Hailo: the Digital Cab Hailing Disruption Digitizing Cab Hailing with by Putting Customers Directly in Touch to Address These Challenges, the Hailo with Drivers
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Hailo: The Digital Cab Hailing Disruption Digitizing Cab Hailing with by putting customers directly in touch To address these challenges, the Hailo with drivers. The idea is to eliminate the startup formed a team comprising three whole 24/7 call service that traditional London Taxi drivers and three Internet Who hasn’t faced this: it’s late at night dispatchers need while also eliminating entrepreneurs. The rationale was to tap and it’s raining with no licensed taxis in the costs of maintaining and running into the collective learning and experience the vicinity. The only option seems to be hardware associated with computer- of people from within the industry and an endless wait for a cab. Meanwhile, assisted dispatch services. technology experts. The three taxi after what seems like hours, you see an industry veterans were already working open taxi cruising for fares on the next on a startup business of their own for two block. Unfortunately, the driver doesn’t years called Taxilight and had recruited see you in the rain and turns the corner Unlike most apps that about 800-900 drivers. They brought an onto another street. Much to your chagrin, understanding of the local taxi market your wait continues as does the driver’s focused on addressing to help tailor the product to address search. This problem is fundamental to passenger requirements, challenges that cab drivers faced. The the taxi industry – licensed taxi drivers team’s technology visionaries helped in London spend anywhere from 30- Hailo decided to launch develop an app using a sophisticated 50% on “downtime,” where they are not an app addressing driver algorithm that would be multi-platform carrying passengers1. On the other hand, compatible and ensure seamless passengers are known to wait for up to concerns. connectivity on-the-go. 15 minutes for a taxi each day2. Hailo also leveraged a number of notable Hailo’s Origins technology investors. To date, the company has raised over $50 Million7. When Hailo first launched the app in Investors include Niklas Zennström, the Hailo was created London in the fall of 2011, there were at co-founder of Skype, along with Accel least six other players ahead of it in the to address two key Partners and Wellington Partners, who e-hailing market5. Hailo realized that in funded companies such as Facebook challenges that drivers order to stand out from the competition, and Spotify. face - isolation and profit it would need to offer an app that was maximization. different from what others were already providing. As Ron Zeghibe, Executive Chairman of Hailo says, “We had to find a different approach as we were the 6th or It’s like Foursquare, but Enter Hailo. Since its inception in 2011, 7th mobile application in the market6.” Until Hailo has emerged as the dominant then, taxi apps focused on addressing for cabbies. cab hailing app with nearly 60% of all only passenger requirements. Hailo opted cabbies in London using the service. A to build an app that addressed drivers’ - Jay Bregman, Hailo ‘Hail’ is made every seven seconds concerns, and build a community of cab CEO, Hailo in London by over 375,000 registered drivers to support it. customers 3. Hailo is adding over a 1,000 new customers every day in London. Globally, over 42,000 drivers use Hailo4. Why has Hailo been so successful? Hailo was founded by Hailo has focused on the needs of all stakeholders in the ecosystem, not just six individuals: three the end-users. They have tailored their business entrepreneurs value proposition to be as compelling for drivers as for passengers. Hailo attempts and three cab drivers. to bridge inefficiencies in the taxi market 2 Hailo’s Interactive E-Hailing Taxi App Hailo makes use of many technology features of today’s smartphones to create a rich experience for users and drivers alike. Hailo’s Interactive Driver App - Screenshots of Driver App Accept Arrived at Passenger Take Job Location On Board Payment Customer Final Confirmation Payment Mode Rating Selection Hailo’s Interactive Passenger App - Screenshots of Passenger App Hailo Passenger Hailo Passenger Pickup Pick Me Up Now Confirmation Confirmed Rate Driver Payment Types Arrived at Destination Source: Company Website 3 Changing Business thousand drivers, the Hailo app goes live charges can collectively add up to as Dynamics with a Cabbie-led for drivers and passengers alike. This much as 35%-40% of a driver’s total ensures an adequate supply of cabs on earnings15. Ron Zeghibe highlights a focus the market and avoids any inconvenience key attraction of Hailo for drivers when Since its inception in London over a year