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Back in Black

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Back in Black

  1. 1. London Black Cab And Private Hire Firms Differ But Share A Common Market Daily totals Daily totals 300,000 passengers 301,000 passengers 200,000 journeys 210,000 journeys 21,000 vehicles 45,000 vehicles 24,000 drivers 46,000 drivers Each taxi per Each taxi per 2,300 operators month month 290 fares 142 fares £12 average fare £13 average fareSource: TFL; market research
  2. 2. CONFIDENTIAL 1,000 London-based Taxi Users Were Surveyed To Gain Insights Into Credit Card Usage And Potential For A Hailing App Survey Format • Online survey format with some free text responses • Responses for 1,000 taxi users, aged 18+, all living in London – 1,224 people needed to be contacted to reach 1,000 taxi users (frequent and occasional): 18% of the London population never take taxis • Both black cab and private hire users were included – Respondents provide a representative sample of 2100 fares per month out of London black cabs’ 6.1 million monthly fares • Survey focus on: – Demographics – Taxi usage behaviours (personal / business) – Likelihood to pay by credit card, credit card needs – Acceptance of a smartphone-based hailing app The survey combines details on current usage patterns and allows estimation of potential usage regarding paying by card and hailing via an app Draft Presentation v2/280911/ 2 © Corporate Value Associates 2011. All rights reserved
  3. 3. CONFIDENTIAL Respondents Represent A Significant Part Of The London Black Cab Market But There Are Others To Consider Too Market Coverage Estimated breakdown of black cab journeys in London • Survey only includes Londoners, equivalent 14% to 61% of all black cab journeys undertaken • Visitors to London not included 25% • Other British visitors are equally likely Foreign Visitors to pay by card but very unlikely to use an app because of unfamiliarity Other British Visitors • Foreign visitors are very unlikely to use Londoners an app because of high data charges 61% when abroad (as well as unfamiliarity) but quite likely to pay by card for ease/lack of local cash Draft Presentation v2/280911/ 3 © Corporate Value Associates 2011. All rights reserved Source: TFL; Visit Britain
  4. 4. CONFIDENTIAL Draft Presentation v2/280911/ 4 © Corporate Value Associates 2011. All rights reserved
  5. 5. CONFIDENTIAL 92% of Taxiworld customers think that hailing apps used by private hire companies are threat to the black cab trade. 82% of Taxiworld customers agree a fleet of 4000 vehicles would be required to provide a reliable service and compete with rival private hire companies 90.1% of Taxioworld customers have never used a hailing app Draft Presentation v2/280911/ 5 © Corporate Value Associates 2011. All rights reserved
  6. 6. Almost Half Of All Black Cab Fares Would Be Paid ByCONFIDENTIAL Card If Card Payment Systems Were Fitted In All Cabs % of taxi users in London 28% 29% 43% Would never Circumstantial Preference for use cards use using card • Potential card users make 3.2m black cab journeys per month (of the total 6.1m London black cab journeys) • Up to 2.7m of those would be paid for by card • The average fare paid for by card would be £ 13.75 Card usage is strongly dependent on the surcharge passed on to the customer Draft Presentation v2/280911/ 6 © Corporate Value Associates 2011. All rights reserved
  7. 7. CONFIDENTIAL Potential For Card Usage In Cabs Is Concentrated Around A Very Small Group Of Heavy Business & Private Black Cab Users 43% Heavy Taxi Users Potential for up to 1.4m journeys paid (business & 6% by card private) Strong Occasional Up to 508k preference 12% card for using Business Users journeys card Private Users 25% 386k 29% Circumstanti Circumstantial 29% 306k al Users Draft Presentation v2/280911/ 7 © Corporate Value Associates 2011. All rights reserved
  8. 8. CONFIDENTIAL By Targeting the Heaviest Users As Well As Occasional Business Users, The Majority Of The Market For Card Payments Could Be Captured These two groups have very similar needs Heavy Cab Users (business & private) Occasional Business Users Senior-Level Up to 508k Job card Smartphone 12% journeys Users • 25-55 male In Full-Time • Full-time employment Employment • Above-average income • Senior-level job • Smartphone users More likely to High Income be male Private Users University 386k Degree Aged 18-45 25% • 35+ female • Working part- 6% of London taxi users time/homemaker/retired • Below-average income Potential for up to 1.4m journeys paid • Basic phone users by card Draft Presentation v2/280911/ 8 © Corporate Value Associates 2011. All rights reserved
