Details analysis on Lyft Business Model
Real-time ridesharing is the trending business in the taxi industry today. GPS navigation devices, smartphones, and social networks are well tied up in proportion to bring in comfortable rides in and out of the city.
The on-demand transportation service industry is on the rise with more than $23Bn valuation. Everyone in the world is utterly dependent on such services while the rivals in the industry try to pamper us with their best to be their customers. However, we are clueless about what these on-demand service companies are trying to do. Uber and Lyft are the rival giants trying and outsmart each other to thrive as a monopoly in the on-demand transportation industry.
Lyft – The pink moustached car service
Lyft is an America based transportation network company (TNC) stationed in San Francisco, CA. Taking its debut presence in June 2012 by its masterminds Logan Green and John Zimmer, the mobile-phone application was developed to enable passengers to get connected with drivers who are willing to rent their car. The transport service company extends its market presence in over 200 U.S. cities that veils San Francisco, Los Angeles, and New York City, with a monetary value of 5.5 billion USD. The transportation service on-demand connects people to reliable and affordable rides through a single tap on the app. Lyft has snared 40% of the integral market in U.S. cities including San Francisco and Austin.
Features of Lyft outsmarting its Rival Uber
Lyft took its form by taking some valuable business concepts from Uber. However, the Lyft team has made efforts to incorporate features to trick Uber in all possible ways. It is nothing but the best fighting with the best in the on-demand transportation service industry. Some of the striking features of Lyft include:
- Lyft connects customers with cab drivers who are available at the closest proximity instantly.
- With a single tap on the smartphone, users could request a ride and get the details of the driver with the Expected Time of Arrival (ETA).
- The user can track the location of the driver in real-time.
- Lyft app has an integrated payment gateway module.
- Lyft charges a 20% commission on each trip while the remaining 80% goes to the driver.
- Lyft allows both customers and drivers to rate and review each other within the app.
- Lyft provides multiple cab options like Lyft Mini, Lyft Line, Lyft Plus, etc..
- Lyft also accommodates the surge pricing concept in the name of heat maps.
How does Lyft work?
The next generation transport service app is taking the lead by a smart tap on your smartphone. See how does it work??
- First Install the app
- Then Customers need to log in to the Lyft app
- They need to Choose the type of vehicle they want before booking
- Get linked with the nearby Lyft driver partners.
- After booking, customers can find the photo of the driver along with the details of the taxi number.
- Get into the car & reach your destination on time comfortably
Lyft uses S.W.O.T. methodology
Strengths – Lyft sidelines other business growth inhibitors by choosing drivers who own their cars who are willing to make some extra money. Taking a step advancement with innovative craftsmanship to pose unique yet a stay-in-mind marketing approach is undoubtedly the strength of Lyft’s business model. No one can miss the giant mustached cars. Extending its benefits to customers for a pleasant ride with a convenient doorstep pick up at pocket-friendly rates and to drivers who own cabs who are willing to earn extra money to their pockets.
Weaknesses – Legal issues, reliability issues still exist even after stringent background checks. Lyft sees a limited income as a big slice of the rideshare goes to the driver while only 20% of the trip cost goes to the Lyft’s management. Lyft’s profit on each trip is currently limited.
Opportunities – Users are engaged in subscribing to the Lyft services and get committed to rides consistently. In this way, Lyft receives an opportunity to extend its revenue to see consistent growth. Lyft has better chances to grow well in advance of the rival alternatives by refining its business model and services better. Lyft can also create opportunities for customers to choose different types of rides in relevance to customer-based interests like party buses, trucks, and much more for better business.
Threats – The competing rivals and start-ups in the ride-sharing industry are the biggest threats to Lyft service. The Lyft team has to work well in advance to stay ahead in business to beat the competitors.
Lyft Revenue Generation Model
Heat maps (Surge Pricing)
Lyft terms Surge in ride pricing as Heat maps. Prices get hiked up when there is demand for cabs in a particular locality. It beefs up massive revenue to the Lyft revenue model. To be more précised Heat maps are time specific and location specific. Download lyft app from iOS or Android
Customer Segments that lifts the Lyft Revenue System
Lyft – Lyft taxi service created a demand in the taxi industry, especially on the ride-sharing platform. Lyft connects licensed drivers with cars in good working condition that are matching lyft’s requirements with the customers who want a comfortable ride within the city. Lyft harbors car drivers to help passengers who wish to commute from one point to the other. Customers don’t need to worry about the type of car they want to ride on as they have lots of options to choose from the list.
Lyft Line – This facility is only accessible by Los Angeles and San Francisco localities. It helps passengers to share their cab rides on a specific route. The Lyft line works out cheaper while the customers who are willing to travel to their destination at more competitive rates.
Lyft Plus – These are luxury liners, especially with big-seater cars. It accommodates a minimum of six passengers and sometimes with more luggage. The rates will be a little bit higher when compared to the previous two vehicle types. Customers who want to accommodate their luggage or those who want to go out to a destination with family or friends then Lyft Plus would be the perfect choice for their travel.
Value Propositions
The value proposition is nothing but a service or feature of a product or company that works to attract customers.
Lyft delivers complete value propositions to identify its
- Main customers
- Novel Benefit
- Customers’ Problems
- Competitive Advantage
Lyft has devised a strategy with the right proportion of excellent value propositions for both drivers & customers
For Customers
- One tap on the app and the taxi is at your doorstep. The pulse of the business starts right here.
- Customers are eligible for free and discounted rides during festival times.
- “Your friend with a car,” the tagline says it all. Customers can find a friendly driver anytime in just a single tap.
- Taxi charges are very less and affordable.
For Drivers
- Lyft helps drivers to earn extra money who own cars right in condition.
- Flexible work timings help the drivers to work for lyft at their convenient time. There are no strict working hours.
- Earn extra money when you are free - is a simple formula pinned to Lyft’s business strategy.
- Lyft ensures huge payouts to drivers by paying 80% of the total ride cost to its driver partners.