2-sided market tips from GoCatch App CEO

Apr 13

2-sided market tips from GoCatch App CEO

In this podcast series we ask experienced Appreneurs for one success story and one fail. In this episode of the Mobile Engagement Podcast:

Ned Moorefield from Taxi App “GoCatch” shares his tips on how they built driver loyalty with gamification. Its a very useful interview for any App that is facing 2-sided market challenges – I was impressed with the creativity to drive the supply side.

Engagement Score

We score all out interview anecdotes based on 3 axes of: acquisition, UX and retention – I’ve listed the actionable points below in TL;DR but Ned’s explanation of using gamification on the supply side shows how intrinsic and extrinsic rewards to his drivers (supply side) were not only a great retention technique but also a vital under-pinning of getting a happy experience for the consumer-side.

Let us know on our Twitter account how you score it.

Transcript

The TL;DR

  • Simple Gamification gave deeper loyalty and retention on driver side. They got 20% uplift in jobs which was more than any feature release of the App.
  • Providing additional benefits – such as preferential bidding on jobs was the extrinsic motivator that matters to a driver
  • Happy drivers means happy customers! More drivers means more successful bookings.
  • The big fail was making bookings too easy and erroneous bookings were made. GoCatch had to back this out.

Transcript Detail

DAVID: Hi, this is David from Street Hawk. I’m here with Ned Moorefield. Ned’s coming down with a head cold, so we’ll do the interview and let him go home to bed after this.

NED: Thanks, David. Great to be on air. Yeah, luckily the head cold hasn’t kicked in too badly yet, so we should be okay.

DAVID: Okay, cool. So you’re the CEO and co-founder of GoCatch. Tell us a little bit about what GoCatch is.

NED: GoCatch is a smartphone-based taxi bookings and payments platform. How it works is taxi drivers download the app directly onto their personal phone and they run the app while they drive around the city. As a passenger, obviously you download the app, it’s available on Android and iOS, and when you need a taxi, you open up the app. We resolve where your pickup location is, and in a couple of simple taps, you send out a request to the nearest driver, matching to that driver. You see them approaching, in real time you can call them and they can call you, and at the end of the trip, you can simply pay through the app as well via Visa or MasterCard, Amex or Paypal and get your tax invoice emailed to you at the end of the trip. So it’s right through from the booking and to payments process, and most specifically in the taxi industry with accredited drivers and accredited vehicles, which is something that differentiates us from some of our competitors.

DAVID: Right. So what you’re saying is these guys already have taxi plates.

NED: That’s right.

DAVID: So therefore, there’s no question about whether they’re a taxi driver or not. They’re guys who do this as a living anyway.

NED: Yeah. We also require them to provide their driver authority or their photo ID that’s in the taxi and you’ll see it when you jump into a taxi, a copy of their driver’s license, their ID, and their bank account details. So we require all of that information before we provide them with access to our work. We put a very high level of competence that they are an accredited driver.

DAVID: Right. So aside from the elephant in the room, which we’ll come back to in a tick, but around the globe, is this typically the way? I was in Singapore and I saw there’s a company there, whose name escapes me but they’ve done an incredible job in terms of automating the taxi force there, presumably the same approach, with accredited the drivers. Is that sort of what happens around the globe?

NED: It is, yeah. I mean, when we started researching this model, we saw that there were equivalents that were popping up in different markets. I think the one you’re talking about in Singapore is probably Grab Taxi. They’ve done a phenomenal job in Southeast Asia. They’re in about seven different markets there. Actually they just raised $250-million funding around, so they’re doing all of the funding side as well.

DAVID: Wow!

NED: There’ve been big investments in that space up in the region. Right around the world, pretty much in every market now, there’s an equivalent to us and it’s predominantly folks on the taxi space. There are a few of our equivalents that have actually gone into hire cars, and then we’ve obviously got the ridesharing with UberX and Lyft, which is fairly unique to the US. We haven’t seen any other new entrants. It’s been predominantly taxis and then hire cars possibly onto that as well.

DAVID: Right, yeah. There are two things I’ve got. I read the other day that the largest hotel company in the world doesn’t have any hotels, and the largest taxi company in the world doesn’t have any taxi. So I’m guessing that’s two brands that are known pretty well. I also heard this morning on a board call that actually there are like three companies that are bigger than Uber in China alone, or seven companies bigger than Uber already in that market.

