A case study on redBus

redBus is the world’s largest online bus ticket booking platform, connecting various cities across the globe with just a click of a button.

With the increase in new users from metro cities as well as tier 2 and 3 cities, this case study would explore how redBus can increase its overall revenue growth with an increase in transactions that should not be a result of an increase in CAC (Customer acquisition cost).

Key Business Objectives

1. Identify opportunities and strategies
2. Improve their transaction funnel without increasing the CAC
3. Identify major challenges that redBus could face in the next 12–24 months

Target User Segments

1. Users living in tier 1 and 2 cities: As the users living in metros and tier 2 cities have comparatively more purchasing power, technical abilities like having a smartphone or desktop, this segment would have a bigger contribution in revenue. Also, this segment also includes users who frequently travel from one city to another.
2. Users traveling on weekends: This segment includes users whose native location is different from the place they work. These users travel on weekends to their family and come back. This segment also includes users who love traveling to different places.
3. Users traveling for religious reasons: This segment of users travel for religious reasons. These users mostly travel with family and will make a group booking.

Key Metrics

1. Conversion rates from source: This metric will help to understand from which source users are coming and completing a transaction. This will help in optimizing and reallocation of resources and money.
2. Average transaction value: The average transaction value can be calculated by dividing the total revenue in a given time period and the number of transactions in the same time period. As redBus earns from commission from each transaction, more the value will result in more revenue for redBus. If it is less, then redBus can look for another target audience that pays more.
3. Number of users initiating a search: There are many users who would just check the buses and not make a transaction. This metric can be helpful in optimizing user engagement in the transactional funnel.
4. Percentage of users completing a transaction: This metric would give us an idea of how well redBus is solving the user’s problems in selecting a bus besides all the competition we have in the market.
5. Percentage of repeat users: This metric will help to understand how many users are repeating transactions. It shows that the users trust the platform and very well solves their problems.

Parameters to monitor checkout funnel

1. Bookings from Android, iOS, or website: This parameter will help to identify which platform the users use most to make bookings.
2. Checkout conversions rate: This metric will help to understand how many users started the checkout process following all the steps and complete a booking. This can help in understanding the checkout funnel and further improving it.
3. % of users opting for redBus Assurance Program: This parameter will help to understand how many users trust redBus and opt for this feature.
4. Users applying offer code: This parameter will help to understand how many users are inclined to make a booking with an offer code. This will help to understand whether the offer codes make a difference while booking.
5. User selecting which payment method: The most common payment methods can be identified and made sure that the transactions don’t fail.
6. Percentage of payment failures of each method: This will help to identify which payment methods are failing more and require attention.

Suggestions for new features and growth strategies

Features:

1. Pass for regular travelers: A regular pass can be given to frequent travelers with more benefits. This would assure a regular monthly revenue with more transactions as well as building trust with users.
2. Bus review and Images inside the bus: This feature can help users to decide how the bus experience is and looks from inside. Very often, the users select a bus and then later regret it because of the bad experience. This would add great value to customer engagement building more trust.

Growth Strategies:

1. Support for more language: As of now, redBus has an option to select one language in the beginning in mobile. With adding more languages, users will feel more comfortable engaging with the platform and thus help in expanding in other regions where English is not spoken especially in tier 2 and 3 cities.
2. Special packages on weekends and festive seasons: On weekends and festive seasons, people travel more and tend to use bus services. By giving special packages with extra benefits can make a differentiating factor with other competitors bringing in more transactions.

Key metrics to measure the success of the above points

1. Number of users opting and dropping for passes every month: These two metrics would give an idea of whether the feature of passes for regular travelers is working or not. As the number of users opting increases with less drop, it means there are more frequent travelers who trust redBus and value their service.
2. % of users using the bus review and images feature to make a booking: This metric can be found in the transactional funnel where redBus can identify how many users use the review and image feature to make a decision of booking.
3. % of users opting for different languages: This metric will give an idea of where users are from which will help in bringing more regional tie-ups.
4. Number of users opting for special packages: This metric will give an idea of how well their value proposition works for the users. The more users opt for special packages, the more users will trust their platform and these users can be identified and given special offers later for other occasions.

Major challenges in the next 12–24 months

1. Covid impact: Due to the two waves of coronavirus in India, the bus operations have been affected a lot and traveling has been restricted. This has led to less revenue growth due to restrictions and lockdowns as the commission from booking tickets has been reduced. The biggest challenge for redBus would be the third wave and further lockdowns.
2. International Expansion: Due to pandemic, revenue and profits had been impacted and thus it is a big challenge to expand in other countries.
3. Operating expenses: With less demand for travel due to restrictions, expenses within the company would have to be optimized like marketing costs, letting go of employees, and other costs.