2. 2
Zipcar is a car-sharing company whose mission is to make it as easy for city
residents to get behind the wheel of a car as it is to get a coffee or paper. This was not the
first car-sharing business model, but it was a new concept in the U.S., which meant that
there was plenty of opportunity and growth potential serving this new market niche, the
urban, car-less residents in the U.S. Members could get a car without the hassle having
to pay for insurance, buy gas, or try to find parking on city streets. Zipcar was making a
strong case for city residents to not own a car depending of course on how much they
actually drove.
Zipcar’s goal was to provide reliable and convenient access to on-demand
transportation, complementing other means of mobility (Zipcar.com). They offer a viable
service that would not be possible to build, operate, scale, or sustain without the Internet
and other technological infrastructure. (See Appendix A) In addition, Zipcar has built a
sense of community with its members through an on-line newsletter and listserv (Russel,
2003) along with their grassroot, almost simplistic marketing strategy. This also helped
them established a strong brand image. Technology, brand image and communication
play a large role in Zipcar’s strategy.
Zipcar was interested in building a real company with real long-term growth
potential. They had ambitious targets, but established a realistic strategy and did not over
extend itself. They started in Boston and have now expanded to five other states. By
establishing themselves in the Boston they created a foundation on which they could
expand.
During this time Zipcar was a growth business and a majority of what funds it had
was invested in developing its technology, which was essential to the business. The
3. 3
remaining funds were invested in creating an identity and building the Zipcar brand. This
new service faced very little actual competition in its target market, Boston, and would
not expand until the business model was proven and established. At this point Zipcar was
looking to increase revenue productivity through enhancing its capabilities and providing
its customers with convenience and cost savings while appealing to their environmental
sense. By the end of 2000 Zipcar had over 400 members and 97% of their trial members
became full members (Hart, 2002) along with excellent projections.
From the customer perspective, Zipcar’s market share is college-educated
urbanites that drive less than 6,000 miles a year. As already mentioned, Zipcar’s
customer acquisition continued to increase and more importantly they were retaining
them. These customers became permanent members because Zipcar was more than
meeting their needs. It was projected that they would achieve gross margins of 25%
(Hart, 2002). Furthermore, Zipcar had an excellent image and reputation and established
itself as a progressive and socially responsible company, which only added to its strong
customer position.
Zipcar’s internal process was predominately based on its technology. If its
investment in their technology was successful there was an excellent chance that they too
would be. Their technology allows Zipcar to provide quick, quality, convenient service
to its customers. In addition, as demand increases, Zipcar has made sure to have enough
cars in order to maintain customer satisfaction. (See Appendix A)
On the learning and growth perspective, Zipcar must continue to maintain its
technological leadership because it is the foundation of its business. This is why its R&D
department is so important. There were some initial difficulties with their R&D and
4. 4
management teams. However, Zipcar amended the problem after they realized they did
not correspond with its strategy and corporate culture. Zipcar’s Balanced Scorecard will
be expanded on further in Appendices B, C, D, and E.
Zipcar’s strategy has been quite successful. Currently, it has more than 10,000
members and 250 cars in the Boston, New York/New Jersey, and Washington D.C. areas,
with plans of continued expansion (Grimes, 2004). They have entered into several
partnerships in its markets including several universities, such as Harvard, University of
North Carolina, and George Washington University. The fact that 98% of Zipcar’s users
are on college campuses and is becoming an integral part of commuter choice (Williams,
2004) was key to partnering with these schools.
These partnerships, specifically with the universities have been a win, win
situation for both parties. They have provided Zipcar with free/cheap parking, which has
been extremely valuable because one of its greatest hurdles to improved returns (ROI)
has been the cost of parking. In addition, these partnerships provide them with free or
discounted promotions. Zipcar has had a frugal marketing budget and has been
dependent on basic marketing techniques and word of mouth promotions. The fact is that
over 40% of those who have joined Zipcar have heard about them from friends and
satisfied members (“The Fast 50:,” 2002). Zipcar has been the choice of partners because
of its successful track record, user-friendly technology, and advanced web-based
reservation system, which continues to add to its success.
