Discuss the case study questions in your team, and use your collective ideas and knowledge of

Enterprise Rent-A-Car to create a 10-minute presentation addressing the key issues. Your classmates
and tutor will provide helpful feedback and suggestions

CASE STUDY

Measuring & Managing Customer Satisfaction

Synopsis

This case presents an overview of the customer-focused strategy that has catapulted Enterprise
Rent-A-Car into position as the largest rent-a-car company in the industry. As of 2005, when the
case is set, Enterprise had $8.2 billion in revenue, approximately 818,000 vehicles, more than
6,500 locations, and more than 61,000 full-time and part-time employees. From 1980 through
2005, the companys revenues grew at a compound annual rate of 20.5 percent.

Now well into their 5th decade of doing business, Enterprise was founded in 1957 by Jack
Taylor, who began leasing cars while working with a car dealer in St. Louis, Missouri. When his
customers lost the use of their cars due to accidents or the need for repairs, Jack saw the
opportunity to rent them replacement vehicles. This led to the creation of Enterprise Rent-A-Car
in 1962, a company which for much of its history focused exclusively on the "home-city" rental
replacement market local branches near our customers homes and businesses rather than at
the airport.

From the beginning, Enterprise has based its growth strategy on a simple philosophy. Jack
Taylor believed that by taking care of customers and employees first, profits would take care of
themselves. Taylor focused on doing "whatever it took" to satisfy customers. He hired primarily
university graduates and promoted them rapidly, putting them in charge of branch offices that
they ran basically as independent businesses. Managers earned most of their compensation
based on the profitability of the branch or branches for which they were responsible. This
combination of customer orientation, local-market focus, profit-based incentive, and well-
educated employees, proved to be a powerful formula for success in the home-city market.

Enterprise grew slowly until the 1970s, when courts in the United States ruled that insurance
companies had to offer coverage to allow their customers to replace their cars temporarily
following accidents. This change jump-started Enterprise's growth. The company established
relationships with insurance companies and their agents, and with local auto dealers and repair
shops. These referral agents became Enterprise's key sources of business, and by 2005, the
company had preferred-provider relationships in place with 49 of the top 50 insurers in the
United States.

As Enterprise continued to grow, it expanded its focus on home-city rentals to include the
corporate class market providing vehicles for work trips that dont involve travelling by
airplane. Over 99 percent of Fortune 500 companies in the United States have designated
Enterprise as a preferred provider for these local corporate rental transactions. In addition,
Enterprise has developed a third segment of the home-city rental market: retail, or leisure,
rentals offering consumers the chance to rent a different vehicle for special needs (e.g., a
luxury car for a special occasion, or a pick-up truck to haul materials for a weekend project).

In 1995, Enterprise opened its first airport branch, in Denver a move that was driven not by a
corporate expansion strategy, but by the decision of the local General Manager to respond to
the customers in the market who repeatedly asked for an easy way to rent from Enterprise at
the airport. Based on the success of that initial airport operation (and those opened in a number
of other markets in the following years), Enterprise decided in 1999 to pursue a comprehensive
airport expansion plan. The company doubled the size of its airport business every year over
the next six years, opening its 200th airport branch in 2005 a move that gave the company an
on-airport presence at virtually all of the major airports in the United States. In just ten years,
Enterprise built a 7 percent market share in the highly competitive airport rental segment
climbing from a zero base in 1995 to the #7 ranking by 2005.

Enterprise has also grown successful businesses in other segments of the transportation
market. These include a Fleet Services division, providing vehicle leasing services to corporate
customers; a Commercial Truck Rental business; Referral (retail) Car Sales; and rental car
operations in Canada, the United Kingdom, Ireland and Germany. Throughout its history,
Enterprise has relied on internally-developed expansion initiatives not acquisitions to create
growth opportunities.

Year-to-Year Comparisons of Key Business Statistics (Global)

Year Revenue (billions) Fleet (cars) Locations

1985 $ 0.2 45,000 175

1990 $ 0.8 115,000 725

1995 $ 2.5 310,000 2,400

2000 $ 5.6 590,000 4,438

2001 $ 6.3 633,000 4,783

2002 $ 6.5 649,000 5,199

2003 $ 6.9 684,000 5,500

2004 $ 7.4 737,000 6,017

2005 $ 8.2 818,000 6,511

Home-City Market Comparison

1991

Home-City Rental Market (Industry): $10.7 billion

% of Total Rental Market (industry): 25%

2004
Home-City Rental Market (Industry): $17.6 billion
% of Total Rental Market (industry): 54%
With a full afternoon of interviews scheduled and a tight deadline looming Susan Shea admittedly was a little
distracted as she left the newsroom at the Financial Business Journal to grab some lunch. It was just before noon on
a sunny Thursday, and the lunchtime traffic had already begun to build on Fleet Street, the dual carriage way just a
short walk from her office. As she waited at the roundabout at Salisbury Square, she noticed that her car was the
fourth car in the queue to turn left. She knew the roundabout well, and thought to herself that she ought to be able to
make the turn quickly good news, because she didnt really have a lot of time to spare for lunch that day.

