Customer Loyalty

The world of transportation is on the cusp of change to a scale that has never been seen within our lifetimes.

Published on 08.06.2018, in Insider, Feature, future-proof, business efficiency

The world of transportation is on the cusp of change to a scale that has never been seen within our lifetimes. Granted it may just be starting and will take a few years before it noticeably impacts on us all, but by the time the average person does notice it will have changed forever.

How we use transportation, the modes we use, when and why, frequency, the payment models, the companies and suppliers involved, the types of vehicles and even how they are navigated around our streets (no more drivers!) are all on the table for disruptive change.

Autonomous taxis, or robo-taxis, are on the way. We can’t really say for sure when they’ll be here or what it will definitely look like, but we can reflect and consider what a future with them may involve.

We can consider how transportation may evolve in the next 3, 5,15 years, how our place within that may shift and what changes we may look to introduce to our models to ensure we evolve and maintain relevance in this new transportation model of the future.

As a part of this exercise we should consider what our inherent value is, and how we can maintain that and carry it into the future.

In my view the greatest inherent values in a taxi company are:

·     its’ customer base

·     they are a local business, often family run (as opposed to a faceless international conglomerate)

·     experience - in managing transportation and customers in their area

·     their infrastructure including offices, yards, garages/workshops

I believe each of the above offer opportunities to anchor a position in the transportation model of the future. In this article I’m going to focus on just one element and the one that I feel is most valuable, the customer base.

In a recent analysis of the data built up with one taxi company over 2 years we saw that 70% of the value was coming from just 30% of the customer base, we also saw break downs within that of who the most loyal were, the regular users, those that were new, those that might be deemed “at risk” as customers etc. All really fascinating stuff and that data can be used to work on and engage with those segments to make a business more solid and profitable.

The new tool we’re working on, iCabbi Insights, will allow taxi companies to easily see this information while enabling them to roll out programs that will reward or encourage these passengers accordingly and build a stronger, more committed customer base (watch this space!).

While on a long flight back in October 2016 I penned an article about the future of transportation (which made it on to LinkedIn almost a year later) that touched on the importance of a taxi companies model, its’ customer base and loyalty and today my opinions on the same remain un-wavered.

From a customer perspective the services provided by a taxi is transient, often with little in the way of loyalty to any particular provider. And why would there be when to the average customer it’s viewed as a commodity, where one taxi is the same as another, one taxi company is the same as another and where availability and price are the biggest influencers on which provider we use? I acknowledge that quality of service, car, drivers etc play a part in some cases but to date branding hasn’t really figured in a meaningful way in our industry and taxi companies generally don’t know who their customers are and where the real value is.

I’ve looked at other industries where products or services may be viewed as a commodity and noticed how in addition to building a strong value proposition and brand based on level of service (quality, reliability, relationship, support, trust) they are also engaging with customers to build levels of engagement and advocacy through different kinds of loyalty programs that help ensure they become the place their customers go to first for their product or service.

Think airlines, supermarkets, coffee chains, mobile phone networks, clothing chains, fast food chains, restaurants, make up and movie clubs.

What I’ve concluded is that right across the board consumer facing industries are growing and retaining their customer base through comprehensive loyalty programs that not only offer customer direct benefits, but make them feel special, valued and proud to spend their money with a particular brand.

How that loyalty program is constructed, managed and what is involved in it would seem to determine the level of success. But a number of key elements are consistent across all industries:

·     Increased levels of service are welcome - customers want an easier life, to have their problems solved with minimum or no hassle and they want their pain points soothed.

·     Experiences are remembered long after they’ve forgotten a discount.

·     Customers like consistency, it creates confidence, which in turn drives loyalty.

·     Customers can become loyal to an airline, hotel, supermarket etc because of pointsmore than anything else, they become fixated on earning points, even if it means paying more for tickets. They drive sales and create repeat customers.

·     Simplicity and clarity in a loyalty program are important. The customer needs to be able to understand it quickly and easily.

·     Exclusivity Pays - Customers want to feel exclusive and important, as evidenced through the prestige associated with moving higher up airline loyalty program tiers and also in other industries as seen with the Starbucks Gold level. A high tier is a symbol of status and importance, an exclusive feeling and a strong motivator where the highest tier should be reserved exclusively for your very best customers. It’s not exclusive if everybody has it!