Zipcar is less about transactions and more about establishing a village of
customers with a strong sense of community spirit (Kennedy, 2003). It is this sense of
community that is very important for Zipcar. They foster this sense of community though
5. 5
get-togethers in local markets for regional members so they get to know each other.
Since roughly 15-20 members share the same car, members have a strong incentive to
treat the cars as if they were their own (“The Fast 50:,” 2002). There is a greater chance
of this occurring as members get to know each other. Zipcar members also promote the
service at work and in their neighborhoods. It is this positive word of mouth and sense of
community that is critical to Zipcar's growth & success.
At this point the Boston market is the only one returning a profit. However, D.C.
is expected to be returning a profit within a few months, but New York will take longer
because of higher costs. As it continues to grow and develop, Zipcar will only become
more dominant especially if you compare it to the success of similar car-sharing services
throughout Europe (currently in 450 cities) (Zipcar.com).
Adopting the car-sharing model to the American marketplace was a challenge in
and of itself. Zipcar had to make fundamental improvements to existing models while
also creating a market for a product that had never been offered in the U.S. It has been
quite successful in implementing its strategy, but there are some changes that should be
made in order to increase the success rate of their strategy.
First, when Zipcar was attempting to raise the money for its business, Chase
should not have been so presumptuous about reducing risks. The business concept
worked, but jumping the gun before receiving the necessary and sufficient financial
backing was foolish. In their attempt to reduce risks, Zipcar accrued unnecessary
expenses, which could have left them dead in the water. This possibly may have slowed
down the potential success of this business venture. Zipcar would have been wiser to
raise the required capital and then proceed to sign the contracts and build the
6. 6
infrastructure. If they had waited, Zipcar could have increased its coverage quicker. The
more vehicles and locations Zipcar could support, the more accessible this new service
would become to potential and current customers allowing for faster growth potential.
In addition, when they where ready to close on the $1.3 million funding there
should have only been two lawyers involved with this deal; one from Zipcar and the other
from the investor group. As mentioned in the case, because of all the lawyers involved it
took over two months to finalize the deal, which also may have delayed the development
of this business.
Zipcar should have also realized that they needed to hire a president that fit into
their corporate culture; one that followed and believed in their corporate strategy. This
person should have been innovative and had experience in dealing with a start-up
business so he/she would understand the challenges that they present. By hiring someone
that they believed had the appearance of upper management and would address the
concerns of credibility to the investors was a poor choice. They had to eventually fire
him from his position as president of Zipcar because he did not correspond to their vision
and culture, which lead to more questions about Zipcar’s stability and potential to be
successful business. Potential investors look for and want stability from their investment,
but this decision lead investors to believe that there was more unnecessary risk involved
if they were to invest into Zipcar. Basically, when Chase took over, Zipcar was starting
from scratch again because of their inconsistency and Chase’s inexperience. If they had
approached this correctly, Zipcar may have avoided another delay to its potential success.
Zipcar’s mission and strategy will be key to developing its BSC because that way
they will know how to approach making it a reality. Its mission is to offer members
7. 7
affordable 24-hour access to private vehicles for short-term round-trip use as an efficient
means of complementing the public transportation network. Zipcar’s vision is for every
urban resident to have a transit pass and a Zip Card, which should meet the transportation
needs of every urban dweller. There are four perspectives that will need to be evaluated.
Financial Perspective:
Maintain steady growth, specifically in Washington D.C
Improve Returns
Reduce Costs
Increase Business Value
(See Appendix B)
Customer Perspective:
Competitive Pricing
Maintain & Increase Residential & Corporate Membership
(See Appendix C)
Internal Perspective:
Car-Sharing Market Leader
Maintain Service Excellence
Increase Partnerships
Increase Customer Awareness
Maintain Social Conscience & Community Involvement
(See Appendix D)
Innovation & Learning Perspective
Car-Sharing Market Leader
Maintain Superior Technology (R&D)
Maintain Infrastructure for Long-term Growth
Improved Communication of Zipcar’s Strategy
(See Appendix E)
These goals will be elaborated in Appendices B, C, D, and E and show how
Zipcar’s strategy can be evaluated. If positioned correctly, there will continue to be a
great demand Zipcar’s service.
