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One Year Later: Rappeport Discusses Donlen-Hertz Merger

Automotive Fleet checks in with Donlen CEO Gary Rappeport a year after the company’s sale to Hertz Global Holdings. One key takeaway was the discovery that the companies have much in common and are leveraging these synergies.

October 2012, by Mike Antich - Also by this author

Donlen’s headquarters in Northbrook, Ill., experienced an expansion in 2006 that added nearly 8,000 square feet to the facility, including a 2,500-square-foot employee training center.
Donlen’s headquarters in Northbrook, Ill., experienced an expansion in 2006 that added nearly 8,000 square feet to the facility, including a 2,500-square-foot employee training center.

One year has passed since Hertz Global Holdings purchased Donlen Corporation. Recently, Automotive Fleet Editor Mike Antich spoke with Donlen CEO Gary Rappeport about what the past year has been like under Hertz’ ownership

Below are excerpts from the interview.

AF: What’s your assessment of the first year under Hertz ownership?

RAPPEPORT: It has gone famously well. They’ve let us run our business, and haven’t in any way tried to change our service delivery or customer experience. We’re in control of all the things we were before and that’s really important to our customers. We’ve been really fortunate. Mark Frissora, Hertz chairman and CEO, is incredibly supportive of Donlen, our independence, and our culture.

We remain Donlen as you’ve always known it, able to accelerate our growth path while part of a larger organization, which gives us access to more prospective customers, resources, and more potential to do new things in the marketplace that we couldn’t have done before.

AF: How would you define the Hertz culture vis-à-vis the Donlen culture? Are there similarities between the two?

RAPPEPORT: Ironically, we found more parallels in the cultures than we expected. Donlen’s focus is on high levels of employee engagement and employee satisfaction, resulting in high levels of customer satisfaction and customer retention, ultimately leading to business growth and performance. That’s Donlen’s business model: employee satisfaction drives customer satisfaction, which drives growth and profitability.

Hertz is also focused on employee satisfaction, customer satisfaction, and asset management. We found, to our pleasant surprise, that there are many parallels in how both companies look at driving the customer experience, engaging employees, and empowering them. In that sense, it’s a lot more alike than we expected.

We’ve believed for years that there are huge opportunities in the fleet, lease, and management business to leverage technology to improve our customer experience at the driver, fleet manager, and analytics reporting levels.

We found that Hertz is also very focused on leveraging technology to be the leader in the business of impacting the client experience, especially using technology to improve the rental experience. We knew that Hertz is an industry leader in technology, but we didn’t realize how entrepreneurial it was.

AF: What has changed in the past 12 months with Donlen since the acquisition?

RAPPEPORT: What has changed is our ability to accelerate the company’s growth through some of the synergies with Hertz. We’re really starting to experience that right now.

For instance, we have more than 50 potential new opportunities in different stages in the sales cycle with Hertz corporate customers that Donlen didn’t have a previous relationship with. It’s created more opportunities for the sales team and more opportunities for us to develop relationships that might not have been there before.

Other changes are in the areas of product. We’re working on a number of different initiatives with Hertz to bring new products to our customers and their customers, where we leverage some of these synergies to be a broader provider in terms of capabilities. Some of these products are around technology, especially telematics.

Our platform, DriverPoint, is very advanced. We developed our own intellectual property and server-side technology to give us greater control over the infrastructure and increase the speed of deployment. We’ve taken that platform and expanded it to a project we’re doing for HERC (Hertz Equipment Rental Corp.), which is the equipment rental business, to provide a broader telematics and logistics solution for both their delivery vehicles and material handling, earth moving, and aerial equipment.

Another area that’s different is our ability to get involved in global leasing. Hertz has existing leasing business in many areas such as Asia, South America, and many parts of the Middle East. While Donlen is not going to get into the leasing business in those markets, Hertz will continue to do it utilizing some of Donlen’s technology.

We’re leveraging our FleetWeb technology platform and providing the capabilities for Hertz in those countries to improve the efficiency and scalability of their leasing businesses. Through that, we also gain greater access to integrated leasing capabilities for our clients and many of the developing parts of the emerging markets across the globe, which are marketplaces that we were not partnered with before.

The last thing is specific synergies around our product, such as the ability to lease a Hertz rental vehicle. We developed and launched a product called Hertz Value Lease. It’s a new category in the market that allows clients, who want to reduce their costs of leasing, an option to lease an approximately 12-month-old vehicle.

AF: How is Hertz using the FleetWeb platform globally in Asia, South America, and the Middle East?

RAPPEPORT: This first phase of our project with Hertz Asia has been to take the FleetWeb platform and use it internally for Hertz China to improve efficiencies, visibility, and capabilities for their lease customers. The leasing business in Asia is very different than it is in the U.S. and in Europe; there’s a chauffeur-driven component and other aspects that make it a very different model.

Right now, it’s not a customer-facing system. Rather, it’s about having the capabilities to meet the unique requirements of leasing in Asia. So, that project is centered on helping create efficiencies and automation for Hertz’s business, not to create a customer interface for the client right now. The next stage will be giving a customer more web-based or mobile visibility into their leasing operation.

AF: The work you’re doing for Hertz Asia with the FleetWeb platform, is Donlen the back room for that operation?

RAPPEPORT: We’ve provided the platform and Hertz is continuing to manage that business with their people and infrastructure.

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