The light changed, and Susan patiently accelerated her Vauxhall Astra toward the roundabout as the cars ahead of
her made their turns. Thats when she noticed something odd out of the corner of her eye a car still moving toward
her in the centre lane. Here comes trouble, she thought, just ahead of a most unwelcome sound: squealing tyres,
followed by the metallic thunk of bumper meeting fender.

In that instant, Susan knew her day had just taken an annoying turn for the worse. A quick check confirmed that
neither she nor the other driver had suffered any physical injuries. But the same couldnt be said for her beloved
Astra. Shed purchased it just eight months before, the first new car shed ever owned. It had been a delightful
relationship, but it was also clear that the car wouldnt be going anywhere on its own not for a while, anyway. The
right front tyre had been flattened by the impact and it was now tilted in toward the engine at a sickening angle. The
bumper and headlight had been damaged, too.

After collecting her thoughts for a moment, Susan called the local police to report the accident and within minutes,
a police car and two breakdown trucks were on the scene working to clear the accident from the busy roundabout.
She was relieved to see that a witness had stopped and was telling the policeman that the other driver was at fault for
having run a red light. At least I wont have that fight on my hands my word against his, she thought as she
watched the police officer write the other driver a ticket. Then she realised that one of the breakdown drivers was
speaking to her: Madam, do you have a body shop in mind where youd like me to take your vehicle? The
question startled her momentarily. Why on earth would I have a body shop in mind, she thought. Its practically a
brand new car.

Thats when the realisation began to dawn: This is going to be a hassle. Not just a missed-lunch-today kind of
hassle, but a I-wont-have-my-car-for-days-or-maybe-weeks kind of hassle. I have no earthly idea, she replied
testily. I guess the Vauxhall dealer. Her tone softened a bit when she noticed that the driver really was trying to be
helpful. Im sorry for snapping at you, she said. This just wasnt even remotely on my To-Do list today.

Not a problem, madam. I understand how it is, the driver said. Lets see if we cant get you back in action. He
opened the truck door for her, she climbed in, and they were quickly on their way. The driver, it turned out, had a
fair amount of useful information to pass along or what he called tools of the trade for accident victims. He
reassured Susan that the insurance company would pay for the tow of her vehicle, that one estimate would be plenty,
and that she was free to take her car anywhere she liked for repairs whether or not it was one of the insurance
companys preferred shops. You can get a rental car easily, too, he said. Just tell the adjustor at the body shop.
But for all his helpfulness while in transit, Susan was amazed at how quickly the driver was gone once he had
delivered her and the damaged Astra to the shop. There, the adjustor a harried, distracted sort who spoke primarily
in sentence fragments contributed to her growing sense of abandonment.

Claim number? he barked. Insurance company notified? Susan found herself fumbling through the slips of
paper shed been given by the police officer at the accident scene trying desperately not to waste any more of the
mans time than absolutely necessary. Call this for a rental, he said, pushing a business card toward her and
nodding toward the phone on the wall, before diverting his gaze from her and back to the computer screen and
keyboard. Susan looked at the card: Enterprise Rent-A-Car, it said. She noticed that the address listed was just a few
blocks away and that she could call either a local or a 0800 number. She dialled the local number and was impressed
that a real person answered the phone after just a couple of rings.

Enterprise Rent-A-Car City Centrethis is Jason Armsteadhow may I help you? she heard a friendly voice say.
Hello, Jason. My name is Susan Shea, and Im going to need a rental because I was in an accident earlier today,
she said. Im really sorry to hear about your accident, Ms Shea, but well be glad to take care of you, Jason
responded. He then took a moment to explain that hed be asking a specific set of questions to initiate the rental as a
direct-bill to the other drivers insurance company. As he proceeded, Susan noticed that she was impressed by both
his thoroughness and his engaging manner. Jason clearly knew his business the tools of the trade, as the
breakdown truck driver might say. But he was also very good at making her feel like a valued customer. That takes
care of the tough stuff, Ms. Shea, he said. Now, if you like, I can pop by the body shop and take you to our
branch, so that we can get the rental agreement signed and get you on your way. Thats when Susan remembered
why the Enterprise name sounded familiar: Shed seen the companys television ads, promoting their Well pick
you up service.

