A shift in the taxi model needs to start with the passenger

"The traditional taxi company’s battle for survival will be won or lost by those who identify the direction of change within the industry, and evolve accordingly at a sufficient pace to retain & grow their customer base."

Published on 07.09.2017, in Market news, Feature

 

Now on the face of it this statement may seem obvious. Like most businesses, taxi companies have always had to deal with the threat of competition. 

This has been in the form of other taxi companies, new taxi companies starting up, a driver or groups of drivers breaking away to start their own business, regulators restricting the number of vehicles fleets can have etc.

Now on the face of it this statement may seem obvious. Like most businesses, taxi companies have always had to deal with the threat of competition. This has been in the form of other taxi companies, new taxi companies starting up, a driver or groups of drivers breaking away to start their own business, regulators restricting the number of vehicles fleets can have etc.

Competition was understood by all players in the market because they were all trying to do the same thing. Drivers moved between taxi companies, customers came and went and fleet owners generally didn't know unless it was a particularly good customer or they left in large numbers (eg system failure). Every customer typically had 2 or 3 cab companies that they could call when they needed one, usually with a preferred one that they would call first.

There wasn't a particularly strong incentive for taxi company owners to generate loyalty amongst drivers. This all changed drastically with the arrival of Uber etc. Drivers have choices about who they drive for and that brings with it increased needs and demands. It stands out in my mind one client recently saying they now hold their office door open to drivers, greet them by name, with a handshake and give them the attention any paying customer deserves.

Technology is adapting in line with the new requirement to look after drivers. For example, in iCabbi we are completely rebuilding the app that the driver uses to receive trips. It has been built for drivers with driver’s direct input. This will enable drivers to be in even better control of what after all is their own business. They will get greater visibility on where work is and therefore more fares with less dead miles ie be more efficient, more effective, making greater revenues with lower costs.

Likewise consumers didn't have a lot of choice. They used one of a few local services and there was little to differentiate between them. Once again that was until the arrival of apps like Uber, Lyft & Hailo/MyTaxi.

But it's only when we consider the way that the competitive landscape is going to change that my opening statement becomes clear: The company that survives will be the one that knows their customers and best meets their needs while earning and maintaining their custom and loyalty through quality of service and innovative use of customer data.

While being a relative newcomer to the market, Uber & Lyft still operate in the same general field - picking up customers, dropping them to their destination and getting paid - but unlike many taxi companies their entire business model is driven by data.

The new models that are being considered and tested involve a future where people don't own cars. Where delivery companies don't need to hold large amounts of vans and trucks that are sitting empty and costing money at least as often as they are being used. Picture in your mind any big brand logistics business, they all have huge costs and inefficiencies in relation to sourcing and maintaining their fleets of vehicles which lie empty, unused for large parts of each day.

I believe consumers will go to simple booking portals to book their own transportation from A to B across several transportation types (Mobility as a Service) and taxi companies can be one prominent and valuable link within that.

Returning to my opening statement, until now taxi companies have understood the competitive landscape. It's changed little in years and they knew how to tweak their model for example in the face of a new marketing push by a local competitor.

As with other industries it is data that holds the key to drive customer retention and growth. Taxi company owners need to get to know who their customers are today and what their usage patterns are. This may sound obvious as it's a given basic in other industries, but many cab companies don't actually know who their customers are, when they use them and equally important, when they don't.

Then they can begin working on who their customer will be tomorrow and how their booking flow is going to change and evolve. If they don't start working on these areas soon they'll possibly identify the importance of these areas too late and will become irrelevant and risk fading away. They need to think about what motivates consumers to use a service now and use data to determine what they can do to retain and grow their customer base.

A very big consideration for me is to look at other industries to see what they do to retain customers eg airline or supermarket loyalty schemes or hotel booking sites that give every 10th booking for free or white goods stores that offer products with payments spread over 2 years with no interest.

Whatever happens, the taxi company owner needs the right technology partner to give them the back end system that has the flexibility to evolve with their changing needs.

At iCabbi we're putting quality and innovation to the very fore of our business with a view to being the technology partner of choice in the taxi industry for a long time to come - however different that industry may become - and we're looking forward to the ongoing evolution with excitement. We've partnered with Oracle to build a data warehouse with integrated Business Intelligence tool that our customers can use to get to know their customers and associated usage patterns and crucially where they should look for more.

This week we’re in North America meeting with customers in an industry that is building bridges towards the future, considering everything from technology to the best use of their drivers time, electric vehicles and driverless cars.

If you are a taxi company owner please feel free to contact me to discuss how iCabbi could help your company evolve in these challenging times on bob@icabbi.com

Bob Nixon

Sales Director & Co Founder

Bob is the Head of Global Sales, and a co-founder of iCabbi. Bob gives a detailed look into 2016 and how 2017 looks for iCabbi and the industry.

iCabbi is the leading global innovator in cloud based dispatch systems, created with and for enterprise taxi partners to drive business growth.

The platform offers full visibility and control of business and is designed to reduce operational costs, increase efficiency through automation and drive customer satisfaction.

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