Perhaps 20 years ago, the idea of a taxi service offering ridesharing would have seemed crazy, but now it's a reality. Just as we can find very simple apps and secure, instant payments for all parties involved. It's a market that's being revolutionized and reaching its niche with just a few taps through customized apps.
Learn about Lyft
Lyft has a business model quite similar to Uber, managing much of its service through ride-hailing software. This provides a platform readily accessible to any potential customer with a mobile device. Lyft is valued at $5.5 billion, positioning it as a fierce competitor to Uber in the taxi and delivery niche.
To give you an idea of how big this company has become, it covers approximately 200 cities in the US. Its growth in the country where it was founded has been astonishing; it was created in 2012 and already holds 40% of the global market. Because of this great success, we felt it was vital to explain how Lyft works, some of its unique business features, and its revenue model.
Features that made Lyft a great taxi service
We've already discussed its similarities to Uber, but despite this, Lyft has always sought ways to distinguish itself from its competitors. Thanks to its perseverance, it has developed a strategy that allows it to disrupt Uber in every possible way. Here are some key features of Lyft's business model that you can apply to your own company.
-
Thanks to the software they use, customers who need a ride can be connected with the nearest available drivers.
-
They have a pretty clear image in terms of design; they even started putting pink mustaches on their fleet to make them identifiable.
-
It allows ridesharing for those who want to travel with friends, family, or cannot afford the entire trip.
-
Whenever a trip is requested and booked, the driver's information is provided. In addition to the estimated time of arrival, this type of detail is really important for a taxi service.
-
The location of the customer who requested the ride is revealed to the driver through live tracking.
-
Since software companies began to advance technologically, they decided to start managing the payment process directly from their app.
-
Lyft's business model includes a rating system where both customers and drivers can rate each other. This demonstrates their commitment to keeping both passengers and drivers happy.
There are specific features for its customers, such as the ability to find the nearest driver using only the app. And, the numerous benefits of being a regular customer, such as free rides or discounts.
Lyft drivers
Drivers are offered flexible work schedules, with Lyft paying them 20% of the total fare. Lyft has decided to allow all its taxi drivers to be independent contractors. This means they are responsible for their own taxes, insurance, vehicle expenses, and other trip-related costs.
However, to even the playing field, drivers have access to special perks, such as discounts on car maintenance and insurance packages, which typically cover both ridesharing and services offered to Lyft partners. Drivers prefer to be part of this type of platform rather than work for a traditional ride-hailing company.
Business model
The idea of "ride-hailing" has swept the world, and understanding how Lyft embraces it is the first step to understanding its business model. By explaining this term and the company itself, we can define it as a transportation network company (TNC). It operates through an app and website that connects drivers with passengers seeking transportation.
They created a service that was simple, convenient, and above all, innovative within the market. They are committed to providing a cost-effective solution for both passengers and drivers. Users gain an easy way to make reservations at any time, with numerous benefits.
Drivers, on the other hand, retain a large portion of their income and can choose the type of work schedule that best suits them. Furthermore, it's well known that there are numerous significant incentives to reward their work, just as there are for customers. However small these incentives may seem, they encourage continued work and continued use of the service.
Why is Lyft called disruptive?
One of Lyft's strengths is that they don't use intermediaries like other taxi or delivery companies. This allows them to maximize efficiency while reducing costs, a business model that has led to their success and enabled them to operate in over 644 cities across the United States, Canada, and other countries worldwide.
Passengers argue that the app is very easy to use, especially because it allows them to pay directly through it without risk. This convenience is something that traditional taxi companies, which refuse to change, can no longer match.
Learn from the best to be among them
Lyft's business model combines on-demand services with a peer-to-peer model, offering customers an easy-to-use platform with the option to share rides. However, we know that consumers increasingly expect convenience, affordability, and safety features. Make sure your taxi service offers all of these by applying the best practices this market leader has to offer.