At the Branch

Upon arriving at the branch office, Susan saw that it was a busy place just like the body shop. But there was a
difference, too: Jason and his colleagues seemed genuinely pleased to see her, even to the point of addressing her by
name. After spending a few minutes collecting additional information from her, Jason then stepped through the
rental agreement point-by-point, pausing to explain terms that werent familiar to Susan. Next, he took her outside
the branch to do a visual inspection of the vehicle shed be renting checking to make sure, she noticed, that it had a
full tank of petrol. Soon, they were ready to wrap up, so he handed her a business card and said, Again, my name is
Jason Armstead. If theres anything we can do to make your rental experience better, Ms Shea, please let us know.
And thank you for choosing Enterprise.

As she drove away from the branch, Susan realised that she was feeling a lot less stressed than she was before.
Impeccable service, she thought. I can see why the body shop recommends Enterprise. With her afternoon
schedule of interviews now pretty much shot, she decided to head back to the office and do a little digging to satisfy
her reporters curiosity about Enterprise. Her experience convinced her that she might have the makings of a feature
story there Customer Service Alive and Well at Local Enterprise Branch.

After spending a few minutes on an Internet search, Susan was more intrigued than ever. She discovered that
Enterprise wasnt a local or regional player as she had supposed but the largest rental car company in the industry,
with a rental fleet of well over 904,000; thousands of branch offices in the United Kingdom, Ireland, Germany,
Canada and the United States; and total annual revenues of over $10.1 billion. One other fact caught her attention:
Enterprise had won the prestigious J.D. Power and Associates award for customer satisfaction among rental car
companies at or near airports not just once, but almost every year in the last decade. Maybe theres a bigger story
here than I suspected, she thought. How does a multi-billion-dollar business, with tens of thousands of employees,
and millions of individual transactions, maintain such a consistent level of customer service year after year? She
decided to pitch that story angle to her editors and, at the next staff meeting, got the go-ahead to do some in-depth
reporting. She contacted the companys corporate communications staff, and learned that Enterprises top European
executive would be willing to sit down for extended interviews as part of an ongoing public relations effort to mark
Enterprises 50th anniversary in business. The date was set and Susan made plans to travel to the companys
European headquarters near London.

Arriving For the Interview

Two things surprised Susan when she arrived at Enterprise. First, the headquarters building seemed modest in size
for a multi-billion industry leader. Second, after signing in with the receptionist, she was greeted in reception by her
interview subject Jim Burrell, the companys Senior Vice President of European Operations. Susan, great to meet
you, Im Jim Burrell, he said, putting her at ease with a handshake and a smile. On the way to his office, Susan
explained how her personal experience with Enterprise a few weeks before had piqued her interest in doing an in-
depth story about the company. They arrived at Jims office, settled in, and Susan clicked on her digital recorder to
begin the interview.

I have to tell you, its really heartening to hear your story, Susan, Jim began. That tells me the folks at the City
Centre branch truly are focusing on customer satisfaction, which is right where their attention ought to be. In fact,
customer satisfaction has always been one of our core values at Enterprise right from the earliest days of the
business.
Truth is, when Jack Taylor founded the business in 1957, he didnt set out to build a rent-a-car company at all.
Instead, his big idea was to create a company that stood out for the way it treated its customers. You could say it
was and is his passion: To provide a level of personal service that sticks in customers minds.

In fact, Jack often repeated a couple of pithy comments to get his point across to the management team. Hed say,
After dealing with us, we want customers to say, This is the best place Ive ever done business. Another one of his
favourite observations is, Take care of your customers and your employees first, and profit will take care of itself.

You might not find that kind of wisdom in a management textbook, Jim said. But Jack actually had a very good
business reason for wanting to keep the focus on customer satisfaction. He knew that repeat customers are very
valuable customers. Theyre the ones who really drive a companys profitability the customers who come back to
do business with you again and again. Jack believed and his early experience proved that when you treat
customers right, they really do come back for more.

Id have to say I agree, Susan observed. The body shop did a fine job repairing my car. Still, I probably wouldnt
go out of my way to do business with them again just based on how they treated me. But your City Centre branch
employees really did seem grateful for my business, and that makes me want to put Enterprise at the top of list the
next time I need a rental.

That doesnt surprise me, Susan, smiled Jim. I hear it from customers just like you all the time. And our strategy
of focusing on satisfying customers has certainly stood the test of time. When Jack started this company in 1957, his
fleet had a grand total of seven vehicles and a single office. We didnt even have our own building. Our first office
was located inside a Cadillac dealership in St. Louis. But today, Enterprise has the largest fleet of privately-owned
vehicles on the planet over 904,000 vehicles strong. And we have branches just about everywhere. In fact, theres
an Enterprise office located within 10 miles of 91 percent of the UK and Ireland population.

