Key Performance Indicators To Measure Your Car Rental Business Success

Avantika Shergil By Avantika Shergil  |  Apr 3, 2024  |  Car Rental Business
Evaluating Success of Your Car Rental Business Application

The car rental app today is one of the most promising sectors all around the world. Why? Because the statistics about this industry are impressive and promising. According to the research giant Statista, the global number of car rental segments was forecast to continue increasing between 2024 and 2028 with a total of 77.9 million users.

The prediction further shoots to a whopping 644.4 million users worldwide by 2028. Backing this figure, Global Market Insights also quotes that between 2023 and 2032, the car rental market size will register a CAGR of 7.4% which is impressive as well.

How to Determine the Success of the Car Rental Business?

You are all set to start a car rental business and you built a quality solution to venture into the market. But, a million-dollar question is how do you decide initially that your business or car rental is successful. Determining the success and failure of your car rental business is crucial. It allows you to assess your financial health through metrics like revenue and profit margins, identify areas for improvement through customer acquisition costs and rental conversion rates, and ensure you’re using your fleet effectively. This understanding empowers you to make data-driven decisions that keep your business on the road to success.

Specific indicators inform you about the rate at which your business is growing. On this basis, you can change strategies to grow your business. You can include extensive features in the car rental app or your website that can enhance their performance. Your car rental mobile apps can be successful with the integration of new features. Now, let’s get into measuring your business success through your digital presence. First, why is it needed?

What Is the Need to Determine the Success of the Car Rental Business?

After you develop a car rental app, you need to determine its success to achieve your business goals. Determining the success of your car rental business is important for its overall productivity. It’s the car rental apps that provide more advantages or disadvantages to your business; therefore, you need to be cautious about the features and functionalities you offer through your car rental software solutions.

You can search for car rental app development companies that can be a great helping hand for you to instigate a well-researched car rental app business through their previous experiences and market research of the current trends.

Key Factors You Need to Consider for KPI

Several factors indicate the performance of your car rental apps. These factors generate statistics on your business that will enable you to take steps to improve it further. These statistics are on daily car rental, number of days car rented and much more. Let us learn about all of them in detail.

Average Car Rental Daily Rate

Daily car rental is one of the chief key performance indicators (KPIs) that help you determine the success of your business. Its average price and rate inform how much money you make from each rental. This average daily car rental cost of your business is calculated by dividing the total revenue generated by the total number of days a car was rented.

Total Revenue (TR) – This represents the total amount of money earned from car rentals during a specific period (e.g., month, year).

Total Rental Days (TRD) – This represents the total number of days all your cars were rented out during the same period.

Average Daily Rate (ADR) = TR / TRD

Average Days Rented

The calculation of the number of days on which your cars were rented is an important key performance indicator for success and failure. It helps you keep track of the total number of days your business made money. This average is calculated by dividing the total revenue by total vehicles.

Total Revenue (TR) – Same as defined in ADR.

Total Vehicles (TV) – This represents the total number of cars in your rental fleet.

Average Days Rented (ADR) = TR / TV

Occupancy Rate

The number of your cars occupied determines the performance of your business. If its percentage is low, then you have to consider different ways to improve it. This percentage is calculated by dividing the number of days rented out by the available inventory. According to this percentage, you can consider decreasing or increasing your fleet of cars.

Car Rental Net Operating Income

The net operating income of your car rental business is one of the most important indicators of the success of your business. This indicator informs you about your need to improve your business of car rentals to generate a better income than before. It is calculated by subtracting all expenses from all revenues. Thus, net operating income=rentals-repairs-debit card fees.

Profits = Revenue – Expenses

Car Turnover Rate

You can measure the success of the car rental company by observing results on car turnover. This KPI informs the rate at which your cars are being rented out. You can know this rate if you divide the number of cars rented out by the total number of cars in your fleet. For example, if you have 100 cars in your fleet and only 10 cars are rented then your car turnover rate will be 10%.

Car Turnover Rate = Total number of cars / Number of rented cars

Percentage of Partner Car Rental Agencies

One of the most significant factors that determine the success of your car rental apps is the percentage of partner car rental agencies. It means that your wide network of partner agencies is effective on yours. This percentage indicates if you either need to retain or minimize a partner agency. You can decide to continue your partnership on this basis.

Customer Satisfaction Rating

Your car rental apps should be able to satisfy the requirements of your customers. Its high customer satisfaction rating will let you know if your services are meeting their requirements. If this rating is low, then you need to modify or adjust the features of your apps to increase it. You should also try to update your car rental app according to the suggestions of your app users as their feedback and reviews are valuable to gain success. In almost all cases, the ratings depend on the user experience of your product and the cab services. You can ensure the best features in a car rental app to get positive feedback and thus improve the visibility of your product on the app stores. In most app stores, the ranking is measured from one to five stars, one being the minimum and five being the best car rental app.

Number of Repeat Customers

You can get insight into customer loyalty, satisfaction, and overall business success by assessing the number of repeat customers. Their loyalty can be judged on the number of times they have used your car rental service. It is calculated in the form of a percentage. Divide the number of customers who have rented your car more than once by the number of customers in the same period to get this percentage. If you figure that the number is lower then implement strategies to retain your mobile app users and increase the value of your company.

Revenue Growth Rate

The rate of revenue growth is another key performance indicator of your car rental apps. This forecast shows an increase or decrease in revenue during the given period. Moreover, it allows you to compare the revenue generated currently from the past. You can calculate it by subtracting the total revenue at the end of a period from the beginning of a period. The subtracted amount gets divided by the total revenue at the beginning of the period. This divided amount gets multiplied by a hundred to get the final rate.

Number of Reservations Processed Per Day

The growth and profit of your car rental company is indicated by the number of reservations processed every day too. This number enables you to understand the demand for your car rental apps. You can calculate it by dividing the total number of reservations processed by the number of days. You need this indicator to estimate reservations booked and canceled in a day.

Conclusion

The above-mentioned factors indicate the performance of all car rental apps. Get the best car rental app development companies to ensure that you have the latest features and functionalities that cater to the present-day users i.e., renters and commuters. As stated in this short guide, you can determine the success of your car rental business by calculating the number of reservations per day, net income growth, revenue growth, customer satisfaction, overall profit, and the rate of car turnover. These factors will allow you to take further steps in achieving your business goals and expand your car rental business in the future.

Avantika Shergil Avantika Shergil   |  Apr 3, 2024

An enthusiastic Operations Manager at TopDevelopers.co, coordinating and managing the technical and functional areas. She is an adventure lover, passionate traveler, an admirer of nature, who believes that a cup of coffee is the prime source to feel rejuvenated. Researching and writing about technology keeps her boosted and enhances her professional journeying.

Subscribe

Enter your email

Connect Now

    Full Name
    Email Address
    Contact Number
    Your Message
    49 + = 58

    Recent Blog