Car-Sharing Startups BlaBlaCar and Turo Use NonTraditional Strategies to Boost Usage
Car-sharing marketplaces are finding that partnerships with automotive leasing companies and insurers may be a more cost-effective way to get the word out about their services than using traditional digital marketing efforts.
— Sean O'Neill
BlaBlaCar and Turo, long-distance carpooling platforms based in Paris and San Francisco, respectively, each face a problem in boosting consumer usage.
Distribution deals, such as being listed on aggregators or online travel agencies in exchange for paying a commission, and search engine marketing, which requires buying ads that may not result in transactions, are both expensive ways to generate demand.
The two well-funded companies have instead chosen alternative routes to build consumer usage of their marketplaces.
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When Turo expanded last year into the French Canadian region, it cut a deal with Intact Financial, one of the largest Canadian insurers. Intact owns Belair Direct, the biggest direct-to-consumer insurer in the country.
Policyholders of BelAir Direct are pre-approved to rent their cars on Turo and receive coverage for roadside assistance. Along the way, BelAir Direct promotes Turo as one of the perks of being a policyholder, which provides helpful marketing for the startup.
On Wednesday, BlaBlaCar announced a partnership with French leasing company ALD Automotive that also offers indirect benefits to gain members and reward its most loyal users.
Starting with 300,000 of its most active French members, BlaBlaCar will offer discounted leases on select vehicles.
If successful, the company’s goal is to expand the program to many of the approximately 8 million users who are defined as “active drivers” because they give lifts to strangers at least a few times a year.
BlaBlaCar can provide data to the leasing company on how their active drivers behave, and thus create a pool of drivers and use that buying power to collectively qualify for wholesale rates.
The package includes a discounted four-year lease, a warranty, comprehensive maintenance coverage, and discounts (starting at 20 euro a month) for every month spent carpooling on select new Opels, like the Corsa, Astra, or Mokka X. The leases are priced on an assumed 20,000 kilometers (12,427 miles) of travel each year. If drivers exceed the average, the contract is readjusted upward to reflect fair usage and to account for the additional expected warranty and maintenance costs.
The goal over time is to enable BlaBlaCar’s most active drivers to use passenger contributions to trips to help pay that lease on the car. “This is not the professionalization of carpooling,” assures Nicolas Brusson, chief executive of BlaBlaCar, in response to a Skift question.
Brusson’s hope is that the more people share their cars, the less they will pay out of pocket for their vehicles. But the incentives are set up in such a way that a driver can’t earn a profit from the scheme and the lease is only for the owner of the car — to prevent the entrepreneurially minded to try to create mini taxi fleets.
While not well known in the U.S., BlaBlaCar has 40 million registered users (with one out of five adults in France registered), which includes passengers and drivers in 22 countries.
Turo’s model is a bit different from BlaBlaCar’s. It allows owners to rent out their vehicles without having to be the driver.
Turo says most of the rental transactions that occur on it marketplace have an average duration of five days and are by out-of-towners renting for trips. Some owners offer to deliver their cars to an airport or other location for a fee.
Despite raising $80 million, Turo has had only about 2.5 million registered users and 121,000 vehicle listings since its founding in 2009. It recently expanded into Canada and the UK.
BlaBlaCar says it has raised $400+ million to date and claims 40 million registered users.
Both companies’ executives say they plan to continue to use non-traditional commercial partnerships to get the word out about their services and to encourage repeat usage.