Truth is, Enterprise has grown much larger than Jack Taylor ever dreamed it would, Jim said. But with that
growth came a unique management challenge. After all, its one thing to guarantee an outstanding level of service
when youre managing a single location and a handful of employees. Its quite another question when youve grown
into an organisation with world-class size and scale.

Thats exactly what intrigued me when I started researching Enterprise, Susan said. I was amazed to learn it was
such a large company, because the branch employees made me feel like I was dealing with a local outfit. In all
honesty, I thought it might be a fluke. So are you telling me it really is possible for a big company to manage and
improve its customer satisfaction performance? she asked.

You bet, Jim said. We actually work very hard at it and the process weve developed has been featured in
publications like Harvard Business Review and The Financial Times. To help you understand how we go about
managing customer satisfaction, I should set the stage first by telling you about the early days of Enterprise and
some of the building blocks that have helped make the company so successful.

A Case Study in Customer Satisfaction

It all got started in the late 1950s and early 1960s, Jim explained. Thats when Jack and his team hit on a
strategy that set Enterprise apart from our U.S. competitors. While most rent-a-car companies were focusing on
getting business at the airports, we spotted a different niche the home-city rental. Enterprise started locating branch
offices in neighbourhoods not at airports and we specialised in providing rentals to customers whose cars were in
the shop for repairs, or who needed vehicles for special occasions, and so on.

It was a very successful model, and we started expanding one step at a time, into a regional footprint first to
Atlanta and Kansas City, then to parts of Florida, Jim continued. But targeting the needs of home-city renters
wasnt the only thing that set Enterprise apart. We also introduced some customer-pleasing extras like our
trademark Well pick you up service.
Its a nice touch, Susan added. Thats one less thing for folks to worry about when their cars are out of
commission.

Thats right, Jim said. And as we continued to expand into new areas of the United States, we discovered that our
basic business model travelled very well. We could enter a new market, and within a short time, make our
operations there profitable and growing.

By 1980, Jack was ready to turn over the day-to-day operating responsibilities to his son Andy, Jim said. It was
also about then that the Enterprise management team decided it was time to go national across the USA with our
expansion plans. That decision sparked a period of rapid growth, a trend that continues even today. In fact, over the
past 25 years, Enterprise has achieved a compound annual growth rate of 20.5 percent.

Wow, thats impressive, Susan said. Twenty-plus percent compound annual growth, for 25 years running? There
cant be many companies in any industry that could match your track record.

I think youre right, Susan, Jim said. And our focus on customer satisfaction has played a key role in keeping that
string going. I believe another important component of our growth strategy was the decision to limit the size of our
rental branches, and manage them in a highly decentralised way. This continues to contribute to our success today.

The Enterprise Branch Model

You said before that the City Centre branch seemed like a small, local business when you dealt with them, Jim
continued. Thats by design. No matter where you go across the country, youre going to find that the typical
Enterprise neighbourhood branch has a team of five to seven people, and a fleet of about 125 cars. Not only that, but
the local managers all have profit-and-loss responsibility for the performance of the branch, and their own income is
tied directly to the performance of their location.

When a branch grows beyond a certain size, we divide it and the manager there moves in line for a bigger job,
Jim noted. As a result of this structure, a major percentage of income for all our managers from assistant branch
managers, right on up to me is directly tied to the performance of the branch, region or operating group in which
they work.

I guess you could say Enterprise runs like a confederation of small businesses, Jim said. We have a relatively
small headquarters staff to handle certain disciplines like information technology and marketing at the corporate
level. But for the most part, local operations have a great deal of autonomy in how they run their businesses.

I wondered about that when I first saw your offices today, Susan said. It didnt seem like this building was big
enough to house a multi-billion dollar company.

Youre right, Susan, Jim said. We intentionally keep our corporate operations lean, and companywide mandates
are rare. Here again, thats by design. We believe we benefit from a decentralised management structure. Its a big
part of what drives our entrepreneurial spirit. On the other hand, as weve grown larger and larger, our decentralised
structure has created a bit of a management challenge: How do we ensure that our tens of thousands of busy,
ambitious and largely autonomous local employees stay focused on key strategic issues like customer satisfaction?
At one time, it was pretty easy to accomplish: When we were a small, regional business, most Enterprise employees
knew Jack personally. More importantly, they knew what he stood for. They knew that customer satisfaction
wasnt just a saying to Jack. It was his passion a way of life.

