Taxi hailing startup market is the only area which gets most of the funding among on-demand startups. Not to mention the intense competition ranging from top giants to small and regional level startups. So, to those who are running the taxi startup, it is full of challenges day in and day out. There are many tips and hacks to do well in this business but all of them are very common and it may not double the income. 

So, I have explained some practical techniques unique to the taxi business to double your income. 

What is Customer Segmentation and how it benefits your taxi-hailing app startup?

Customer segregation

As the name states, customer segregation is dividing the users based on demographics, purchasing power, age, requirement, and many more. If you closely watch top taxi giants like Uber and Lyft, you can see customer segregation being applied. These taxi giants are successful in each and every country they enter and segmenting the customer is the reason for it, though they do it implicitly. 

Finding this is not easy because it requires behavioral analysis of users and the help of data analytics is necessary. Problem is, data analytics is underutilized by many small and bootstrapped taxi startups.

Uber started off as a simple app-based taxi booking firm but they sensed that in order to expand quickly to other regions it is necessary to adapt personalized approach to the customers. So, the answer is customer segregation.

Is it necessary that only the customer segregation method is the answer for all?

Personalized approach requires more money and so this approach is next to impossible for many taxi startups especially bootstrapping firms. What I recommend is to follow the segmentation of customers after some time. 

But, the general approach to the markets will not help you when you have,

• Competition 
• Urge to expand to new places 
• Incorporate innovation
• Differentiate from others

Customer segmentation models

Demographics:

Since taxi hailing is a business to consumer model, the various ways you can divide customers are:-

1. Age
2. Occupation
3. Purchasing power
4. Gender
5. Language 
6. Ethnicity

Psychographics:

1. Social media presence – Like WhatsApp, facebook, twitter, etc. 
2. Social class – lower, middle, and upper class in society.
3. Lifestyle – rural and urban lifestyle.
4. Mobile/desktop – smartphone users and laptop users.

Region:

Based on religion it is possible to divide the users. For example, Uber’s approach in India is different from that of China. 

Behavioral:

1. Usage pattern – occasional users, frequent users.
2. Spending pattern
3. Mode of payment – cash, wallet, cards, and other digital payment.

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Benefits of customer segmentation

New opportunities

While applying this process, you may find a completely new and unidentified group you are totally unaware of. Also, they may have huge potential. For example, when Uber entered India, they found that many people use auto-rickshaws and quickly Uber introduced the auto-rickshaw booking service by partnering with them.

Effortless marketing

Marketing is common for any business but it would be easy to allocate resources for it when you can identify preferences. The segregation model helps to find preferences and potential users and with smartphones, it is easier to do marketing. This boosts efficiency and effectiveness in marketing. Unnecessary wastage of resources is eliminated.

Customer retention

When you do focussed marketing you also get to know the pain points and release highly personalized service to them. This can catch the customer’s attention and the chance of them going to another service will be minimum. 

Easy branding

Normally, you need to know some key things like price, design, quality, etc which is required for building the brand. This is made easy when you have fixed target customers. So, building a brand has never been so easy after customer segregation.

Identifying premium users

Definitely, a portion of the taxi users is in need of a premium taxi service. Customer segmentation helps to find it and the reason for this is that sometimes premium users can provide more revenue than other users combined.

Example of Uber on how they used the premium business model to get more revenue.

Uber has a premium service called the UberBlack. This service is provided to loyal and frequent Uber users. In UberBlack, rides are offered in luxury cars with professional drivers. The rate offered is also equally high.

The revenue for Uber from UberBlack is 100% more than what is got from normal service for the same no. of users.

Wrapping up

The list I gave for the customer segmentation models is not exhaustive. Based on the current scenario, different variables can be used for segmentation. Whatever it is, by dividing it should translate to better business.

These tips can also be kept in mind for entrepreneurs who are yet to start this business. For them, more than following customer segmentation, it is imperative to choose the right taxi booking app solution. So, for that, I would strongly recommend SpotnRides – taxi app solution. Our dedicated development and design team can customize the app solution to target different users by adding specific features and designs. 

We would be very happy to partner with you and be a part of your taxi startup. Do send any doubts and queries to [email protected]. We are keen to answer you.

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