  9. 9. They Look For Convenience & Simplicity In CardCONFIDENTIAL Heavy Cab Users Payments 88% want to be able to pay the fare and tip without requiring any interaction with the driver 85% claimed they would be significantly more likely to pay by card if fast, contactless technology was available ? ? Draft Presentation v2/280911/ 9 © Corporate Value Associates 2011. All rights reserved
  10. 10. As Well As Modern Payment Systems, The Idea Of ACONFIDENTIAL Heavy Cab Users Hailing App Also Appeals To These Most Frequent Users If they could 50% of these customers would use a hailing app for all or most of their black cab journeys Heavy Taxi Users 6% 38% 33% 22% (business & private) No journeys Som e Most All m y journeys Occasional 13% 53% 24% 10% Business Users No journeys Som e Most All m y journeys 36% 38% 15% 11% Private Users No journeys Som e Most All m y journeys 42% 45% 11% 3% Circumstantial Users No journeys Som e Most All m y journeys Proportion of black cab journeys for which an app would be used if it was 10 available© Corporate Value Associates Presentation v2/280911/ Draft 2011. All rights reserved
  11. 11. Using A Hailing App Is Seen As Generally PreferableCONFIDENTIAL Heavy Cab Users And More Convenient Than Hailing On The Street Under which circumstances would you consider using an app? Currently use an app 5% General preference – an app is better than Would always use if possible 37% hailing on the street Its too busy - cant find taxi 30% Convenience – when the normal way of hailing a Avoid waiting outside 29% black cab fails Have no cash & can pay via app 10% (multi-select, total = 40%) Pre-book 37% Security of a pre- Agree fare beforehand booked cab 21% Would never use 2% All Target group Draft Presentation v2/280911/ 11 © Corporate Value Associates 2011. All rights reserved
  12. 12. A Number Of Features Have Been Suggested For ACONFIDENTIAL Heavy Cab Users Potential App For many, it is just a more convenient way to hail a black cab… “it helps me and saves my “Simple, easy to use - from which “Be able to find taxis time” postcode address to where.” when busy” “I would like it to be simple and just let “I would like it to tell me how far away (truthfully) the driver me know in how long the taxi will be was and if they were going to be delayed.” here.” …but price & payment are top of mind “Exact price - approx ride time “making it easy to pay, easy “quote feature…ability to and payment from phone to access destinations” pay ahead,” option” “The ability to pay via mobile phone and “Pre-registered card payment system and to know the costs of my journey pre-agreed price for journey” beforehand” Draft Presentation v2/280911/ 12 © Corporate Value Associates 2011. All rights reserved
  13. 13. CONFIDENTIAL This Target Customer Group Is Likely To Prefer Black Cabs, However There Is Growing Competition From The Heavy Cab Users Private Hire Industry The desire to pre-book and to fix the fare beforehand If you were using a hailing app… 57% All Price is key – 48% would 41% 48% Target group only use a black cab hailing 27% app if the fare was the 16% 11% same as for private hire vehicles Always Prefer Prefer Black Cab If Prefer PHV Black Cab Its Same Price as PHV Overall, this group already makes as many private hire journeys as black cab journeys Need to act to maintain competitiveness with the private hire industry Draft Presentation v2/280911/ 13 © Corporate Value Associates 2011. All rights reserved
  14. 14. The General Customer Expectation Is That CardCONFIDENTIAL Payment Should Be Free Nearly three quarters of people say they would use their cards more often in black cabs if there was less of a surcharge “Using the card in the cabs should be the same as using it in shops” “Its ridiculous to surcharge for such a common form of monetary “Why surcharge at all? Make it all exchange” one price” “We are heading towards a more “I don’t think they should charge – cashless society. Lets have all costs up to them to factor it into their up front.” fares” “We live in a technological age “Black cabs should bear the cost like where most people use cards and all other retailers” black cabs should move with the times” “The fare should cover ALL charges” “I dont understand why there should be a surcharge. Tesco doesnt surcharge me” Card payment is so commonplace nowadays but people rarely have to pay a surcharge Draft Presentation v2/280911/ 14 © Corporate Value Associates 2011. All rights reserved