But as you can imagine, the bigger Enterprise grew, the more difficult it became to rely on the personal touch as
our primary way of communicating about customer satisfaction, Jim said. We started to develop more formal
methods in the early 1990s. One step we took was to craft and publish a Mission statement, he said, handing her a
copy. (Exhibit 1: Enterprise Mission Statement) As you can see, it talks about the goal of exceeding customers
expectations for service, quality and value in the very first sentence.
We also asked the leaders at Enterprise to focus on customer satisfaction any time they met with employees. Our
top executives talk about it constantly, in all kinds of different forums, in an effort to keep the issue top-of-mind. In
addition, we paid close attention to what customers were telling us. We even went so far as to answer every
complaint with a personal letter or phone call.

During the early years of our USA expansion effort, it seemed like Enterprise was doing a decent job of staying
true to our customer service heritage, Jim observed. Our business results were certainly on the right track:
Between 1985 and 1992, our revenue more than quadrupled from $237 millionto $1.1 billion annually. But we
also started to notice some cracks in the foundation. We started to see an increasing number of letters, calls and
anecdotes that indicated our service was not as consistent as it ought to be. Thats what spurred the decision for us
to begin to collect data about customer satisfaction in a formal way, starting in the late 1980s.

Tracking Customer Satisfaction

In connection with our first national advertising campaign in the USA, we conducted audience awareness surveys
in about a dozen markets, Jim said. One question asked how satisfied customers were, overall, with their
Enterprise experience. Frankly, the results were a little troubling to ownership: Just 66 percent of customers said
they were completely satisfied when they rented from Enterprise. Not only that, but there was a significant spread
between different markets: Scores were 13 percentage points higher in our best markets than in the lowest-
performing locations. As we continued to track these numbers in the early 1990s, we noticed that the top-box score
the highest mark for completely satisfied on a survey stayed pretty much the same: Just 66 percent of customers
were completely satisfied. But the percentage of dissatisfied customers started to drift upwards and reached 10
percent by 1994.

It was about then that Andy set out to find out more about our customer satisfaction performance, Jim said. We
started out pretty simply really just floating the idea among senior executives that Enterprise needed a better way
to measure customer satisfaction. But we learned quickly that not everyone on the executive team agreed. Many of
our top leaders questioned whether there truly was a systemic problem with customer service, especially since
Enterprise continued to enjoy strong growth. These executives maintained that we just had some isolated trouble
spots, and that they could be handled individually case-by-case.

That approach sounds like it would be more in keeping with the decentralised management structure you
mentioned earlier, Susan said.

Absolutely right, Susan, Jim replied. A lot of the resistance we encountered in the early going centered on that
very point: Our top leaders didnt want to do anything at the corporate level that might diminish the entrepreneurial
spirit at our local branches and operating groups. It became clear pretty quickly that we needed to collect more data
before we could draw any firm conclusions about our customer satisfaction performance. With that in mind, we
went to work on developing a meaningful, ongoing measurement tool one that we could use for all Enterprise
operations, everywhere.

We actually did most of the development work in-house on the questionnaire in large part, because we wanted
Enterprise people to have a sense of ownership in the process, Jim noted. We didnt want it to seem like a
consultant-driven tool. But one result of this internal give-and-take process was that we wound up with a bigger and
more complicated questionnaire than Andy really wanted. It contained something like 17 different questions. We
struggled with question creep, because a lot of senior managers were still leery about the whole idea of the survey.
They wanted to make sure we truly understood what we were measuring, so that we could communicate it more
effectively across the organisation.

It took us about a year and a substantial investment of our management resources to create the survey
instrument, and to settle on a survey methodology, Jim said. The first survey went out in 1994 in the United
States. It was mailed to 1,600 customers per operating group or region, once a quarter. We called it the Enterprise
Service Quality index or ESQi. We were actually very pleased with the initial response rate: On average, about
25% of our customers completed the questionnaire and turned it in. But the ratings customers gave us were another
story: Companywide, just 67 percent of our customers ticked the top box Completely satisfied. Even more
troubling, to ownership, was the fact that there was still a big spread between our strongest and weakest performing
groups and regions. Some had top-box scores from more than 80 percent of their customers, while others were in
the mid-50s. In fact, our Southern California group Enterprises biggest and most profitable territories turned in
one of the lowest scores, a 54.

Ill bet that raised some eyebrows, Susan said.

To say the least, Jim replied. The leaders of that group werent at all happy about being singled out. They started
to criticise the tool, the questionnaire, the sampling technique. They raised all kinds of questions: Did the ESQi
score accurately represent customer perceptions? Did it allow for differences in branch size? Did it account for
geographical differences? For example: Did customers in Alabama have the same expectations for service as those
in Southern California?