NED: There are two big ones out there, Kuaidi and Didi, two big ones. Kuaidi is backed by Alibaba, and Didi is backed by Tencent, which are two massive online rivals in China. It was quite amazing to see an announcement that the two companies have merged. That was probably around four or five months ago, they announced athat, so the combined entity is now valued at about US$10-billion, so it’s definitely one of the major players, being it’s such a large market. Isn’t that true? It’s going to be a pretty significant player in the Chinese market. But, yeah, that’s making Uber’s traction into that market a little bit more challenging. But, you know, I think they’re fairly different models; I mean Kuaidi and Didi are very focussed taxi offering. They spent a lot of money on getting, you know, it’s essentially a land-grab to the Chinese market. I know Uber is in there doing the Uber Black service but not in the taxi space. So they’re kind of a point-to-point travel but there are a few different ways of approaching it.

DAVID: Right. So when did you start? And did you actually envisage a thing this massive when you had the original idea?

NED: Yeah. We started in early 2011, I believe it was, and so we’ve been in that market for about four years now. Definitely, I mean, all the ingredients were there in terms of the timing around the technology making this model possible. A really big problem that needed solving – I mean, that’s what really attracted me to these, I mean, two to three key elements – let’s call it three key elements. There was a clear problem, big pain point, we’ve all experienced it; it’s incredibly painful catching taxis in Australia. The networks have just started a really bad job of providing a good quality product.

The other one was a great business model, the transactional nature of the business model for me was a big draw card, and the third one was they were great examples overseas of well-funded equivalents to what we were doing, and I think that’s really important.

DAVID: So, it was already in progress, there were models already being proven out elsewhere.

NED: Yeah. And I think if you look at a lot of the really successful online business models, you’ll see that they popped up around the world around the same time, I mean, unless you’re a complete genius in coming up with a brand new model and full credit if you are. But I think what generally happens, we saw this with the Daily Deals model, is it generally popped up in a bunch of different places around the world at around the same time. So that was certainly happening in our space when we were starting out in 2011 and, yeah, I’m not surprised to see that it’s continued to grow and attract a lot of investments because it’s fundamentally a really strong business model, you know, and so being a clear pain point for people.

DAVID: So Grab Taxi is taking a really huge funding around. You obviously can’t speak for their strategy, but do you think it’s a way of aggressively building out their thing or is it primarily defensive against the amount of money that’s being poured into their competitors, whether it’s coming out of China or whether it’s Uber? What do you think?

NED: I’m sure if you asked them, it’s probably to aggressively expand market share, but there’s definitely an element of each player in their market is battling against Uber. I mean, we can see it with Halo over in the UK market, they actually expanded over to the US, to New York, and to Tokyo, after taking on investment in those markets, and actually subsequently pulled out of those markets and really concentrated back on London and Dublin, which are their key markets.

DAVID: Right.

NED: So I think there’s an element that, you know, each of the major players in their respective markets is really just concentrating on solidifying their stronghold on that market, and that’s certainly our strategy is we want to make sure we got a lot of depth in this market before we would even look at going overseas.

DAVID: Right. Okay. So I was aware, at least in this town, there was at least two of you before Uber arrived, and presumably in other capital cities such as Melbourne or whatever, there were probably a couple of others around. In terms of competitive forces and so on, has Uber been a complete game changer for you guys?

NED: I wouldn’t say complete game changer. I mean, it’s added an extra dynamic in terms of the regulatory space. There was a first round of regulatory changes after we launched to accommodate our model. In Victoria, New South Wales, the regulators brought in a new tier. They termed it something; it’s Central Booking Service or Taxi Booking Service, which we fall under. So, you know, I think government & regulators decided that that round of changes in regulation was enough to create a kind of level of competition. What we’re seeing now is more challenges to the regulation, so it will depend on what happens to the regulations. I think if the regulations change, that becomes a bit more of a game changer. But, you know, I don’t think it’s clear. The government certainly in Victoria New South Wales is pursuing it through the court, so we’ll have to see what the government’s response is going to be.