  15. 15. However A Small, Cost-reflective Surcharge IsCONFIDENTIAL Considered Acceptable Customers are happy to pay for convenience but also want “If it was shown to decrease to be seen as “smart” buyers their earnings I am happy to pay a surcharge” “I dont know why I should pay ANY surcharge except to The acceptable level is cover bank fees” “enough to cover any costs to [the] driver” The acceptable level is “the surcharge that the bank “They should only charge the actually charge for a card amount they [have] been transaction” charged from the card issuer” “The surcharge should be no “All businesses charge on more (and no less) than the average 1 to 3% for card charge made by the card payment. I dont see why black company” cabs would be entitled to so much more” A number of respondents have also suggested a fixed card processing fee in the region of £1-£2, equivalent to the surcharge charged some cash machines Draft Presentation v2/280911/ Source: Lightspeed Research Ltd.; UK Payment Administration; Which? 15 © Corporate Value Associates 2011. All rights reserved
  16. 16. The Customer Is “Showing The Way” In Its PaymentsCONFIDENTIAL Preference 16.4m Contactless Payment Cards in the UK 6 issuers Over 5.6bn Mobile Handsets by 2016 15.3 bill Mobile transactions predicted by 2013 Within 10years Mobile could overtake Credit card As the most popular non cash payment Draft Presentation v2/280911/ 16 © Corporate Value Associates 2011. All rights reserved
  17. 17. Cab Drivers Want To Remain Competitive And Are KeenCONFIDENTIAL to Embrace Anything That Will Help Business They realise the potential of PHVs increasing their market share if they do not keep up with the technological advances • Most cabbies would be interested in joining a hailing “It can only be a app system despite never having used one before good thing” • They can see the potential apps have for benefiting “Anything to PHVs support the black • Apps may allow cabbies to claim some of the private cab industry is a hire trade – particularly those accustomed to using good thing” existing PHV apps • Reluctance of cabbies to move with the technology could result in PHVs superseding black cabs as apps become the default method of hailing/booking a taxi “Everything these • Cabbies agree that a large fleet size is necessary to days is a threat to the have enough drivers/passengers to satisfy both black cab industry” • Both cabbies and passengers are having teething problems with existing apps which are already live “We are already the but only still gradually rolling out second choice” Cabbies are keen to use any help to maintain or increase their levels of business. They see that apps are working well for PHVs and do not want to lose custom to them Draft Presentation v2/280911/ 17 © Corporate Value Associates 2011. All rights reserved
  18. 18. Card usage is strongly dependent on the surchargeCONFIDENTIAL passed onto the customer How much can reasonably be charged? 4,000,000 <5% 5-10% >10% 3,500,000 Preference Convenience Necessity 3,000,000 Number Of 2,500,000 Journeys Per Month Paid By All journeys 2,000,000 Card 1,500,000 Journeys 1,000,000 <£15 500,000 0 0% 2% 4% 6% 8% 10% 12% 14% percentage surcharge level paid by customer If facilities for contactless payments are installed only, the number of journeys paid for by card would be reduced significantly to those <£15 Draft Presentation v2/280911/ 18 © Corporate Value Associates 2011. All rights reserved
  19. 19. Taxiworld’s Value Objective In Designing Its ServiceCONFIDENTIAL Offering Is To Win Over The Most Attractive Customer Key dimensions of the value objective: High-value passengers How can we ensure this? • Win the customers who we know have higher fares, pay more by cards and want to use a hailing app • Convenience • Simplicity Loyalty • Availability • Each passenger acquisition will have an • Peace of mind associated marketing cost; a loyal base of • Security repeat users will be crucial for market success • Reliability • Build up and maintain a relationship with the passengers Advocacy • Influence passenger behaviour • Organic growth from word-of-mouth recommendation by giving passengers the best possible experience These value objectives define the proposition to the passenger 19 © Corporate Value Associates 2011. All rights reserved