Now to make this clear, Jim continued. None of these managers were questioning the need to provide superior
customer service. They believed as senior leadership does that its what provides our competitive edge in the
marketplace. Rather, they were objecting to the ESQi process. It seemed too vague and inconclusive to them, and
they certainly didnt want to be held accountable for ESQi results. On the other hand, Jim continued, Andy
believed the survey did tell us enough to know that Enterprise had a problem so we pushed ahead, and went to
work on developing a better measurement tool.

Strengthening ESQi

In the mid-1990s, we took several steps to beef up the credibility of ESQi, Jim explained. First, we started
collecting more data, so that we could delve deeper into the numbers. That step was important, because it enabled us
to explode some of the myths that had started to circulate about ESQi results. When we sorted the numbers
according to the size of the branch, for example, we found that there were just as many good and bad performers at
both ends of the spectrum. Small branches were no better or worse than big ones at delivering superior customer
service.

The same thing was true when we sorted by geography, Jim observed. There were strong performers, and weak
ones, in every part of the country. Another persistent myth was that good managers didnt need ESQi to tell them
where the service problems were. They already knew where they needed to improve. So one quarter, before the
ESQi scores were released, Andy informally asked senior managers to predict which of their operations would be
above the corporate average on customer satisfaction, and which would be below. As it turned out, they had a
success rate of 50 percent or less at predicting their results really no better than a pure guess.

As we gathered more and more data like that, it helped prove to the skeptics that ESQi could be a valuable
management tool, Jim said. Little by little, the leadership team came around to the idea that our old intuitive way
of managing customer satisfaction was not the answer. And our ESQi methodology continued to evolve, as well.
One key step was the decision to collect customer satisfaction data by branch rather than solely at the region or
group level. That meant significantly expanding the sample size. Managers also told us they wanted to get their
scores faster: Once a quarter just wasnt often enough so we started surveying customers by phone, rather than
with a mailed questionnaire, and we did so every month.

Perhaps the most important change we made, though, was the decision to track only the top box scores those
customers who said they were completely satisfied with their Enterprise experience, Jim said.

Thats a pretty high standard, Susan said. Seems like most companies would be happy with any results that are
above-average not just marks for the very highest box on the ratings scale.

True, we do set the bar higher than most, Jim said. But there was and is a good reason for that decision. As
we studied our data, we realized theres direct link between customers who are completely satisfied with
Enterprise and our financial bottom line. In fact, the research showed that 70 percent of our completely satisfied
customers said they definitely would rent from Enterprise again. That number compared to just 22 percent of those
who said they were just satisfied with our service.

Kind of like my experience with the body shop, Susan said.

Exactly right, Jim replied. You can do a decent job for your customers, but if theyre not completely satisfied,
you may or may not have earned their loyalty for the long term. But our data showed that top-box customers do, in
fact, become repeat customers. They do come back to rent from us again and again, and they are more likely to tell
others about their positive experience, which further grows our business. Its not an exaggeration to say that was a
real turning point for ESQi around Enterprise. We finally had proof that high ESQi scores turned into real dollars of
revenue and profit so naturally, our ambitious, entrepreneurial managers started to value ESQi data like they never
had before.

What do you mean by that? Susan asked. How could you tell that managers were paying more attention to
ESQi?

Maybe the best example is that we started to use ESQi data to change our behaviours in a systematic way, Jim
said. We formed a Standards Committee, comprised of members from several different operating groups. This
committee worked to develop a set of best practices in customer service gleaned from operations that posted the
best ESQi scores. Still, the impact of this effort was limited by our decentralised culture. It would have been out of
character for headquarters to impose a set of best practices on the operating groups. Instead, we simply identified the
best practices, and made them available to any operating groups that wanted to adopt them.

From what youve told me, I get the sense that the story doesnt end there with a set of optional best practices,
built around ESQi scores, Susan said.

Right again, Susan, Jim said. Wed come a long way by this point, around 1996. Wed become pretty good at
measuring customer satisfaction, and wed poured a lot of resources into the capability. In fact, our cumulative
investment was climbing past $10 million, and we were starting to spend $3 million to $4 million a year, in order to
get meaningful sample sizes for our thousands of local branches each and every month.

Its worth noting that we paid for ESQi sampling through a per-car assessment on our operations, Jim said. As a
result, ESQi has always had a direct impact on costs at every one of our branches, and therefore, it also affected
every managers pay slip. So its safe to say that managers across the organisation respected the data we were
generating through ESQi otherwise they would have objected to the per-car assessment.