·     Offer value and exclusivity from the get go, reward for showing brand loyalty. This creates brand ambassadors, advocates who will tell friends about your business.

That got me thinking about how this might look in the taxi industry, for a taxi company or a network of companies looking to increase loyalty and use through a loyalty program.

From a taxi industry perspective we could consider giving points for:

·     Refer a friend = X points (and/or credit added to your account when they’ve completed a certain number of trips or value)

 ·     Points for social sharing – invite friends & family, share trips, recommend service, commend good service etc

 ·     Using branded credit card – a taxi company can make revenues from getting a cut of the card charges every time the card is used while rewarding the card holder for same with points (as commonly seen in the airline industry, supermarket chains etc)

 ·     Family/company plan = combine points to one account to reap rewards more quickly or on a larger scale

 ·     Booking source – book by app to get more points (Domino’s Pizza do this very successfully)

 ·     Pre-payment – not sure how attractive this would be to customers of the taxi industry but Starbucks allow their customers to lodge money on to their loyalty card/app and customers can buy coffees in store from the card and app*.

Which might lead to a program that offers:

 ·     VIP Benefits – dedicated phone line and app/web booking service, higher priority to get a car, guaranteed service levels, executive vehicles & drivers etc

 ·     Tiers - the more points you earn, the more you spend the higher the tier, the higher the multiplier of points per $ spent and so on

 ·     Option to pay an annual premium to increase level (something Lids headwear have had success with)

 ·     Or perhaps even a monthly subscription to get X trips or encourage group usage. For example Cinemark Movie Club charge $8.99 per month where members are given one free movie, a 20% discount on food, and $8.99 movie tickets for their entire party. At an average ticket price of $13, Movie Club appears to be a great option for casual moviegoers, as users will see greater savings if they go in groups, and only see one or two movies per month. Could taxi companies perhaps use this model for small local clubs who take outings several times a year?

 As members build up points they could perhaps be rewarded through:

 ·     Experiential rewards such as free attendance to lectures/talks/music events given by prominent local sports players, musicians, historians etc

 ·     Give tours to local/regional attractions or areas of interest

 ·     Give rewards in non-related businesses - Discounts and/or free access to popular local events

 ·     Donations to charity on customers behalf

 ·     A free trip for every X trips completed (a model that works well for Hotels.com, get a free hotel night for every 10 nights booked and completed, the night is the average value of the 10 you’ve done)

 ·     Build a credit of taxi miles to use on trips - get X miles of free trips for every Y points collected

 ·     Monetary value – get $X of free trips or a reward for every $Y spent (for example on Verizon’s loyalty scheme customers get a reward for every $300 spent)

 ·     Discount codes – give banded discounts based on number of points redeemed

 ·     Car set up the way they like – radio, drink, temperature, talk/no talk etc

 ·     VIP Tier receives monthly, quarterly or semi-annual gifts

The taxi industry must recognise the value of their customer base. Of the value of the overall spend going through the business every single day and how it can be retained as our industry evolves.

I’ve yet to see a comprehensive loyalty program rolled out in a taxi company, or even better through a network of taxi companies, one that gets the full backing and whole hearted commitment of the business.

We might question the validity of a loyalty program in the taxi industry, and I can only speculate on the level of effort and difficulty creating one would entail, and acknowledge that without proper marketing support and spend it will fall flat on its face.

However from where I’m sitting the taxi industry looks mighty similar to many of the industries I’ve name checked above that are using loyalty programs to great success.

With a time of colossal change coming how you engage with and retain those customers will play a key part in determining your relevance in the transportation model of the future - why not give a loyalty program a try?

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

* Starbucks had $1.2 billion loaded onto Starbucks cards and the Starbucks mobile app as of the first quarter of 2016. This money can be used to purchase items including drinks, food and other merchandise.

As of the second quarter of fiscal 2016, 41% of Starbucks transactions in the U.S. and Canada were conducted using a Starbucks card (24% of transactions at company-operated retail stores U.S. used the Starbucks mobile app), according to figures Starbucks provided to MarketWatch. The company had 12 million active loyalty members in the U.S. in the second quarter.

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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