Customers just aren’t prepared to put up with ‘badly thought through’ experiences anymore. If industries don’t address customers’ ‘pain points’, then they risk being overtaken by startups which think everything through from a customer’s point of view and make it a reality. We’ve heard it time and time again, but perhaps nothing could demonstrate it more clearly than the taxi business.
Uber, the taxi hailing firm which markets a mobile app allowing customers to submit a journey request which is then directed to a pool of drivers, is just six years old. Yet it’s already causing quite a stir over its perceived unregulated competition with traditional taxi firms.
A confrontation between London Mayor, Boris Johnson, and a black cab driver protesting about Uber’s launch in London went viral and there are many others protesting about it as well.
Its supporters say that it provides a cleaner, more convenient and - crucially - cheaper service than traditional regulated cabs; but its detractors say that its aggressive business practices against its rivals (start-ups such as Gett and Lyft have been targetted) and its ‘surge pricing’ model, which increases prices when there is increased demand, is unfair and antagonistic.
There have also been criticisms over data security and privacy: with traditional taxis, you can flag one down on the street, pay in cash and stay anonymous, whereas with Uber you need to identify yourself and the taxi app company is currently and controversially planning to track its customers’ locations – even when they’re not using the Uber service – and harvest details of their contacts.
At the moment, Uber is one of several taxi options, but if Uber becomes hugely successful, then traditional taxis could disappear altogether and a potentially dangerous monopoly could be created.
Uber is finding out however that licensed taxi drivers the world over are not people you want to tangle with lightly. Customers might like Uber’s new definition of customer service, but taxi drivers who feel their livelihoods are under threat are not going to sit back and let it happen without a fight.
But it’s not just customers who are impressed. Investors have been flocking to the Uber model, already raising nearly $3 billion in investment and attracting favourable attention from Google Ventures who invested $258 million in August 2013. In May 2015, Uber revealed plans to raise between $1.5 billion and $2 billion in new funding, raising the value of the company to $50 billion or higher.
So what is the secret of this start up’s success? Can this Uber moment last?
Not a Taxi Business
The reason that Uber is so interesting is because it’s one of those truly disruptive ideas that completely redefines an industry and changes the way that people think about a particular product or service.
Quite simply, Uber has tapped into the frustration and resentment of every single passenger who has ever stood patiently in the rain and snow, freezing to death, trying frantically to attract the attention of a taxi driver speeding past them in an empty cab late at night and turned that experience into a brand new way of getting around. Uber hasn’t just decided to tweak a few things in the existing system, it’s looked at the entire ‘getting around’ process from start to finish and completely re-invented it.
Uber’s not in the ‘taxi business’ as such – it doesn’t own any cars and it claims that it doesn’t employ any drivers (although this has been disputed in the courts).
Instead, it plays the role of a matchmaker, matching a driver who has a car with a customer who is looking for a lift. They then take a percentage of the fare for providing that service.
For customers, Uber provides a fantastic customer experience, but more importantly for everyone else it has huge potential.
Maybe as a taxi service, it’s not that exciting, but think of it as a personal transport service that can take you to the station for work, drop off the children at their respective schools (and collect them again at the end of the day), pick up your parents to bring them to your house for a meal, drive you to the restaurant or pub for an evening out so you can have a few drinks ... and then it starts to look a lot more interesting.
Then think again about it doing a whole lot more for you ... taking your clothes to the dry cleaner, picking up your groceries at the supermarket’s ‘click and collect’, collecting your prescription from your GP, collecting parcels from the parcel depot ... and then it becomes yet more interesting again. Recently Uber has gone live with a full-scale meal delivery service across 10 cities in the US, an expansion that will test the company’s ability to use its drivers to move goods.
Always On Tap
Then ‘getting a lift to somewhere’ becomes as simple as turning on the electric light switch to access electricity or running a tap to get a glass of water – it’s always there when you need it and it’s easy to get hold of. It’s like having your own personal chauffeur following you around, never more than a block or two away, but without having to pay for the privilege.
The app is also available as a ‘platform’ for other services. Once lots of people are using it for taxi rides, then the company has a ready audience and can use it to sell them other services as well.
So far, Uber has shown that creating a consumer-friendly product, with access to capital, that completely reinvents a familiar experience can lead to huge growth and a huge amount of publicity, but it remains to be seen whether the combination of local regulatory restrictions and the stream of ‘me-too’ competitors will prove too powerful to make it a lasting business success.
About Nicholas Mitchell
Nick Mitchell is the Managing Director, EMEA at intuitive customer experience company, 7. Nick has a background of delivering IT supported transformation programs when he worked for organisations such as Logica and Andersen Consulting, while at 7 he works with some of Europe’s most prominent brands to deliver a more intuitive and omnichannel customer experience. For more information, please visit: www.247-inc.com