Case Study: Ola Cabs

Problem Statement: How to increase the revenue per active-rider in the next six months for Ola Cabs?

Context:

1. Ola Cabs is an Indian ridesharing company offering services that include peer-to-peer ridesharing, ride service hailing, taxi, and food delivery.
2. The cabs are reserved through a mobile app and also through their website and the service accepts both cash and cashless payments with Ola money.

Assumptions:

Below discussed features will be launched initially in Bangalore. After seeing the response from the audience, it will be decided to launch in other cities.

Competitors:

1. Uber
2. Meru Cabs
3. Public and personal transport

Market Behavior and Size:

In India, Ola is the largest player by monthly active users (MAUs) and also has a significant lead ahead of other similar platforms. From around 27 million MAUs in December 2018, Ola had 23.96 million MAUs in November 2019. With respect to downloads, the monthly figure stood at 67.41 million for Ola.

The population of Bangalore is around 84.3 lakhs. Active internet users in the city are 6.1M.

Target audience: People in the age group of 16 to 45 years and having family income greater than 15000 pm. This chunk of the population will correspond to 5M.

Feature 1:

Add the option to avail Refreshments on demand during rides.

Pain point:

The user was busy throughout the day as he had an exam at an exam center far from his home. He wanted to reach his home ASAP from there as he was extremely tired and hungry and it was already late in the evening. He booked the ola cab and the driver reached and started the ride. The expected time to reach home was 1.5 hours. He wished if he could have something to eat during the ride.

Solution:

1. Once the ride started, the user can open the ola app, go to the refreshment section, and can buy a bottle of mineral water and snacks that he can take from the driver.
2. Payment can be done through ola money or cash.
3. This feature definitely adds a lot to the user experience.
4. Driver-partners can place the order for the stock on the driver’s app and can collect the placed items from the ola city hub.

Option to avail Refreshments during the ride.

Let’s see how it helps in increasing revenue.

1. As per the data, the average no of rides per hour 1.2. A driver-partner can work for 10 to 12 hours. So the average number of rides per day would be 13. The average number of trips per month would be around 312.
2. Out of the total number of trips, the majority of the trips would be short in duration(70%) and 30% of the trips would be longer than the average duration.
3. No of short duration rides: 218, No. of long duration rides: 94
4. Considering 50%(47) of the long duration rides will result in the favor of buying the refreshments and 10%(22) for the short duration trips.
5. Total number of rides per month resulting in conversion= 47+22 = 69
6. Ola would be charging a convenience fee of 5 INR apart from the MRP of the product. Thus revenue per ride would be 5 INR.
7. The total revenue earned per month = 5*69 = 345 INR.

Feature 2:

Add the option to use the Ola money wallet to buy from other platforms directly from the Ola App.

Pain point:

1. Ola has ventured into the money wallet field by introducing the Ola money wallet. While it can be used to pay money to the driver-partners for rides, in order to use it for other platforms, the user needs to open the merchant’s app separately. The user misses the option to use ola money to buy from other platforms directly from the ola app which has so many MAUs and DAUs.

Solution:

1. This popularity of the ola app can be leveraged to make the use of ola money more prominent.
2. Various platforms can be added under the ola money section of the app which facilitates smooth, faster, and more frequent use of the wallet.
3. More use of the ola money wallet would result in more commission from the external merchants and in turn more revenue for Ola.
4. Features like to pay for broadband, water, credit card bills, etc can also be added.
5. Personalized touch can be added by launching Ola money gift cards and vouchers. It can be used for giving gifts to dear ones on special occasions. Thus, making use of ola money more prevalent among the masses.

Accessing merchants and additional features like gift cards directly from the Ola app

Feature 3:

Display Ola Select and Ola Pass while booking the cab.

1. Ola Select is a subscription-based membership program that offers premium benefits. Key benefits of the Ola Select membership include:

2. Sure, Ola Select provides features strong enough to attract customers to buy it. Consumers may find it convenient if they see that they will use the service on a regular basis and they might save money and time.

3. Ola benefits because they are assured of a predictable and constant revenue stream from subscribed individuals for the duration of the subscriber’s agreement. It also allows customers to become greatly attached to using the service and, therefore, more likely to extend by signing an agreement for the next period close to when the current agreement expires. Additional benefits include a higher average customer lifetime value (ACLV) than that of nonrecurring business models, greater customer inertia, and a more committed customer base.

4. In order to promote this subscription service amongst more customers, they can always have the option to display it when the user sees the option of costs of the trips of cabs and at the time when the user sees the bill receipt.

What impact would it have on revenue?

Let’s understand by getting into the shoes of the user who ordered food from Swiggy. Let’s see how Swiggy places its Swiggy saver premium feature smartly while placing the order.

When the user sees this multiple times while placing her orders that she can save X amount of money per order, it definitely invokes her mind to buy the premium feature. Most of the time, this smart placement of its premium service results in successful conversion in favor of Swiggy and adds up to its revenue.

5. Similarly, Ola can increase its revenue by smartly placing its subscription service in its app.

Smart Placement of its Premium Feature

Customer Journey Map:

Product Roadmap:

In the future, the use of cabs for advertising can be implemented. Revenue generated from the ads can be shared between the driver and Ola.

Marketing Value proposition:

1. Ola should promote all these features extensively on its social media handles so that people can know about it.
2. Promote the smooth experience of using ola money in partnership with merchants to gain customer’s trust.

Success Metrics:

1. Number of Ola select and Pass subscriptions sold on a weekly/monthly basis.
2. The number of transactions done for using the services of external merchants directly from the Ola App.
3. Amount of time spent by the user browsing the Refreshment section. Quantity of refreshments sold to the customers on a weekly/monthly basis.
4. Customer Acquisition Rate and Average Customer Life value (ACLV).
5. Frequency of use in ola money wallet for using newly added features like gift cards, paying broadband, and credit card bills.
6. The average revenue per customer.

Challenges:

1. Pressure on the operations team in order to keep the Inventory up to date. Possibility of wastage of products once expired if not sold.
2. Many customers are not much inclined towards buying the premium services thinking that it’s more of a luxurious service rather than a viable need.
3. Many competitors against Ola money in the wallet payment industry.