Lex Autolease has introduced tough new penalties on its daily rental suppliers, effectively guaranteeing its customers get priority when they book a short-term rental vehicle.
Ensuring customers have access to vehicles throughout the year is a major challenge for daily rental companies and their lease partners.Recognising this, when Lex Autolease went to tender last year it moved from a single supplier to a multiple supplier model. It also imposed tough new supplier rules.
“We noticed that we would struggle with one supplier,” said Ian Drayton, the head of Lex Autolease’s short-term rental operation. “So we carried out an intensive review and tender process.”
The result is a new three-year supplier agreement with tough standards imposed on four major rental companies – National, Avis, Hertz and Enterprise – that effectively mean Lex Autolease customers always get a rental vehicle regardless of when they book.
“We have imposed extremely powerful service level standards, they are industry leading,” says Drayton. “I don’t believe anyone else is offering such a service.”
For example, a standard vehicle must be delivered within two hours of a booking being made through a dedicated rental call centre (a web booking system will be rolled out next year to all Lex Autolease customers who want it).
If the car is just a half-an-hour late the rental company will be penalised. There then follows a matrix of penalties that progress all the way to if a vehicle is four hours late, when a £100 penalty is imposed. This £100 will be credited to the customer’s account.
“These service level agreements are a major benefit and it is a promise that is backed up by cash,” said Drayton.
The standards cover all areas including vehicle condition and age, for example vans cannot be over three-years-old and cars not over 12 months.
Service and complaint levels are also monitored and assessed. Should a supplier underperform for three consecutive months, it will lose Lex Autolease business.
“These are very strict standards,” agrees Drayton. “We are very careful that they have availability and we are very clear that if a supplier underperforms they will lose volume.”
The punitive penalties however come with a significant reward – suppliers get a guaranteed slice of the lease giant’s £48 million annual spend on short-term rental, which amounts to 2.31 million rental days.
The strategy has been a success because all corporate customers want guaranteed supply, says Drayton. “We will not have any problem getting our customers a rental vehicle,” he says. “And we have seen a significant growth in demand, we have won contracts on the back of this.”
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