanism by which you apply kaizen within a service business? Is it simply just an email to you, the CEO, or is there a process in place?

SG: No, we have an expert who has been trained in kaizen and continuous improvement techniques and is our shepherd inside the company. It’s something we’ve been trying to build into the culture: People know who to go to, when to call a kaizen, and when something becomes big enough. Now, typically our president, COO, VP of engineering, or myself will sponsor a major kaizen.

For example, we went through a major change to our billing system and to how we handle parking tickets that our members get. Our members get parking tickets all the time, and sometimes they just forget to pay them, and we have to find who was in the car; this was a big problem for a while. We resolved it through the kaizen technique. We used a kaizen on the co-pilot to see what we thought we could improve around the in-vehicle experience when people use our service. The result of another kaizen was a video that we now show. It’s an orientation video — it’s actually very funny — that’s on our web site for new members.

PM: Obviously you want to make your members happy, but I’m guessing as CEO there are other considerations that you’re taking into account in terms of how you recognize or evaluate success in something like that. Making a new reservation is an excellent example. What are the things that you need to see coming out of this new reservation system to make you feel like it’s been a successful deployment?

SG: I think the member experience and satisfaction is a great measure, but you’re right, there’s always more than that. One of the things that we were looking to do was to present the variety of cars that we offer in a better format. We have now over 30 makes and models that start with, a fairly standard Volkswagen and go all the way up now to a BMW 5 Series. Trying to present all of the different available options in an easy to see, easy to use format was becoming challenging for us. What we saw was that too many people were just picking the first car that popped up on their reservation screen. We wanted to present other options so they could see the great breadth of different types of models and brands that we had to offer. The second — and this was a big success — was increasing utilization. This is a business that has high fixed cost, very much like a hotel or airline business. Economics on the bottom line are driven off higher utilization.

PM: Right. In the same way that an airline is going to fly the plane whether or not all of the seats are filled or a hotel has rooms whether or not they’re filled, you’ve got car seats that you want to make sure are being utilized as fully as possible. Do you have a percentage of a utilization rate that you’re aiming for?

SG: We tend to aim north of 40 percent, and that’s a 24-hour a day, seven days a week clock. That’s saying that on a 24-hour day we’re talking about nine to 10 hours a day these cars are actively on reservation seven days a week. And managing that, but also managing the availability on the other side — if you get utilization too high — what happens is members can’t find a car when they want one.

PM: We work with various services firms, and one of the things that over the last year and a half or has taken the world by storm is Net Promoter scores. Is this something that you’re following at all, and how do you follow it, if you do?

SG: It’s funny you should mention that because I was about to bring it up. We started using Net Promoter scores about three and a half years ago. What we have found is it’s very powerful in its ability to tell us when we have major good things or bad things happening within the service. What it doesn’t do is get us into more specifics. It doesn’t give us an action plan to make changes. It tells us directionally what we’re doing well or when we have a problem. We’ve created a survey that starts with the net promoter score, which I think is a key measure of our brand and our service. And then below that, we ask four more questions that help us target where we might have specific improvement opportunities; around the kaizen idea again. We follow that city-by-city and location-by-location to see how we’re doing.

PM: Earlier we touched on the notion of brand, and obviously for Zipcar the brand is quite important. One of the things we’ve seen at Adaptive Path is that at times the concept of brand and the concept of user experience can either integrate and succeed together, or be at odds. Because brand is typically the company’s message from the inside out, right? The company has its positioning and attributes, and they want to deliver that. They want to impress that upon an audience. Whereas user experience is very much about what is it that the customers want, and bringing that inside. The flow tends to be more outside-in with user experience. How do you see the intersection of brand and user experience within Zipcar? How does that work?

SG: You might find this odd, but we think it’s the same thing. I really think that the whole notion of building a simple innovative, self-service model is our brand, but it’s also the key model or mantra for our user services as well. When someone thinks about our brand, they’re making a smart choice to use our service because they’re probably saving a lot of money versus trying to own a car that they don’t use very often. They’re making a simple choice; it is easy and hassle-free. We see the brand and the service delivery fitting together in lockstep, and I think many of the really strong product and service brands that have the brand DNA fit in lockstep with the service delivery, are some of the most successful brands we’ve seen. Whole Foods, I think, is a good example of that. ING, the new, very innovative, mostly online banking service now, is really doing much of the same things. Netflix has done a very nice job of combining the whole idea of a simple solution with a brand that’s all-around self-service. I see us in that category.

PM: Interesting. Aside from Whole Foods, ING, Netflix, are there other services or organizations that you look to for inspiration? Who’s getting it right, and how are they getting it right? What are the elements in their experience that you think are potentially informative or valuable for Zipcar?

SG: I think JetBlue has done a wonderful job building the brand and a user experience that’s on-brand and in lockstep. Now, they ran into me trouble last winter on the east coast with schedules and weather, and I think that was a classic example of what we just talked about: They weren’t really set up for the weather catastrophe they had. That really degraded the brand there for a while. I think that’s a great case study for all of us trying to build good service brands. They built an innovative model, but they didn’t have enough redundancy in their systems and assets to have a backup plan for such a big weather emergency. They’ve made some changes now. I think Zipcar and others can take a page from that book and really understand.

PM: I’m wondering if there are other management theories, tools, or thought leaders you pay attention to? What do you read? Where are you drawing insights and inspiration from?

SG: One thing I find intriguing is that with each new 12-month, 18-month cycle, more and more of the mainstream population is willing to use a business model like Zipcar. Where self-service and simplicity around self-service becomes a key part of the business model. I track trends that are around that. Who else is out there changing? That’s why I mentioned ING Bank. I think the day of the brick and mortar bank is largely gone at this point. Between ATMs and online banking, why do we even need brick and mortar in banking any more? There’s a demographic that wants that; they’re comfortable with it. But other than that, there’s really no need. I watch where in other categories trends that are happening, like Netflix and what they did to Blockbuster.

PM: I’m wondering if you’ve seen a behavior change away from owning to sharing? Is this something that Zipcar is driving? Are there other factors driving this change? Or is it generational? It takes 20-years for a certain new way of thinking to emerge, while those who hold to the old way of thinking die off. What do you need to do to make it clear to the potential audience that this is a better alternative?

SG: Well, we make a very strong economic argument. On our web site we have a little calculator that compares using Zipcar versus car ownership. For someone that’s not using a car very often, we help people understand how much they’re really paying to own a car. They often think about a lease payment, car payment, or loan, and they forget that there’s a big tab for insurance they pay — maybe not every month — but it’s still a big number. Then there are parking tickets, maintenance costs; that all adds all up; even AAA estimates $600 to $700 a month for a pretty basic car in a city. That’s a lot of money, and we just try to educate our group about how much they’re paying for the convenience of using a car a few times a month. The trade-off becomes a very simple economic one, and the net result is exciting for our cities. 40 percent of our members either sell their car or choose not to buy a car as a result of the service, just like you were doing when you first joined. That’s great for our cities. It’s also a great feeling for our employees to be part of a business that’s making that an impact. That’s a statistic we’ve seen actually growing over time.

PM: Well, that’s all the time we have now. Thank you so much for your time.

Published by Adaptive Path | 363 Brannan St. | San Francisco, CA 94107 | 1-415-495-8270 | http://adaptivepath.com/