Did you catch the Sixt Valentine’s Day spot on the internet, the one in which a Sixt rental car is the catalyst to reunite lost love from generations ago? The unexpected twist at the end aligns with the company’s history of offbeat marketing campaigns in other parts of the globe.
Edited to 30 seconds the commercial is Super Bowl worthy, though large ad buys on television don’t make sense for the German car rental company that doesn’t (yet) have a national footprint in the U.S.
That’s changing.
“You’ll see more of that (creative marketing) later this year,” says Sebastian Birkel, CEO of Sixt North America. “But right now we’re more focused on branch openings.”
This 106-year-old global company is still an upstart in America, the most mature, seemingly saturated car rental market in the world. Yet Sixt’s audacious goal is to open 12 new U.S. locations in 2018 on a path to the nation’s Top 30 airports. Erich Sixt, CEO of Sixt SE, believes the U.S. will become the company’s biggest market in a few years, even ahead of Germany.
The $64,000 question is, “How?”
Sixt understands that growth will happen mostly by carving a piece of someone else’s pie. “Erich Sixt went up against the big guys in Europe in the ’60s, and we’ve been stealing market share from others ever since,” Birkel says. “It’s in our DNA, it’s what we do.”
Since crashing the gates in the U.S. in 2011, Sixt has already taken a slice — witness Miami International Airport, where the brand accelerated from nothing to a 13% share. Sixt now stands as the fourth largest car rental company in the U.S. in terms of revenue.
“Car rental has turned into a commodity business in the U.S.,” says Daniel Florence, managing director, Sixt USA. “Our goal is to change the experience. We want it to be a joy to rent a car.”
Humans Matter
Florence says the Sixt experience is delivered “with more of a concierge-level service instead of an order-taking service.” He also points to Sixt’s ambience and amenities at locations, diligent employee training, and back-end technology that optimizes pricing, fleet, and utilization without overbooking.
But it’s the human connection that is integral to the Sixt experience, Birkel and Florence say, which seems at first contrarian to the trend toward app-based rental models that bypass the rental counter. While both acknowledge that superior customer service is dependent on an efficient transaction, “The counter is there for a reason,” Birkel says.
Birkel gives the example of inbound European tourists who may be unfamiliar with their destination or the rules governing insurance coverages in a foreign country. “Some people want the comfort of human interaction or need education,” he says. “The counter is still a part of that culture. For the tourist it works very well for us.”
Sixt is seeking this balance of efficiency and human interaction with the rollout of its SmartStart program in Atlanta.
Originally offered in Europe, the program allows members to go straight to the parking area where they’ll encounter an agent who will swipe a credit card before customers access their cars. The agent provides a human touch point for those wanting it — without slowing down the transaction.
New Markets
Gaining a foothold in the top 30 markets entails opening locations in more business-focused cities in the northern Midwest, Northeast, and Mid-Atlantic regions, a different rental customer makeup than Sixt’s footprint in sunny U.S. leisure destinations.
“We feel we can pivot our business model and take care of both types of customers,” Florence says, adding that the company is already serving mixed business and leisure markets on the West Coast. “We have to get into those cities and plant our flag, or we won’t be able to grow the corporate business to the level we want to.”
SmartStart will initially cater to Sixt’s base of leisure customers, but as the network expands it will serve corporate business as it does in Europe, Florence says.
As a premium brand, the optimal situation is to be on airport or in the consolidated rental facility (conrac) if there is one, Florence says. Sixt just opened in Tampa’s new conrac and has a concession for the conrac being constructed at Chicago’s O’Hare.
An initial plan in the U.S. that included franchising is now focused on growth through corporate-owned stores on airports. However, Sixt is willing to open a location near the airport to gain a foothold in a new market.
Florence points to Ft. Lauderdale as a success story, where Sixt’s 6.5% share is beating some on-airport competitors. Sixt wouldn’t rule out adding downtown branches to complement airport locations, he says.
As part of its premium branding, Sixt offers the largest fleet of Mercedes-Benz and BMW models in the world. Understanding the cost pressures surrounding luxury vehicle rentals, would this constrain growth?
Birkel sees it as a market advantage.
“Customers come to us who were very frustrated with their previous car rental experiences,” he says. “They’ll pay extra to get a BMW and a nicer experience. And there’s enough profit in that.”
Unique Paths
Florence and Birkel came from unique paths to form the partnership that runs Sixt’s U.S. operations, yet their experiences are complementary to their joint task.
Birkel was hired from a management consulting firm with an offer to start a new department at Sixt headquarters on corporate development and strategy. He started on a project that ultimately saved 50% on rental vehicle registration fees, and then went about creating greater efficiencies in the claims and accounts payable departments in Germany.
“They kept on throwing stuff at me and I was up for the challenge,” he says, and then they asked him if he’d like to go to the U.S.
Florence comes with 27 years of experience in car rental operations management in multiple U.S. cities, predominantly with Dollar Thrifty Automotive Group.
Florence sees similar parallels with his early experience in car rental, a less corporate era. He saw Sixt, a new player in the U.S., with a more entrepreneurial spirit and willing to take chances. “What really drew me to Sixt is that I was joining an organization where I could make a difference,” he says.
Birkel concurs, describing the spirit of Sixt as a more like a startup.
“The consulting world, it’s much more about strategizing, but at Sixt it’s much more ‘Do it,’” he says. “If it doesn’t work, you adapt your strategy and try the next thing until you succeed.”
Birkel highlights his first encounter with Erich Sixt, when he prepared a series of PowerPoint slides to make his case for a new initiative. “His response was, ‘But have you tried it out?’ I’m giving you money, and you haven’t tested even three cars to see if it’s working?”
As another example, Birkel was overseeing a location in northern Germany that was outgrowing its facilities and needed a cafeteria. Birkel emailed Erich Sixt directly, who approved the funds to build the cafeteria 10 minutes later.
“If the majority shareholder and the CEO of the Sixt Group gives the okay to do it, you don’t need any other approval; you don’t need a committee,” he says. “People come in and they’re being given responsibility. That’s a unique situation and what makes us a little more agile and quicker than some of our competitors.”
Both Birkel and Florence will benefit from this agility in Sixt’s march into new markets, as openings in New York, Denver, Salt Lake City, and Hawaii loom. Seven of the 20 biggest Sixt locations are already in the U.S. — Erich Sixt’s prediction may arrive sooner than expected.
by Chris Brown
