Marketing Car Sharing & Mobility 2.0 | Ep. 15 Rethink Podcast
In this episode of the Rethink Podcast, we hit the streets of Portland on a ride along in a BMW X1 with ReachNow’s CEO Steve Banfield to discuss his car-sharing service, and how he markets mobility 2.0.
In the podcast, we discuss ReachNow’s offering, its target audience, their differentiation tactics, market adoption, promotion channels, preparing for when things go wrong, working with regulatory agencies, and having a rich German uncle.
Enjoy the conversation, and we hope you can get one or two takeaways that you can bring to your business.
This transcript has been edited for length. To get the full measure, listen to the podcast.
Steve, can you tell me a little bit about who you are and where we’re at right now.
I’m Steve Banfield. I am the CEO of ReachNow. And for those of you who don’t know, ReachNow is a division of BMW. We’re a subsidiary, we’re a startup, and we’re based out of Seattle. We’re not very old. We just got launched in April of last year. And we operate mobility services for BMW – so car sharing, ride sharing, and some other things that we’ve launched. And we’re here in a car in Portland driving around downtown where it was our second launch city in September. And we just launched last November in Brooklyn, New York.
We really operate kind of like a startup. I’ve joked occasionally that we’re kind of like a startup with a rich German uncle. Unlike other startups that report to a board of VCs, I report to a board of folks out of Munich. And we still operate very much in a dynamic agile way, kind of uniquely us, taking advantage of the best parts of BMW, but still uniquely building our own thing at ReachNow.
What makes ReachNow unique? Who uses ReachNow?
Let’s start with: Who uses car sharing? Who’s the audience? Well, I think everybody. We’re really appealing to what we think is an incredibly large portion of the population that is growing all the time. And I think some people think about car sharing as just a service that people who don’t own cars use. And, in fact, it’s the opposite. We see some people who have given up cars, or maybe there are families that had two cars that go to one, and then they rely on car-sharing services or other services to get around at other times. And it’s people who own a certain kind of car, maybe a small car, but occasionally they’d like to have a bigger car to take more friends out or to go away for the weekend.
We’re driving in a BMW X1 sport activity vehicle (SUV), kind of a small SUV, with a huge amount of room in it ‒ fits four adults really comfortably. So, if you maybe have a small car and you want to go skiing, this car has four-wheel drive. You could take it up to the mountains and go skiing. We think that the audience for car sharing is just about anyone. We’re really focused on urban centers. Because the way the service works is, once you sign up ‒ and it’s free to sign up ‒ you use our mobile app to do it. We scan your credit card, your driver’s license, and we take a selfie to kind of face match your picture with your driver’s license. We check your DMV record. And you’re approved to drive in about five minutes.
You use the app to find a car, to then unlock the car. And then you only pay per minute. Instead of a car rental where you might have to pay per day in a more traditional sense or other services, you can find a car anywhere in your area, in Seattle, Portland, or Brooklyn. You again use the app to unlock it. And then you only pay per minute for the amount of time you use the car. Our current rate is 41 cents a minute. A 10-minute drive costs you $4. It’s really cheap and really works for a lot of people.
And what’s been your growth? You said you launched last spring. What’s it like? How many people are using the service now?
We launched last April in Seattle with about 370 cars. And we covered I would say about 50 percent of the city. In Seattle, we now cover 100 percent of the city limits and have 700 cars in the fleet. In Portland, we’ve already done one expansion and we covered 35 square miles of the city. In Brooklyn, we just got launched, as I said, in November. We’re over 1,000 cars in the fleet and we have 40,000 members in the service. So, really great growth. We’re very excited about how people have picked up on ReachNow and gotten excited about the service.
And we have some people that are using it multiple times a week, and some people who only use it occasionally. And it does vary in that respect. But we’re really excited about the 40,000 people who have already signed up.
And is there one type of person that uses car sharing or ReachNow?
No, I don’t think there’s one type of person. I think what I would say is that car sharing is a concept and our service, in particular, still tends to skew a little bit to early adopters. We’re still new. We’re not even a year old. So, we’re in that mode where the people who [use us] are technology savvy, in that mobile-first category, living off their smartphone. They’re using iPhones and Android phones, and really doing all the different elements of their life right there. They’re doing their banking, they’re doing their communication with their friends, they’re taking their pictures, all the things that they are doing.
If you’re living that life now, it just makes perfect sense for you to extend that to, ‘Well, this is how I’m going to find a car, and I’m going to unlock it, I’m going to use it, and I’m going to manage my transportation needs through this.’ I think that has been pretty consistent. We’re starting to see more people – and it varies by age. I think people sort of assume that some of these services tend to skew towards younger consumers who live maybe in downtown areas and other things. But the reality is we also see older folks who maybe are empty nesters and they’ve moved back downtown or they’ve downsized their life a little bit. Maybe they don’t need the bigger car because the kids have gone away to college or moved away. They can rely on having a car on demand, having access to a fleet of BMW Mini cars.
And that’s one of the great things about what we’re doing at ReachNow, because as a division of BMW, as a subsidiary, we get access to all the great cars that BMW makes. Our fleets are made up of X1 series cars. We also have the 3 series sedan, the 328, and the 330. We have Minis, so we have two-door and four-door and Mini Clubman models. And then what people get really excited about ‒ and we’ve rolled these out in all our markets ‒ are the i3 electric cars. So, people who’ve never driven an electric car can sign up for the service, find one of our electric cars and drive it around, really get a feel for it, and try it out for the first time.
I’m a layman, so I don’t know, but it seems like there’s a competitive space with other big companies. How do you market yourselves or how do you differentiate yourselves so that a consumer knows they should go to you or use you rather than someone else?