DAVID: Yeah, it’s kind of interesting because originally you would have started out at actually being the disruptors and trying to force the change, and I guess now what you want is you actually want the next round of legislation, or whatever you call it, to not change because that’s in your favor. You’re effectively an incumbent now in that situation.

NED: Yeah. I mean, we need to see the changes come through that are in the best interest of consumers. I mean, that’s why we launched this business, was to deliver better outcomes for traveling public, and I do look at parts of regulations in the industry, like the requirement to have very expensive plate on the taxi. I mean, it doesn’t make any sense from a public perspective because it’s all about public safety. It’s actually about protecting the value of the plates that people have previously bought. It’s a bit of a legacy of bad government policy previously. So, I mean, our opposition is definitely we want to see federal reforms to strip out cost, but we want to see it done in a way where everyone can compete on the same level of playing field. So, you know, if we can strip more cost out of taxi and hire car industry such as eliminating the plate cost, then that’s a great thing for everyone.

DAVID: Right.

NED: It’s not such a great thing for the plate owners, but I mean, we’re talking about millions of people paying more for taxis as a result of a few thousand plate owners.

DAVID: Yeah, I can see that somebody would get hurt along the way but they’re actually the minority.

NED: Yeah.

DAVID: All right. So jumping to the aspect of the “one win, one fail” element of the podcast, can you tell us a little bit about was there some particular inflection point for you along the way or a game-changing “aha” moment that you’d like to share with the people who are listening?

NED: Yeah. I mean, in terms of on the win side, you know, I’m a big proponent of gamification as a feature to really “move the needle” on your metrics, so we launched a goPoints system on the driver side, which is something when you use the app as a passenger, you’ve got no visibility of this. The driver sometimes will tell you that they’re number one taxi driver in their city because we have a leader board feature in there as well. But the way it works is the drivers earn points for every job they complete and they go through a ranking system similar to frequent flyer thing where it’s bronze, silver, gold, platinum and, you know, lots of positive reinforcement back to the driver when they get to the required level.

DAVID: You mean that positive reinforcement in a kind of like a rah-rah verbal type.

NED: Yes, like animation flashes up on the screen, sound-plays and, you know, driver’s fist pumping and you’ve got to platinum. So, yeah, that definitely made significant change to our job completion rate. We just found that we’re getting much better access as drivers really enjoy it, and what it gives them is access to better jobs, or priority access to better jobs.

DAVID: So it’s not just the fist-pumping stuff; it’s actually a tangible benefit.

NED: There is, yeah.

DAVID: Right, okay. So you’re kind of like those “first-dibs” on something.

NED: Yeah, like we build into the algorithm what their ranking is and the status level, and we’ll give the priority to…

DAVID: The people who are really supporting you get the support back from that, that they’re sort of competing on an equal basis then.

NED: Yeah, exactly. I think that out of the different range of product changes we’ve made, that’s been one of the most significant ones for changing the behaviour in the drivers. That’s a really key element of making our business model work. You need to get that really good engagement from the drivers and getting them accepting the jobs on a regular basis; otherwise you don’t have that supply sorted out you don’t have a good user experience. So that surprised me; I didn’t expect it to change the metrics in such a noticeable way where we sort of really just next step up.

DAVID: So you thought of it as a bit of a novelty to begin with.

NED: To begin with, yeah. I mean, because it’s not a very direct material benefit to the driver, you know. I can imagine financial, if you’re giving them $5.

DAVID: It’s an intrinsic value, yeah?

NED: Yes. But we definitely found that a lot of drivers really loved it. So I definitely feel this is, I would say, everything about gamification is pretty true. Have a close look at it as a great feature to build into any online platform.

DAVID: I remember back in 2011 there were some companies around that were gamification companies, gamification platforms. There’s Bunchball and Red Door. Did you use anything like that or did you just basically bake it in yourselves?

NED: Yeah, we baked it in ourselves. So, you know, I’ve seen some of the other platforms where they’ll tie in a network of rewards that people can access, but we really wanted to just tie in without this much algorithm and it was quite specific to our platform, so, yeah, we just decided to build it in natively into the app.

DAVID: Okay. So there’s the fist-pumping stuff, there’s the improvement to do with My Visibility and My Ranking, in terms of competing for jobs. Is there anything else, like you’re giving away trips to islands or anything like that?

