CQ17: Unlocking Customer Inspired Growth. Find out more.

Project Neighborhood Credit: How can Zipcar (and other brands) apply the lessons of a co-op cooking experiment?

With over 500,000 members, Zipcar—America’s largest car-sharing conglomerate—is still in the hunt to become profitable. The answer?  More customers.  According to CEO Scott Griffith, a larger customer pool allows for operating costs to be “distributed more broadly,” as membership and rental fees would offset lower additional per-vehicle gas, insurance and maintenance costs. However, while this solution may bring increased profits to Zipcar, it neglects Zipcar’s greatest asset— its customers.

Zipcar is an example of one of the newest ways that consumers are spending their money: investing with others in shared or “co-op” purchases, to get more from their money together than they would on an individual basis. Groupon, Living Social and even Costco are examples of companies that articulate the group buying phenomenon to help the individuals get more with their money. A Zipcar membership allows members to rent cars parked in designated spots around Boston, San Francisco and 50 more cities across the Nation and the UK.

Zipcar can leverage the fraternity their service creates to increase profitability and also social impact. To prove it, I set out to apply co-op principles to a local cooking project dubbed Neighborhood Credit. Keeping constant the ideal of small individual contributions to a group for greater group (and individual) good, I appealed to my apartment neighbors to fill in the missing ingredients of a banana bread recipe.  As I went door-to-door, my neighbors slowly contributed eggs, flour, baking powder and baking soda to the recipe. In exchange, each neighbor was promised a portion of the total yield—a fixed percentage based on what they contributed. After making the bread, I returned a share of my total yield to each neighbor that contributed—and made enough to keep a share of the bread for myself.

One week after eating the banana bread, and in seek of increased return from the neighbors I’d formed my banana bread co-op with, I went to my neighbors with other requests—favors, opinions, and even an invitation to a party I was attending. As a result of my outreach, I now share wireless internet with the people upstairs, have borrowed several other cooking ingredients from the guys downstairs and even made friends with the girls who live next to us—all neighbors I met during the cooking experiment.

So, how does this apply to Zipcar? An example of adding value to the Zipcar membership while increasing profitability could be integrating the Zipcar membership with Boston’s (imminent) bike-sharing system. As Boston residents know, short trips are not easy to navigate. Combined with bike share, Zipcar users could gain access to a complete, two-way (go and return) transportation experience, as they would now be able to obtain means of both short, destination-to-destination trips and longer, more distant destinations with the same membership. Realizing that increased transportation mobility is not the need of every city, Zipcar should look to scale their service partnerships with the specific needs of each city in mind.

Zipcar’s greatest asset is not their cars, or their locations; their greatest asset is their customer base.  The needs and demands of both new and current customers will become greater and more diverse as their lives and networks expand.  While expansion and a subsequently larger customer base may give Zipcar additional revenue, it is a myopic course of action if pursued alone.  Zipcar should instead seek to leverage its most valuable asset, its customers, into greater interaction not only with the company, but with each other.

In the coming months, I’ll be working with Communispace’s Research team to explore the role of cooperatives and group buying in consumer lives. And in examining the implications for brands, I’d like to explore ways in which to further activate Zipcar and other companies’ customers, further their interaction with the company and each other and find ways for co-op oriented companies to better cater to their customers’ needs.

Hello...it's me

Why more human companies outperform the market
CQ17: Download the full report

You have Successfully Subscribed!