8. 8
References:
www.Flexcar.com
www.ZipCar.com
Grimes, Brad. (2004, February 17). “Leave the Driving To Zipcar.” PC Magazine.
Retrieved March 20, 2004 from PC Magazine’s Homepage on the World Wide
Web: http://www.pcmag.com/article2/0,4149,1476477,00.asp
Hart, Myra. (2002, September 18). “Zipcar.” Harvard Business School case 9-802-085.
Kaplan, Robert S. & Norton, David P.; (1996, September). The Balanced Scorecard:
Translating Strategy into Action. Harvard Business School Press
Kennedy, Randy. (2003, October 10). "Taking the Co-op Out for a Spin: New Car Rental
Idea Depends on Courtesy of Strangers." New York Times, Metro Section.
Retrieved March 18, 2004 from MdUSA database ABI/Inform on the World Wide
Web: http://www.umuc.edu/library/.
Kirsner, Scott. (2003, May 26). “NEW CHAIRMAN, CEO SHIFT GEARS AT
ZIPCAR.” The Boston Globe, Section: Business, pg. D1. Retrieved March 18,
2004 from MdUSA database LexisNexis on the World Wide Web:
http://www.umuc.edu/library/.
Kistner, Toni. (2002, November 11). “New spins on work/life balance.” Network World,
Volume 19, Issue 45, pg. 31. Retrieved March 22, 2004 from MdUSA database
ABI/Inform on the World Wide Web: http://www.umuc.edu/library/.
9. 9
“Leading Business Organization, Springboard Enterprises, Reports Surge in Activity for
Emerging Companies.” (2003, November 19). Business Wire. Retrieved March
19, 2004 from MdUSA database LexisNexis on the World Wide Web:
http://www.umuc.edu/library/.
“Metro's SmarTrip Card and Zipcar Now One.” (2003, June 18). Business Wire.
Retrieved March 23, 2004 from MdUSA database LexisNexis on the World Wide
Web: http://www.umuc.edu/library/.
Micheli, Mark (2002, December 27). “Weathering the storm.” Boston Business Journal,
Section: Business Strategies. Retrieved March 22, 2004 from Biz Journal’s
Homepage on the World Wide Web:
http://boston.bizjournals.com/boston/stories/2002/12/30/story3.html
Root, Franklin R. (1999). Entry Strategies For International Markets, Revised &
Expanded. Lexington Books.
Russell, Belinda. (2003, September). “From Zipcars to water wells - Communication
plays a role in urban design.” The Communicator, The Newsletter of the School
of Communication, Emerson College. Retrieved March 22, 2004 from Emerson
College’s Homepage on the World Wide Web:
http://www.emerson.edu/communicator/index.cfm?View=ShowArticle&articleID
=1124
Swanson, Jessica. (2003, November 12). “Architects, engineers, others drive Flexcar
growth.” Daily Journal of Commerce. Retrieved March 17, 2004 from MdUSA
database ABI/Inform on the World Wide Web: http://www.umuc.edu/library/.
10. 10
“The Fast 50: Trendsetters" (Zipcar #31). (2002, March). Fast Company. Retrieved
March 22, 2004 from the Fast Company Homepage on the World Wide Web:
http://www.fastcompany.com/fast50_02/people/trendsetters/31.html
Williams, Nakisha. (2004, February 3). “New Car Service Zipping to a Lot Near You.”
The Hilltop. Retrieved March 22, 2004 from the Hilltop Homepage on the World
Wide Web: http://www.thehilltoponline.com/news/2004/02/03/Campus/New-
Car.Service.Zipping.To.A.Lot.Near.You-596001.shtml
“Zipcar Expands Car Share Service Into B2B. MIT, Mass General Hospital, NYC
Chambers and RE Developers Sign On.” (2002, November 27). Business Wire.
Retrieved March 20, 2004 from MdUSA database LexisNexis on the World Wide
Web: http://www.umuc.edu/library/.
“Zipping Away From the Heat of Another Summer in the City is Now Fast, Easy and
Affordable. Zipcar Provides Freedom and Mobility for Short Escapes.” (2002,
May 23). Business Wire. Retrieved March 18, 2004 from MdUSA database
LexisNexis on the World Wide Web: http://www.umuc.edu/library/.