NED: We’ve done a little bit as well of if drivers hit a series of metrics such as a number of completed jobs in a month, then we’ll give them a cash bonus as well. That’s just another way. Later on, we’re looking to build additional pages like that into the app as well, I mean, things like setting missions for completing the most jobs on a Saturday night or something like that. I wouldn’t say that that would be a great next step. We’ve got some other product priorities but I see us adding and layering to that over time, given that it’s really paid dividends as well.

DAVID: Right. And you mentioned there that you had a leader board type thing.

NED: Yeah.

DAVID: One of the things I read about leader boards was work better if they are social leader boards in Zynga games or something like that. The fact that I’m competing against “Fred Nerks” doesn’t matter to me, but if I’m competing against Fred my friend, that’s different. So you’re saying that you did that kind of leader board based on city.

NED: Yeah. We’ve done it based on city, but I think it would be a great feature if they could actually then switch it over to seeing how they ranked against their friends. Drivers do form groups, they form kind of informal networks and help each other out and share work, so I think that would be a great next step as well, but at the time it’s just every driver in the city.

DAVID: So when you say you saw a sort of step function in terms of the responsiveness, is there a number you want to put on there? Can you remember? Is the number in regards to the average number of pickups you get for a given driver or…? How would you say it actually tangibly improved for you?

NED: The measure is that percentage of our jobs they get successfully collected in, and I would say there was a relative—not absolute—there was a relative increase. There must have been at least a 20% step-up. You know, we’ve done a lot of product changes to get that up over time and we’ve never seen a release that stepped it up by that much. We tend to get kind of 5 to 10% step-ups over time.

DAVID: Okay. So it was a sort of three to four X better that what you’re getting from other features.

NED: Yeah. And some of the other changes were very engineering-intensive, I mean, there were changes that we spent months on that we were pretty convinced we’re going to fundamentally change those metrics and then we’d see flops in step-up.

DAVID: Yeah. So this is a classic situation: You got a two-sided market, you know, like an oDesk freelancer type situation where you got suppliers and then you’ve got customers. So what you probably felt what you needed was to actually make sure that there was enough drivers in order to make a happy experience for any consumer that would download the application and use it. Is that what you did, get the drivers first and then you’d actually bring the customers to purchase?

NED: Yeah, certainly. That’s key.

DAVID: Yeah, okay. And so that’s why you went down a gamification path with those guys to try and create greater incentives to keep those guys interested?

NED: Yeah, that’s right. As I’ve said, that engagement level with the drivers is not just about how many drivers you have; it’s also how engaged they are, how much they’re paying attention to the app, what percentage of jobs we send them and they’re picking up. They’re all really key ones as well.

DAVID: Right. Okay. Was that something you did fairly early, or is that a fairly recent development?

NED: No. it was a little while back. It’s probably a year and a half to two years ago, I would say, so pretty half-way through the journey of building up the app technology.

DAVID: Is there a natural kind of lock-in against competitive forces like Uber, I guess, if you build up a certain amount of points or something? I think just basically about my frequent flyer program; it’s hard to get me off my frequent flyer program because of the amount I’ve built up in the current one.

NED: Yeah. It’s hard for me to say precisely what effect it has, but we do have very low churn; I mean, we have very good retention of our drivers. So I suspect that that point system is helping to contribute to that, but it’s hard to put figure on it because I guess it comes down to quite subjective for the driver. But the drivers can use multiple systems at the same time; I mean, they would certainly fish around for different jobs.

DAVID: Yeah. I’ve been in cabs and there’s like three phones sitting up there on the dash.

NED: Some of them are just like complete spaceships.

DAVID: Yeah. [Laughs]

NED: I don’t know. Actually I’ve seen more and more elaborate brackets that they’re putting in on iPads and things like that. One that I saw last weekend, there was very little space to see through even on the passenger side. They might “maxing out” how many devices they can get. [Laughter] It’s funny, you know. But we’re well ahead in terms of the number of jobs we’re delivering to them and they would always gravitate towards who’s giving them the most work.

DAVID: Do you think it is the right way to think about things, if you’re and app developer and you’re trying to deal with the two-sided market issue that you should always get the supply side first?

