Effective Strategies to Overcome the Competition in the Ride-Hailing Business
The ride-hailing market in the world is growing again after certain episodes of lockdown and pandemic burst. The mobility industry is striving to incur losses and establish its existence in the competition.
Businesses in the taxi industry often fail due to a lack of marketing and strategy. A crowded market will not accept another similar product or service, and direct competition with dominant ride-hailing services market leaders requires significant financial resources.
Can you beat competitors and run a sustainable ride-hailing business?
Do newbies still have a chance? Of course, they do! Before you begin, do some research and establish a clear direction.
If you are a mobility startup, you might need to add on your efforts to formulate effective and impactful strategies to become the next unicorn in the market and overcome the competition in the ride-hailing business.
Before discussing the strategies, let’s understand how to operate your business in certain situations.
When the ride-hailing services market is too competitive
This would indicate a mature market with many customers utilizing similar services, fierce competition, and one dominating firm controlling between 40 and 75 percent of the market.
This means that one to three market leaders are sharing the market, have established service standards, and reached sophisticated audiences who demand high-quality services from taxi companies. Therefore, they would prefer to cancel a ride rather than wait 15 minutes.
If this is the case, do you think there is a place for your new ride-hailing business?
Let us tell you that there’s always a hidden opportunity that needs to be explored by diving deep and doing your research (if you really want to get your piece of the cake). In this market, there are always some segments as well as some locations that remain underserved by these big players. You need to identify them and work towards targeting them.
We’ll help you with two strategies that might help you to beat the high competition and build a profitable ride-hailing business.
- Concentrate on niche market segments that are typically underserved by larger operators
- Limit your competition with larger players by focusing on specific regions/cities and reducing your advertising and incentive costs.
Find a niche or area where taxi businesses are not so competitive, and you can easily become the number one. Attract a smaller number of customers who are interested in something the big guys don’t offer. These customers will recommend you to their friends as they share their experiences with them.
Want to understand this with the help of a few examples?
In Los Angeles, Hop Skip Drive has introduced “Uber for kids.” Customers required a trustworthy company to transport their children to and from school each day in a busy city. Hop Skip Drive saw this as an opportunity and established a business that allowed customers to pre-order rides with drivers who had passed a comprehensive background check and had actually met the parents.
Want to know the results? Hop Skip Drive now has a strong market share, $10 million in investments, and plans to expand with services for diverse social groups. Parents are delighted, and kids are safe.
Let’s look at Ola, the dominant ride-hailing service in India. Even Uber’s innovative strategy couldn’t defeat them. The main factor in this success is that Ola offers a special service that is still highly well-liked in India: three-wheelers (autorickshaws).
The ability for users to pay with cash was another savvy move by Ola. For two years after entering the Indian ride-hailing services industry, Uber’s platform did not offer this capability. Ola is able to maintain its market dominance despite the presence of Uber thanks to deliberate work with narrow market segments (those prepared to pay in cash and customers who prefer the mobility of three-wheelers over a classic cab).
Some other ideas to overcome the competition:
- You can offer a full women-driver service
- Focus on electric vehicles
- Offer pet-friendly cab services
- Make partnerships with hotels/airports/restaurants/shopping malls
When the ride-hailing services market is unstable
We are talking about an unstable market if there are no firms with at least a 26% market share. While customers are already accustomed to ride-hailing apps and have specific expectations, there may be numerous ride-hailing companies and no dominating one.
If you bring something unique, customers will immediately notice. In contrast to a market for ride-hailing services that are highly competitive, beginning a taxi business is really quite advantageous. Whether or not your differentiation relates to the needs of the customer will have an impact on your success.
Let us give you an example. InDriver is an international ride-hailing company that operates in 45 countries. This app has amazing features and offers the best fares to its customers. Unlike Ola, Uber; it provides the feature of fare negotiation. Big brands offer a fixed price for every journey, but InDriver allows users to specify the price they are willing to pay based on an average price that is lower than the fare offered by other companies. Passengers can counter-offer the price offered by the driver. Additional options include adding additional destinations, specifying whether a child seat is needed, etc.
Steps/Strategies to overcome the tough competition
Know your competitors
Before competing with them, it is important to get in and out information about the competitors. There are certain ways via which you can do the mapping of the competition and plan strategies accordingly. A few of the common practices are:
1) Conduct an intensive market research
Before hitting the market, it is important to make sure you have all the deep dive insights about the competitors and other players in the market. This will help in making sure you are redirecting to the right strategies and are able to fill the gaps. This is an essential task that can help in bringing the desired results and empowering the processes to generate potential results.
This can be done by either primary research or secondary research strategies that can further formulate to decide the business roadmap.