12. 12
Appendix B:
Financial Perspective
Objectives Measures Targets Initiatives
Maintain steady growth, Market Share Increase Market Greater Market
specifically in Share 7-10% in Awareness through
Washington D.C. total market per Extensive/Mature
month and Promotion
maintain at least a
2-3% growth Maintain its
ahead of its Technological & Service
competitors Leadership
Improve Returns Revenue Mix Increase Revenue Greater Market
(Corporate/Residential 3-4% Awareness through
Members) Extensive/Mature
Promotion
Revenue Growth
Maintain its
Technological & Service
Leadership
Partnership Growth
Reduce Costs Improved Returns No Specific Maintain its
Technological & Service
Leadership
Partnership Growth
Increase Business Value Related to Whole BSC Related to Whole Related to Whole BSC
BSC
Currently Zipcar is the car-sharing market-leader and faces no real direct
competition in any of its markets except in Washington D.C. where it competes directly
with number two car-sharing company, Flexcar. Flexcar’s membership growth averaging
7% a month (Swanson, 2003) and it needs to be Zipcar’s goal to exceed their
competitor’s growth, especially where they directly compete with each other without
sacrificing quality and service.
Zipcar’s estimated/actual returns have been impressive since it was incorporated.
Through a diverse mix of residential and corporate members, extensive partnerships, and
increased marketing efforts returns will continue to improve. Its revenue increased 2.7%
13. 13
in 2002 and it was expected to triple in 2003 (Micheli, 2002) and it raised $2 million just
in the third quarter of last year (“Leading Business…,” 2003).
Their impressive market share, improved return and reducing costs are directly
related to Zipcar’s technological and service leadership and extensive partnerships. As
has been mentioned, it is Zipcar’s successful track record, user-friendly technology, and
advanced web-based reservation system, that has been the basis for its success and that
has also made it an attractive partner. Already, Zipcar has partnered with several
universities, Boston, D.C., and Westchester’s Metro systems and senior centers to have
reserve parking spaces for free or at discounted rate, which is its greatest expense and
directly affects its hourly and per mile rate.
Increasing Zipcar’s business value is a combination of all four Balanced
Scorecard perspectives.
14. 14
Appendix C:
Customer Perspective
Objectives Measures Targets Initiatives
Maintain Competitive Customer Retention Prices at or above Partnership Growth
Pricing & Satisfaction their competitors
Reduce Costs
Maintain & Increase Market Share & Monthly Active Promotion
Residential & Corporate Member Retention Membership
Membership Growth of 7-10% Continue Zipcar Community
(Customer Relationship)
Maintain Social Initiatives
Zipcar customers love the service and many have given up their own cars
and now use Zipcar exclusively or decided against buying a second car. An internal
Zipcar survey revealed that 15% of their customers had sold their cars since they began
using the service and 40% had abandoned plans to buy cars (“The Fastest 50:,” 2002).
This is specifically because Zipcar is less expensive than owning or renting a car because
members do not pay for insurance, maintenance, parking or gas. Research conducted by
AAA shows the average monthly costs associated with car ownership in urban areas is a
total of $700 a month whereas a typical monthly Zipcar member bill for 15 hours of
driving during three sessions is $100-$150 (“Zipcar Expands…,”2002). In addition, for
those unable to purchase a car, Zipcar increases mobility and connectivity among
transportation modes leading to more efficient travel.
Zipcar is priced a little more than its competitors, but its technology, service,
convenience, and a strong sense of community spirit amongst its members have separated
from the rest. Members feel like they are part of the “Zipcar Family.” During past
snowstorms, members have volunteered to dig out buried Zipcars. It has sponsored happy
hours, pizza parties and bowling nights. Zipcar has even delivered turkeys for the
15. 15
Salvation Army around Thanksgiving with the help of its members (Zipping Away…,”
2002).
Furthermore, Zipcar has a positive effect on air pollution because car-sharing
vehicles are usually more environment friendly and they are already starting to add
“clean fuel” and hybrid vehicles to their fleet helping to reduce pollution. This
environmental responsibility is another attractive incentive to current and potential
members.