Still, that respect didnt always translate into action, Jim noted. Despite the fact that we had developed an
accurate, reliable measurement tool at our disposal, we hadnt really figured out how to move the needle on
customer satisfaction. Our top-box scores remained stuck in the high-60-percent range. To me, it said ESQi had not
really become an integral part of how we managed the company day-to-day.

But thats not the case today? Susan asked.

Not at all, Susan, Jim replied. Today, Enterprise has a top-box score of nearly 80 percent. Eight out of ten
customers were telling us they were completely satisfied with their experience.

What made the difference, then? Susan said. How did you turn ESQi data into something your managers would
really use in running their operations?

A Defining Moment for ESQi

Looking back, Id say the turning point came in the fall of 1996, at our annual officers conference, Jim observed.
It was supposed to be a festive occasion, because that was the year Enterprise passed Hertz to become the largest
rental car company in North America. But the happy mood didnt last once our ESQi scores were revealed. Two
years worth of ESQi data showed that we were not making progress we were not improving either the quality or
consistency of our customer service. As I mentioned before, our top-box average was stuck in the high 60s, and
there was a wide gap between our best- and worst-performing locations.

Then, the mood at the meeting turned from somber to grim, when the results were revealed for one segment of our
customer universe insurance adjusters, Jim said. As you can imagine, insurance adjusters are very important to
us because they are a major source of customer referrals for Enterprise and that year, the ESQi data showed that
this group actually ranked us below one of our competitors in customer satisfaction.

Thats when Jack did something extraordinary, Jim said. He hadnt been active in the management of the
company for years, because Andy had taken over most of the operating reins about a decade earlier. But Jack was
still the principle owner of the company, and he is revered as our founder. When Jack saw those ESQi results in
1996, he was visibly upset. He got up and told the senior managers that he considered the ESQi results a personal
affront. He called them a slap in the face. And over the remainder of the meeting, he made it a point to talk, one-
on-one, with every one of the companys senior managers starting with Andy.

Jack delivered a clear, consistent message to each one of us, Jim said. Again and again, he said, Customer
satisfaction is the most important thing we do. Right now, its more important than growth. Its more important than
profits. Then he closed each conversation with a challenge: This is a matter of personal responsibility for each of
us. What are you going to do about it?

Ill bet that was an uncomfortable moment, Susan said.

Uncomfortable, yes, Jim replied. But it also had a dramatic impact on the leadership team. In that instant, we
knew that ESQis experimental phase was over. It was time to put some teeth into our management of customer
satisfaction at Enterprise. We had to start putting ESQi at the centre of the way we ran the company.

How did you go about doing that? Susan asked.

The first step we took was largely symbolic, Jim replied. Right after the officers meeting, we announced that
we would immediately begin to take ESQi scores into account when determining which operating groups would win
the companys most prestigious internal award. You had to be at or above the corporate average on ESQi in order to
be considered for the Presidents Award, no matter how well you performed in other areas such as fleet growth and
profitability.

The decision had an impact right away, Jim continued. The Southern California group long one of our fastest
growing and most profitable operations was shut out in that years Presidents Award competition, for the first
time in years. It sent a very clear signal to the entire company: If your customers arent happy, then you are not
going to be recognised as one of Enterprises best operators.

The next step had an even bigger impact, Jim said. We made ESQi scores part of the formula used to determine
an individuals promotability within the organisation. This was incredibly important, because Enterprise has always
emphasised promoting from within. Every employee knows, if you hit your numbers, youre going to move up the
ladder. Not only that, but our monthly operating reports are published widely within the company highlighting key
performance measures such as fleet growth and profitability. In other words, all managers have a scorecard where
they can track their own performance and that of their peers. By adding ESQi numbers to the scorecard, it sent a
powerful signal to our employees. It said, if youre not exceeding customers expectations for service, then your
career at Enterprise is going to be permanently stalled.

Sounds like a powerful way to get peoples attention, Susan said.

Which is precisely what we were hoping for, Jim agreed. And follow-through was just as important. The new
policy was put to the test in 1998, when a highly visible executive was passed over for promotion even though he
would have been a shoo-in under the old system. Everyone knew why, too: His ESQi scores were unsatisfactory. It
only took a few such episodes to get the point across ESQi is for real.
Still, the process wasnt perfect, Jim continued. Early on, a few managers tried to game the system by
prepping customers to give them top-box scores, or by changing the phone numbers of dissatisfied customers on
rental agreements so that the survey firm wouldnt be able to find them. We sent another strong signal by dealing
with those episodes severely. In fact, some people were fired. Here again, our disciplinary decisions helped to
underscore the idea that customer satisfaction is the top priority at Enterprise.

