"CEOs can't wait to read Sunny Bindra's articles every week."

Poor customer experience? Here comes disruption

You must have heard of Uber. The mobile-app-driven taxi service has taken the world by storm. In just a short time it covers 45 countries (200 cities), and has even entered Africa (Lagos and Cape Town).

Why this phenomenal expansion? Here’s how it works: You go to the app in your phone. It picks up your location automatically. You click to ‘hail’ a car, using different options (from basic to SUV to luxury). A driver will be assigned to you from the Uber approved pool. You will see the vehicle on your app map as it makes its way to you. You can get a fare estimate in advance. You can follow your journey on the same map. When the journey’s done, Uber just charges it to your pre-set credit card – no cash needed.

You get the point. The convenience is phenomenal.

Not everyone loves Uber. Traditional cabbies are up in arms. London’s black-cab drivers recently staged a protest strike – and Uber usage spiked in the city. The ever-organized Germans worry about safety issues and the disruptions of free-wheeling capitalism. And Uber hasn’t got it right just yet – there are many complaints.

But here’s the thing: there won’t be any stopping Uber (and a flurry of similar app-based competitors). A report from San Francisco reveals that the average number of trips per official taxi has plunged from 1,424 a month in March 2012 to 504 in July 2014. Now, even some of London’s traditional taxi-drivers are signing up to join the new way of getting finding passengers.

This new approach to connecting drivers to riders goes against the grain of what taxi services in most cities in the world have looked like for decades. In most places, taxi drivers and their vehicles have to undergo stringent licensing procedures. The supply of taxis is therefore kept artificially low – and prices artificially high.

Who benefits from this arrangement? Passengers, purportedly, because they are protected from rogue drivers and unroadworthy vehicles. But those very same passengers pay a heavy price for this.

Most taxi rides in most cities in the world go something like this: you will struggle to find a taxi, and will spend a long time on the street trying to flag one down, or stand in a long queue at a terminus. When you get in, you will often find a surly, uncommunicative driver. The route being taken will be a mystery to you – you have to trust the driver. At your destination, don’t ever expect the driver to help you with your bags. And the final price will always be a surprise – and not in a good way.

A recent study from UC Berkeley found that during the evening rush hour, 92 per cent of ride-sharing services such as UberX and Lyft arrived in under 10 minutes – but 16 per cent of traditional taxis did so.

And there’s the point. If your traditional offering is a bad customer experience, the new mobile technologies are going to disrupt you – big time. You won’t stay protected by the state for too long, when customers leave in droves. And wise regulators will also not resist the wave of change for too long, but will try to manage the transition. Artificial blocks to trade usually create shortages, high prices and poor service.

Right now, Uber is doing all the innovating, offering even easy ride-sharing and fare-splitting, and a group-charging system for businesses. The traditional industry is in denial.

The way to survive these waves of disruption is always to have a strong relationship with your customers. When Uber and its ilk hit Nairobi, I won’t be switching over too easily, as my current, long-standing taxi provider gives me great service. The rest…well.

Now, who else provides customers with a poor experience that’s ripe for disruption…could that be you?

Buy Sunny Bindra's book
UP & AHEAD
here »

Our new virtual courses,
The 4BY4 Leader,
are now booking »

Share This Article
Like it? Hate it? Engage here

Archives