16. 16
Appendix C:
Internal Perspective
Objectives Measures Targets Initiatives
Car-Sharing Market Share & Revenue Remain Top Continue to maintain and
Market Leader Growth car-sharing improve on its successful track
company record, user-friendly
technology, and advanced web-
based reservation system
Market Promotion
Maintain Service Customer Retention & No Specific Continue Technological &
Excellence Satisfaction Service Leadership
Increase Cost Reduction No Specific Continue to maintain and
Partnerships improve on its successful track
Market Promotion record, user-friendly
technology, and advanced web-
Increased Parking Facilities based reservation system
Increase Customer Revenue & Market Share No Specific Market Promotion
Awareness Growth
Grow Zipcar Community
Maintain Social Great Promotion No Specific Environmental Responsibility
Conscience &
Community Improved Market Share Remain Active in the
Involvement Community
Improved Brand Identity
Much of what has already been mentioned in the appendices is also directly
linked to Zipcar’s internal perspective and this is the purpose of developing a Balanced
Scorecard. All perspectives are linked to each other one way or another. In summary,
Zipcar is in continued negotiation with many other potential partners, such as other
universities, co-opts, transit systems, and so forth. Environmental responsibility is a main
aspect of all car-sharing business and Zipcar will continue its community involvement
because that is an essential piece to its “Zipcar Family” strategy. This also will further
improve its already positive brand image and identity. Furthermore, Zipcar’s technology
and convenience has lead to its initial success and will continue to lead to further
improvements in its service and market leadership.
17. 17
Appendix D:
Innovation & Learning Perspective
Objectives Measures Targets Initiatives
Car-Sharing Market Market Share & Remain Top car- Continue to maintain and
Leader Revenue Growth sharing company improve on its successful
track record, user-
friendly technology, and
advanced web-based
reservation system
Market Promotion
Maintain Superior Competence & No Specific Invest in R&D &
Technology (R&D) Awareness of Infrastructure
Technology
Improve Infrastructure for Employee & Customer No Specific Employee Training &
Long-term Growth Satisfaction Feedback
Market Share Invest in Infrastructure
ROI
Improved Communication Employee Everyone will Regular Meetings &
of Zipcar’s Strategy Competence & Value Clearly Status Reports to Discuss
Understand the Position & Direction
Zipcar’s Strategy of Zipcar
& Vision
Learning and growth is an intricate part of Zipcar remaining a car-sharing market
leader. Any company that intends to remain a market leader must be innovative and
continue to learn and grow to meet the challenges an ever-changing market presents.
Zipcar’s technology has been the basis for its success, but as the market changes
they will have to continue to improve its technology (R&D) and infrastructure. By using
advanced communication technologies Zipcar economically provides rental cars on an
hourly basis without the need for a central garage or in-person reservation agent. Zipcar's
unique web-based reservation system provides secure, keyless entry to all of its cars, and
its on-board computer system tracks all billing and usage information without the need
having paper work or logs to fill out. (See Appendix A for diagram explaining this
18. 18
process) In addition, it has recently successfully integrated D.C. Metro's SmarTrip card
technology with Zipcar's and upon approval from WMATA, Zipcar members who carry
both SmarTrip and Zip Cards will be able to unlock their vehicles with either card
(“Metro's SmarTrip…,” 2003). This is just one brief example of the many technological
innovations Zipcar has and is developing.
The employees at Zipcar are at the core of this continued improvement, whether it
is in the boardroom or on the tech and service front. They are the gears that make the
company run and in order to operate efficiently and effectively it is necessary to have
open lines of communication, especially regarding Zipcar’s strategy and vision. It is
imperative that everyone is on the same page and there is critical analysis of its goals.
Open dialog, constructive criticism, and continuous feedback will enforce and strengthen
Zipcar’s strategy and vision.
Zipcar has been able to do a lot with a small team of 18 employees because its
corporate culture is incredibly adaptive (Kirsner, 2003). They have learned how to run
the business and make the best use of technology and are focused on learning how to
market their service more efficiently (Micheli, 2002). Moreover, Zipcar’s strong brand,
ability to understand their customers, strong established relationships with their members,
along with continuously testing their marketing message and its means of delivery will
prove to be successful for Zipcar and further its market dominance.
