Taxi-hailing services Ola and TaxiForSure are gradually cutting down on special offers and incentives for repeat customers and instead channeling the money to acquire new customers. The move comes in the wake of Ola focusing on building a sustainable business than bleed by way of discounts and offers to customers, after having positioned itself as the leader in the space after the acquisition of TaxiForSure for $200 million.
“They are no longer focusing on giving discounts to repeat customers. Instead, the offers will be earmarked for first-time customers. At TaxiForSure, customer acquisition cost is around Rs 150 and they are trying to bring it down to Rs 100. At Ola, it will be around Rs 200,” said a person privy to the development, adding that Ola was losing Rs 350-400 every ride.
According to sources, these are the first steps towards long-term sustainability and profitability for the taxi companies, which have been bleeding to the tune of Rs 20-25 crore every month by way of discounts, aggressive marketing campaigns and hefty incentives to drivers. However, following Ola’s acquisition of TaxiForSure, the expenses are slated to come down. According to sources, TaxiForSure services about 50,000 bookings while Ola handles over 1 lakh bookings daily. Ola did not respond to queries at the time of going to press.
As part of cost cuts, Ola is believed to have put a curb on TaxiForSure’s marketing expenses and allocated Rs 5 crore towards it for March. The TaxiForSure team plans to ask for about Rs 20 crore for April.
Following the consolidation, the focus has shifted towards building a long-term sustainable business. Ola has adopted surge pricing during peak hours while TaxiForSure charges Rs 50 extra between 8 and 11 am and 5 and 8 pm. Besides, Ola recently launched Ola Cafe to explore alternate methods of revenue generation.
Driver incentives will also be carefully monitored from now on. “Incentives for drivers are being optimised, but not entirely cut because of Uber. Now, driver incentives will be linked to how many hours they are logged in, how many rides they actually do, customer feedback etc. The taxi companies are now in a position to dictate terms,” said the person.