2) Map the functional capability of your competitors
Another on the list could be the potential activity of mapping the functional capability of your competitors. It includes getting a clear picture of tech maturity, processes involved, and other SOPs of your competitors.
It will also help in understanding the tech strength and gaps in the competitor’s processes. Once you are confident with the competitor’s tech stack, you can plan your processes accordingly.
3) Perform the SWOT Analysis
This is a widespread practice that usually helps new and emerging businesses to know more about strengths, opportunities, weaknesses, and threats in the market. If you are looking to root your presence in the market, it is important for you to get started with a thorough understanding. It will help in laying a strong foundation for your processes.
4) Keep an eye over their funding & Future Plan
The next process is to keep an eye on the funding and future plan of the business. It will help in ensuring that you are updated with their expansion, scaling, and funding. It also helps in making sure that you can get a brief idea about how to go ahead with your fundraising process.
Once you have detailed and updated information about the competitors, you can decide your next growth steps. You can divide the vision goals into short-term and long-term goals. And keep track of them by knowing the milestones and accomplishing them simultaneously.
5) Keep your tech strong
In the ride-hailing business, it is important for your business to have a strong hold over the tech part of the operations. The online booking system, online ride requests, and payment collection are a few key essential parts of any ride system that should be taken into consideration.
Below is the list of good-to-have features in your ride-hailing app:
1. Booking app: This feature allows the drivers and riders to get connected with each other and get ride services. The customers can look out for the nearby ride options, and based on their requirements, they can raise the request. Similarly, the drivers get notified on the app for every request. Based on their preference and serviceability, they can either accept or reject the request.
2. Navigation: Getting the right navigation of the place from where the drivers have to pick up the riders and then drop them off is a key strategy to allow your business to operate efficiently. The navigating maps not only help in choosing the ideal route map but also gives a real-time ETA to customers to know how much time their driver will take to reach their place.
3. Communication: This power-packed feature helps in ensuring seamless communication between driver-admin, driver-customer, and customer-admin. This two-sided communication allows the sharing and flow of information from one side to the other as per the requirements. It also helps in getting accurate instructions from customers to drivers in real-time in case of any change in the plan.
4. Payment Gateway: This feature allows the drivers as well as riders to get the ease of payment via the gateway. The gateway gives the opportunity to instantly collect the payment and initiate the process. For more diversity, there are a variety of payment gateways that can be well integrated into the existing apps.
5. Feedback/Reviews: Again, having a dedicated review collection space allows the riders to leave feedback and rate their experience. This can become quite helpful to the stakeholders to ensure that reviews are well formulated and can be utilized to a great extent.
6) Keep your stakeholders happy
If you are opting for effective strategies that can help in making sure that you stay one step ahead in the competition, you need to attain the trust and confidence of your stakeholders.
If you are able to make your stakeholders happy, you can plan your success accordingly.
Here are the two important contributing stakeholders that can decide the fate of your business. Let us evaluate them:
- Offer them work balance: To ensure that your drivers stay in business with you, you need to make sure you are offering a perfect work-life balance to them. This will help in reducing the driver attrition rate and making sure that they are happy with the daily tasks and want to stay connected with you for a longer run.
- Incentivize them: Another good way to keep your stakeholders close to your business is to incentivize them based on their performances. It is a smart way to ensure that you are identifying and appreciating the high performers and motivating others to perform well.
- Account for sick leaves/ holidays: Show empathy to your drivers by allowing them to take sick leaves if when required and compensate them with the next available driver.
- Tech to save their time and efforts: Lastly, there is a need to keep your processes evolved with the technology. It can be taken care of with prominent tech support. It can help in automating the processes and task allocation. If done accurately, it can help in saving time and efforts of the drivers as well as admin.
- Run discounts on a regular basis: It is important for customers to stay connected with your services. You can earn their attention by offering them coupon codes and regular discounts.
- Provision to add feedback: Again, if you start empowering your customers by offering them a chance to go ahead by expressing their feedback and opinions for the particular ride. It will help in making sure you are entertaining the customers and addressing their concerns precisely.
Ace your marketing game: Practical strategies to win your customers
We have talked about practical strategies that will play a significant role in ensuring the proper growth of your business. Going ahead, in this section, we will talk about marketing strategies that might be useful in bringing the desired result for your business.
1) Outreach your potential customers
It is important to position your brand and product in a way that customers start looking for your services. It will help in capturing a large database for your business without investing much
2) Shout out paid campaigns
If you are looking for quick results, it is important to go ahead with varied paid campaigns. These campaigns are quite useful in ensuring that your potential market is perfectly pitched and is catered to with great results.
3) Launch discount coupons
If you want to capture the attention of the audience, it is advised to keep on adding discount coupons for them. It will help in adding more interest to the customers to avail your services.
And many more!
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