Olacabs aims to foster entrepreneurship among drivers and operators through its aggregation business model and in turn, make transportation economical and efficient for customers in India
Post an unpleasant experience or two with local cab services, Bhavish Aggarwal and Ankit Bhati were not the sort to chalk it up to bad karma. The duo saw a market opportunity in this highly fragmented space, which could change the way Indians viewed taxi rides. Interestingly, unlike other service providers in this industry, the founders of Olacabs, pioneered an aggregation-based business model to bring about a structure. “We don’t own a single car. Every car that we have in the Ola fleet is owned by a micro-entrepreneur, a driver or an operator. Ola is merely a technology platform that enables operators to generate additional revenue streams, and at the same time delivers good customer experience,” says Aggarwal.
Aggarwal and Bhati, both graduates from IIT-Bombay, founded Olacabs in January 2011 and put in their own savings to kick-start the business. Initially, the challenge was not in customer adoption, because the model was developed with a heavy focus on customer experience. Rather, it was in convincing the independent taxi owners and drivers to come on board Ola. “While we started as an additional source of business to the cab operators, today, we have become their primary source of revenue, with their own business becoming a top-up,” notes Aggarwal. Ola currently has a presence in Mumbai, Delhi, Bangalore, Pune, Chennai and Goa and has a team size of over 500 people. As of today, it has partnered with over 4,500 operators and has over 8,000 cabs in its fleet.
According to the founders, currently, Olacabs gets over 15,000 requests a day, a third of which comes from its iPhone and Android app. “At Ola, the customer experience is carried forward until a customer reaches his/her destination. At the end of the day, they expect a fuller consumption cycle and that is what we are trying to deliver,” says Aggarwal. The company provides point-to-point services within cities, hourly cab rentals and undertakes bookings for outstation travel. It works on a revenue sharing model with the operators, where, depending on the category and size of the operator, the latter will pay 10 per cent to 20 per cent of each transaction value to Olacabs.
In April 2012, the company raised a Series A to the tune of US $5 million, from Tiger Global Management and subsequently, in November 2013, it raised a Series B to the tune of US $20 million from Matrix India Partners and existing investor, Tiger Global Management. “The latest round of funding will help us expand into the next circle of cities, which includes a few non-metros and Tier-II cities,” states Aggarwal. He adds that the company will also be investing in technology to support its data analytics division, which will enhance customer experience and help drivers plan their inventory better. In fact, the company is also in the process of helping other stakeholders (such as the Government and public at large) benefit from Olacabs’ traffic heat-maps and pothole detection mechanisms.
Making all the difference
Aggarwal indicates that an Ola driver can never refuse service to a customer. “When the driver wants to take a break, he has the freedom to turn off the GPS tracker. But, once the booking is made, he cannot back-out,” says the first-time entrepreneur. Similarly, Ola, as a policy, does not ask where a customer wants to get dropped. “Be it 100 meters or 100 kilometers, our goal is to ensure that the customer’s journey from point A to point B is an experience by itself, and has nothing to do with how far he/she is travelling,” he reasons.
To help maintain its service quality, the company has put in place quite a few criteria to bring an operator or driver on board. As a first, the Olacabs team holds an operational and functional level audit to assess if the car is worthy of being on the road. Secondly, it holds a training session for the drivers, to bring them up to its standards. Thirdly, the Ola team conducts planned and surprise audits from time-to-time, to ensure that the service is being delivered as per the company’s expectations.
Today, the car rental industry in India is pegged to be at US $6 billion, growing by 20 per cent annually. While this presents a huge opportunity for companies such as Olacabs to grow in this space, it is also fraught with regulatory and infrastructural challenges. “As a first, there is no policy framework around the market. We more or less created the market and that leaves us with the responsibility of setting a high benchmark,” indicates Aggarwal. Secondly, given that Ola relies largely on mobile and Internet data to deliver customer experience and process transactions, connectivity poses a challenge at certain locations across cities. To tackle this, the company is in the process of developing alternate devices that are less reliant on mobile and Internet data. The third challenge lies in the lack of proper road infrastructure and connectivity. “We don’t have a good mapping system in place, so we have to rely on Google maps,” says Aggarwal.
Like any other startup, Olacabs builds its brand presence by interacting with its customers on social media and advertising on radio and other mass media. The company, however, focuses most of its energy on the customer and its branding activities are accelerated only when they launch in a new city.
In the next five years, Olacabs is looking to create a presence in 10 to 12 metro and Tier-II cities and make transportation economical, efficient and effortless for everyone. “In all, our goal is to empower the operators as entrepreneurs and hence deliver great customer value,” says Aggarwal as he signs off.
What Olacabs has in store for its customers
Ola Mini, a series of hatch-back cars, with a base fare of Rs. 100 for the first six km and Rs. 13 per additional km.
The sedan series, with a base fare of Rs. 200 for the first eight km and Rs. 18 for each additional km
Ola Luxury is priced at Rs. 250 for the first two km and Rs. 20 for each additional km.
BEST PRACTICES TO BUILD CUSTOMER SATISFACTION IN A SERVICE-ORIENTED BUSINESS
As told by Bhavish Aggarwal
Understand the pain point: In our case, while a customer expected a great cab experience, we went one step further, integrated technology at every level and innovated the on-touch booking experience through our mobile application.
Put the customer first: Ensure that the customer is at the centre of every initiative and his/her experience is delivered to the best of your ability.
Offer a seamless experience: From the time a customer reaches out to you till he receives his invoice, makes the payment and shares feedback, the experience should be seamless. For us, consistency in communication across our web, SMS and e-mail applications helps us achieve this.
Take care of your other stakeholders: In our case, the drivers and operators are our stakeholders and they play a critical role in determining the overall experience. Our vision of creating micro entrepreneurs in the driver community and enabling business for them goes a long way in our customer experience.
Always action feedback: Slip-ups will happen occasionally. Be quick to accept, resolve and ensure it never repeats again.