  20. 20. There Are Certain Features That Passengers Are ClearCONFIDENTIAL About Wanting Some wanted many extra features… …others just wanted it to hail a cab easily “The app to make a “Time the cab will sound when the taxi reach you “Simple but has arrived (so I dont estimated price effective” have to stand in a estimated journey rainy street waiting for time ability to “Just the it)” prepay” basics” “Waiting “Updates on the latest times, costs traffic, fare charges, and alternative public “Easy – i.e. click surcharges, m transport routes, time & go” aps/journey until the cab would “User planner” arrive, journey time, friendly – payment options” few screens to go through” “Ability to find out “Be able to “Fast and fare before pay via reliable” agreeing booking” app” Many of the suggested features are hygiene but some, if offered, would mark Taxiworld out in the passengers’ view 20 © Corporate Value Associates 2011. All rights reserved
  21. 21. CONFIDENTIAL Potential Value Propositions To The Passenger Passenger Value Proposition • Hail a black cab at the touch of a button Like your own Financial • See how long a journey will take & cost before chauffeur having to book Great taxi • Same costs as hailing on the street service at the touch of a button • Hail a cab from inside Convenience Wherever, Security / whenever • Even hail with no phone signal by using Wi-Fi • Priority for cabs when it’s really busy Cab in your pocket • A black cab will always be just minutes away • See exactly how long it will take to get one No need for Convenience • Don’t miss any nearby cabs cash • Convenience of a minicab, assurance of a black cab • Get a nicer, newer, more comfortable cab 3,000 cabs at your • Multiple ways to pay Beat the disposal cab queues! 21 © Corporate Value Associates 2011. All rights reserved
  22. 22. In Our Market Research, We Asked What FeaturesCONFIDENTIAL People Would Like A Hailing App To Offer Percentage of 20% respondents wanting each 18% feature 16% 14% 12% 10% 8% 6% 4% 2% 0% e p n ils n r e al n e e se r y ne bl ap t io to tio tio ot tim lit at riv ta ila U ca an qu bi op tim op si de ar a lia va to ng po lo vi pl e es re k b ab re ta at ti y ay on oo e ca b as fa ai y/ ut m /c e ca es P -b it i W tim rit at E d /ro er xi os re ar xe of cu ro r iv rt ap ne P /p y Fi le pp ng se ne D S M A A ls y/ ki P ur ai G ac et Jo H af Tr S There were several other suggestions too, including some who suggested a reward scheme for repeated use 22 © Corporate Value Associates 2011. All rights reserved
  23. 23. Successful customer experience is enabled by theCONFIDENTIAL 2 size of the driver network Estimated market for 1.4m black cab journeys / month hailed by app If each cab takes 100 app bookings per month (of the typical 290 fares taken), we would require 3,500 cabs  more cabs mean we can serve more customers, enabling a bigger market share in terms of app hails Need to balance best availability for customers against cabbies needs – they will not sign up for the system if not enough work comes through Virtual Taxi Network Business Plan/211111/ 23 © Corporate Value Associates 2011. All rights reserved
  24. 24. CONFIDENTIAL 2 A good driver experience is also required Receive hail • Hail request comes in showing Ready for fare start-point (and destination if known) • Driving around or waiting on • Limited period of time to rank respond Meet passenger • Close enough so ACCEPT • Given passenger details • Alert automatically sent to passenger when cab arrives • Meter starts During the journey • Live traffic updates Post-Journey Payment • Option to update info for other drivers • If cash payment, confirm • Stop meter on arrival payment on app so receipt • Fare shows up on terminal emailed automatically • If card payment, terminal • Passenger adds tip on terminal confirms payment • Passenger carries out card automatically payment themselves • Option to rate passenger • Still has the option to pay by cash Virtual Taxi Network Business Plan/211111/ 24 © Corporate Value Associates 2011. All rights reserved
  25. 25. CONFIDENTIAL Draft Presentation v2/280911/ 25 © Corporate Value Associates 2011. All rights reserved