to the consumer. he says, “The key principle behind our ago, Hailo has grown with over $100m in proposition that drivers find beneficial is 16 sales in 2012 and is doing a job every four A Revenue Model that is Tailored zero subscription fees .” seconds somewhere in the world8. With for Each City smartphone penetration among London An App Designed for Drivers cab drivers surpassing 60%, the app has For each city that Hailo operates in, it seen a rapid uptake amongst cabbies9. tailors its revenue model to the local Access to Real-Time Data and Analytics In London, there are over 23,000 drivers; market. Hailo makes money by taking a The Hailo app is a tool that does far more Hailo has over half of them registered, cut from the driver or the passenger, or 13 than simply providing drivers with a job. It with over 6,000 actively using the app both . For instance, in London, Hailo provides them with access to back-end in any given week10. On the contrary, in charges drivers around 10% of the analytics. This feature has a dashboard 2012 traditional taxi dispatch services like fare. In some markets such as the US, that allows cab drivers to record every Dial-a-Cab in London have seen a 13% passengers are charged a fee to hail a trip and build a statistical profile of their decline in their turnover11. cab. This fee varies between $0.99 to $3.00 depending on the city and the time uptime, downtime and earnings (see of day14. Figure 1). It enables drivers to set daily personal targets and identify regions with more potential for passenger pickup. Since inception, Hailo has A Low-Cost Pay-As-You-Go Using predictive analysis the data stored model carried over 8.5 million in the app is also used to build up a city In most markets, Hailo, typically adopts “heat-map” of where drivers are most passengers with over a pay-as-you-go model for drivers which likely to find their next fare. For instance 30,000 registered drivers. charges a flat fee on each fare booked cab drivers can use real-time information through the app. The commission charged about crowds of passengers at sports includes back-end credit card transaction events, concert halls, among other costs and guarantees payment even if the places. As Ron Zeghibe points out, “We Hailo’s success is attributable to a credit card is declined. Drivers are allowed have even put in a complete logbook that value proposition that extends beyond to keep any further tips that consumers drivers can fill with information about each providing basic travel convenience to provide as well. trip, whether it is through Hailo, or not17.” the consumer. The app’s emphasis is on creating a community of Hailo users Figure 1: Hailo’s Statistical while also providing a complementary Dashboard for Drivers channel for cabbies to drive additional revenues. Hailo has also used technology Hailo’s app is being used extensively to achieve this. Ron Zeghibe says, “We are a tech-led business. We to hail a cab every four have 175 people, but some 80-odd seconds somewhere in the 12 people are engineers.” world. A Global Launch Strategy that is Highly Localized Hailo’s typical launch into a new market While the fee structure varies from focuses on addressing the supply-side city to city, Hailo has positioned its first. Hailo identifies three cab drivers in rates competitively when compared to each city who are influential in the taxi cab traditional cab dispatch services. For space. This helps bring in a local flavor to instance, in Toronto, Hailo charges a 15% the app that ensures a more customized commission on each fare. Traditional offering. It starts by distributing the app cab agencies typically include other to the driver community and actively charges on top of commissions engaging with them in the process. Once including credit card charges, terminal Source: Company Website the service hit a “critical mass” of a few rental charges, and weekly fees. These 4 Engaging Drivers through a steady flow of customers has played a the network of customers they have Communication Platform key role in its success. built to provide a customized service platform for all their traveling needs. As Hailo provides tools to drivers that help The use of Hailo has not only resulted in Ron Zeghibe says, “The real value is in them communicate through a private an increase in productivity of drivers but the network that we are building. If we social network. Hailo’s free driver app also in a better consumer experience for can create a set of opt-in services for this includes a location-based social network users. One driver saw an increase of as network, then that will in turn allow us for taxi drivers. It has a newsfeed that much as 47% percent in his occupancy to create a customized service platform allows drivers to update their status, levels and a 50% increase in earnings20.