Well, one of the things we take pretty seriously is, for example, we’re BMW. We’re a division, as I said, of BMW. We’re trying to offer what we consider a premium service. Now premium does not mean expensive and doesn’t mean priced out of anybody’s range. As I may have mentioned earlier, the current cost per minute for one of our cars is 41 cents. And the next competitor in the market, their cars are 35 cents. I’m not trying to be – from a differentiation standpoint – the lowest cost. It’s not what I’m about. I’m not trying to say, ‘Well, I’m always going to be the cheapest.’
I’m trying to say, ‘Look, when you rent from us, when you use one of our cars, we’re going to have a lot of cars in the city; we’re going to have density, so there’s availability and there’s access. You’re going to have a great app and a great user experience. We’re working hard to try to get to the best customer support we possibly can have. And then when you get in the car, you’re getting, quite honestly, one of the finest automobiles made. These are beautiful cars. Our cars have leather seats. They have seat heaters built into them. They have dual sunroofs. The X1 we’re in, as I said, it’s four-wheel drive, it’s dual sunroof, it’s heated leather seats. It’s all the things that you want.
A lot of times people think of a BMW or a Mini as kind of an aspirational car. It’s $30,000, $40,000, something you aspire to. And we’re taking that aspiration and we’re making it accessible to anyone with a valid credit card, a valid US driver’s license, and 41 cents a minute. It’s really digitizing transportation. We used to buy movies or CDs or other things as sort of a block. And we had to pay 20 bucks or 15 bucks for them. And now we pay effectively pennies a stream on demand when we want it. Well we’re taking this $40,000 car and are making it available to you for pennies a use, quite literally, whenever you want it. For us, it’s the customer service experience, the experience when you’re in the car. We want all that to feel premium, but to be done at a price that we think is incredibly reasonable.
How do you communicate that to your different audiences? Because it seems traditional car advertising is done on big TV commercials and stuff like that. What are the marketing tactics and strategies – our audience tends to be marketers, and so this is what they’re curious about – how would they get their message out if they were marketing? If they were in charge, how would they be doing it?
We try to do an interesting mix. You’re right, BMW is known for great commercials, beautiful cars, and that sort of traditional, almost stereotypical, automobile advertising. Beautiful people driving beautiful cars in beautiful places. And, again, it goes back to that aspiration idea that I just mentioned. We just released the new 5 series. We hired Clive Owen; we literally made a short film. And if you watch that film ‒ please go find it and watch it, because we end up blowing up cars. There are helicopters, and there are special effects, and there are bullet holes in the car, and it’s an action film in about 15 minutes. It’s amazing.
I don’t have that budget. I’m part of BMW. Remember, let’s go back to this: I’m a startup with a rich German uncle. That rich German uncle does not give me an unlimited marketing budget. I can’t just go buy customers. I’m just like any other startup in that respect. For us it is a combination. When we launch in a new city, we tend to do more things like out-of-home advertising and really trying to build awareness where people are, whether that’s near transit hubs, or near places where there are people who maybe are already used to using other forms of transportation and aren’t relying on their car every day. We look at how do we reach out to people via radio ads, maybe in a city, and try to be local.
Beyond that, we do a lot of digital. We’re doing more and more targeting of people who fit the profile. Say maybe they’ve liked or they’ve used mobile ads, maybe they’ve got other apps that fit into this mobility services category on their phone, and we’re really trying to find those people and introduce them to what we’re doing at ReachNow, and tell them why we might be something to fit in with their transportation needs. Because our competition is the other services you might think about. In Seattle, we just kicked off our own ReachNow ride service. It’s a pilot. But it’s a single app integrated with our car sharing app, and it means you can find a car and drive it yourself, or you can hit a button and I’ll send a professional driver in an X1 or a 330 to come pick you up and take you where you want to go, similar to services like an Uber or Lyft.
I’m competing with those guys. I’m competing with the other car sharing services. I’m competing with walking, and biking, and busing, and driving your own car. All of those are substitutes. And I’ve got to find a way to convince you that, for what you need in the moment, this is the right solution for you. And I think that’s something we’re working really hard to do.
Steve, I really appreciate it. Is there anything else I need to know?
I’d be remiss if I didn’t tell everybody who happens to be listening in any of the cities that we’re operating in today ‒ or even the cities we’re not in yet ‒ that you can literally go to the iPhone or Android app store, download the ReachNow app today, and sign up for free. If you have a valid driver’s license and a credit card, it’s really fast and easy. It takes about 5-10 minutes to get signed up and approved. And the next time you’re in one of our cities, and hopefully, we’re going to be in a city near you very soon, you can open up that app and find a car and just drive it around very inexpensively. But signup is free for a limited time. We’re really trying to encourage everyone who’d like to, to go ahead and get signed up. We think it’s a great thing to do.
And it’s an important service for BMW. It’s something we continue to invest a lot of money in for the BMW Group. And we’re just going to keep growing and trying out new things and bringing new services to the market.
Excellent. I’ve registered. I’m definitely looking forward to doing this on my own.
Well I hope so. The “use case” we talked about earlier, this idea that people drive to work because they might need to do X ‒ that’s this fear of needing a car. And what we do is say, look, you can bike to work, you can take the bus to work, you can take the train to work. And then if you need a car in the middle of the day, well there’s one there, there’s one a few blocks away maybe. And now you can grab it, run out, do your quick errand, make the thing happen you need to, and go take care of your kids, or go run home and run an errand, without feeling like you’re being limited by that.
Excellent. Well thank you.
My pleasure. Thank you for having me. I’m glad you were willing to do it. And we’ve just sort of been driving around in a circle in Portland and having a lot of fun here. So thank you for having me. I really enjoyed it.