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Meru Cabs

A Spectacular growth story

Radio Taxi Industry in India

With a market size of INR1 14.4 billion in 2011-12, the five-year-old Indian
radio cab industry was expected to grow by 30.9 per cent in the next five
years. The industry was dominated by four companies - Meru Cabs, Easy
Cabs, Mega Cabs and TABcab. The still fledgling
industry offered no obvious or accepted business model that could be
emulated. By refining their models through trial and error, radio cab
companies in India stumbled upon two types of fleet-based business
models company owned and franchise based. To meet the existing
demand, the major radio cab companies had to scale up their operations.
This required greater investment, which the companies managed by
infusing equity capital into their businesses. Thus, even after five years in
the business, major radio cab companies had not yet become profitable.

Meru Cabs
Upon doing a SWOT Analysis, following inferences were drawn:

First mover advantage as a radio taxi operator
Trained drivers with good condition of cars with safety of prime
importance, who are taught at the Meru training academy
Meru Cabs was one of the first companies to launch metered "Radio
Available 24x7 with e-bill services for the customers
Serves over 2 million customers and has been recognized with
several awards

As per their business model, it owns taxis and hence fixed
investment is high
Sudden surge in competition means limited margins and lower
market share

Unorganized market in India is huge (~90%) and hence potential is
Increasing internet penetration & smart phone users
Rising disposable income
Shifting of consumers towards convenience creates huge demand

Rising competition
Uber & Ola cabs have deep pocket and hence can burn cash heavily
Presence of many national players
Absence of clear government regulations in developing countries
Future is unclear due to lack of regulations and Customer loyalty is
less in this industry

Merus Operational Sub Processes

Customer Acquisition
Customers could make cab bookings via the call center, where calls came
through the Interactive Voice Response (IVR) system, or Merus real-time
website, which accounted for 20 per cent of cab bookings. IVR was a
system through which customers could choose from several available
options, such as Book a cab, or Find out the status of a cab. The script
was designed to differentiate between existing and new customers. When
a customer made a repeat call, Merus built-in CRM in its IVR system
helped them identify the customers name and booking history. This was
helpful in expediting the booking process for returning customers.

Booking Management
Since the IVR system was directly integrated with the cab dispatch
system, Meru used its patented algorithm to match a driver to a booking
request. In order to reserve the cab, the agent pressed the Dispatch
button. The GPS in each cab allowed Meru to pinpoint those drivers
closest to the customer. Based on this information, the system picked five
drivers to whom the customer request was broadcast on the MDT in the
cab. The particular job, with the pick-up address and time, was sent to a
set of five drivers closest to the customer.

Cab Delivery
On arriving at the customers location, the driver intimated the call center
about the cabs arrival by pressing the Reached button on the MDT.
Subsequently, an SMS was automatically sent to the customer from the
call center to inform him of the cabs arrival.

Service Delivery
The cabs meter was switched on only when the customer boarded the
cab. The customer was not expected to pay any waiting charges. The trip
was monitored electronically. However, drivers could switch off their
devices if they did not wish to be disturbed while driving. At the end of the
trip, the customer was given a printed receipt and had the option of
paying by cash or card. Once the receipt was printed, Meru knew that the
trip was successfully completed and that the driver was available for a
new job.

Merus Fail point Measures

Meru did not have a system to track whether a driver refused to do a job,
except when they saw a red flag in their system. The next job was
assigned to a driver only when he exited the system and pressed a button
to indicate that the previous job had been completed.

They identified issues of both on-time cab delivery and on-time arrival of
the customer to the cab after the job had been awarded to the driver.
They cant keep the cab waiting endlessly as the asset was not being
utilized. So there was a sub-process wherein they make an out call to the
customer to check whether he intends to take the cab or whether we
should send him a second cab later. These were probably the two areas
that were pain points.

However, there was no overnight solution. They have got to keep doing
intensive training
with the driver and keep pushing them to raise the envelope; while
internally they have to
put in more checks into the system to gain better control over this
problem - what they
refer to as cancellations.

Another area in which Meru aimed to improve its service was reducing the
customer rejection rate, which was largely a result of soaring demand and
limited fleet size.