I can see why its been effective, Susan said. In essence, youve given employees a personal stake in customer
satisfaction. They cant get promoted unless ESQi says theyre treating customers well.

Linking the Needs of Company and Employees

Exactly right, Susan, Jim replied. That was the missing ingredient before there was no link between ESQi and
the way we recognised and promoted individual employees. But thats really just part of the story behind our
improvement. We also discovered that the ESQi survey can provide a rich source of information about how to
improve customer satisfaction. And maybe the most important thing we learned is that customers dont expect us to
be perfect they just want our people to be quick and friendly in solving the problem.

You have a point there, Jim, Susan said. Truth is, I wasnt really satisfied with the car I was given on the day of
my accident. I felt a little sheepish complaining about it, but when I called the branch the next day, I couldnt
believe the response. Your folks didnt make it sound like a hassle at all. They were happy to get me into a different
car.

That certainly tracks with what weve learned about customer satisfaction through ESQi, Jim said. We now know
that most customers consider three factors to be critically important the attitude and helpfulness of our people; the
speed of the transaction; and the cleanliness of the car. Weve also learned that the first factor is by far the most
important of the three: Customers are willing to forgive and forget a dirty car, so long as our people respond quickly
and with a helpful attitude.

Nor is that the only thing weve learned from ESQi data, Jim continued. Our training programme for new
employees called the Cycle of Service is based on what customers have told us in the survey about the
moments of truth during every transaction. The training is remarkably detailed: It talks about things like answering
the phone before the third ring, mentioning both the customers name and the employees name during the call, and
saying thank you at the end. Over the years, weve learned that these simple details really matter to our customers.
They add a human touch to every encounter, and they greatly increase the odds that were going to satisfy the
customer.

I certainly noticed those extra touches when I dealt with your employees on the day of my accident, Susan
observed. It changed my whole attitude on a day when things really werent going according to my plan.

Weve seen the impact on our business results, too, Jim agreed. When we turned the corner on ESQi in the mid-
1990s, our corporate average for completely satisfied customers was still stuck at around 66 or 67 percent. But by
1998, 72 percent of our customers were giving us top-box scores. And today, nearly 80 percent say they are
completely satisfied when they rent from Enterprise.

Not only that, but we have narrowed the gap between our top and bottom performing branches, Jim said. At one
time, the spread was 28 points, but its closer to 10 points today. That tells me weve made a significant
improvement in both the quality and consistency of our service, despite the fact that our company is considerably
larger than it was in 1996. (Exhibit 3: Total Revenues, Total Vehicles, Total Locations 1999-2005)

The Enterprise Business Model: Tested and Proven

Our experience proves what Jack Taylor always said, Jim noted. If you take care of your customers and
employees first, profits will take care of themselves. Thats certainly been the case for us. At one time, it wasnt
clear that wed be able to keep satisfying customers at a very high level as we continued to grow larger. But now
that weve developed an effective way to measure and manage customer satisfaction, were also finding that the
Enterprise business model travels very well. Weve used it to open up successful rent-a-car operations in Canada
and Europe. Its also helping us succeed in other segments of the transportation business such as airport car
rentals, commercial truck rentals, a fleet management business, and a car sales business.

I dont think Jack ever dreamed that Enterprise would grow into what its become today, Jim said. On the other
hand, it was always clear to Jack that his company couldnt be overly focused on financial metrics like fleet growth
and profitability. He knew that customer satisfaction had to be the cornerstone of our business model. We lost
sight of that truth for a while, during our initial period of rapid growth. But through ESQi, we have restored balance
to the way we measure performance at Enterprise. And thats had a powerful impact on our continued success.

Its quite a story, Susan said. Where do you suppose itll take Enterprise over the next 50 years?

Thats hard to say, Jim laughed. But Ive learned never to underestimate the people who work here. Again and
again, theyve found new ways to prove that customer satisfaction is a great business to be in. So this much I do
know: It ought to be exciting to discover where their hard work and commitment take us next!

Discussion Questions
1. Describe Enterprises basic operating model at the branch level. What competitive advantages does it provide?
What might be the disadvantages of the model?

2. How does a business size affect its ability to succeed? How must a companys strategies evolve as the business
grows larger?

3. As a privately-held company, does Enterprise enjoy any advantages over its publicly-held competitors? Any
disadvantages?

4. What challenges (internal and external) does Enterprise face today as a multi-billion dollar industry leader
looking ahead to its second half-century in business that didnt loom as large in its first 50 years?

5. What recommendations would you make to Enterprise to guide its continued growth?