NED: Yeah, I do. I think you’ve got to really tightly control that quality of the supply side and make sure that everyone’s having a consistently positive experience. Without this, its very much is about the supply and the density of drivers and the level of engagement. I think there’s a lot to be said about with a location-based business like ours concentrate on a smaller geographic area and make sure that you set expectations to tell people we’re servicing this part of the city to start with and and then make sure when people use it in that part of the city that they have a great experience and then expand out from there.

DAVID: Yeah. So I use this term “value density”, that what you want to do is if somebody is going to use the bloody thing, they actually really have the chance, a very high percentage chance, of having a happy experience, there’s going to be enough value in that particular thing.

NED: Absolutely.

DAVID: If you’re trying to sort of address too many markets or too many cities, if you’re a product app and you’re trying to do every piece of apparel, you know, shoes, necklaces, tops, jeans, you’re going to end up being a pretty ordinary experience for people. But you said okay, for us, what we would do is start in a small geographic region that gives us enough value density to actually end up with happy experiences.

NED: Yeah. And, you know, I think with your apparel example is it’s all incremental progress. Yeah, start with one product, that you just got this great offering that’s really compelling, sell a lot of shoes or whatever it might be, and use that as your base to then expand out into other offerings. I see companies that are coming and they want to do everything all at once, assuming they’re going to jump from A to Z in one big leap. I think business is very much about step by step making progress towards where you need to get and being really conscious of what it is that you need to do in the immediate turn to get to that next step.

DAVID: Yeah. It’s like what you got to do is make small bets, see if the data supports whether the bet was a positive bet and then double down on that later on, or something like that, whereas if you try and put everything on number 23, that’s it, you just basically dilute the chances you’ve got.

NED: Yeah, exactly.

DAVID: Was there any consumer-oriented kind of “aha” moment that you wanted to mention or is that it for now?

NED: Well, I think on the payment side, we were first to launch that kind of payments experience with our product.

DAVID: What? Do I put money into your app first and then draw down on that later or…?

NED: It’s not a pre-pay. It’s a “page you go to” kind of model where you put in your credit card or you link to your PayPal account and we’ll charge through that payment method. So that was something that was quite new to selling, not the taxi network apps; have integrated payment into their apps. So I think that for some of the early adaptors, that was a real way out, this is cool, you know, getting a tax invoice via email, rather than having to keep paper receipt. Now that feature has become pretty standard now, particularly for the new entrants.

DAVID: Typical baseline.

NED: Yeah, the new entrants to the market. The taxi networks and “cab charges” still haven’t quite got their head around that and are definitely tied to their old payments technology. But I suspect that for the past years, that was a really key feature that kind of differentiated us. But in terms of product features’ “aha” moments, it’s probably more so on the driver side. I think that – I’m not going to talk about the gamification as a pretty key one.

DAVID: No, it’s great. All right, fails, one fail, particularly if you’ve got something that’s really massive, but you had an assumption that just blew…

NED: Yeah. One of the big fails that comes to mind is we launched a new version of the passenger app. We revamped the passenger booking app. We thought we was just completely streamlined it and minimised the number of taps that you needed to go through booking a taxi. We kind of took it too far because it ended being like two taps, and when we launched this, a lot of people would accidentally posting jobs out for taxi without realizing that and then drivers were accepting and then the passenger were having to cancel.

What we ended up finding was we had a whole bunch of people kind of canceling and reposting jobs, so we had a lot of duplicate jobs getting crossed out and our conversion went down. Yeah, we thought we had tested a lot, we did quite a bit of UX testing leading up to launching out that product and it came back pretty good. But until you’ve got out in the real world, it’s not really valid. I think we didn’t do any UX testing in a real world enough environment. It was people coming and sitting in the office and they went actually out there, booking a taxi.

DAVID: Yes, this whole thing to do with being on the street and being distracted or, you know, you’ve got bags in your hand or you don’t have your glasses on or something like that. All those things kind of lead to a completely different UX behavior, I guess.

NED: Yeah. So I think a big lesson from that is really if you’re making a fundamental change to the user experience or the user flow, absolutely you want to just test that as much as possible out in the real world. We had to then do a series of releases to the app to get them fixed up quickly.

DAVID: Well, that was what I was going to ask. How did you dig your way out of that? So practically you just released it to try to get people to upgrade.

NED: To begin with, we couldn’t work out why people were canceling so quickly, so we went out and spoke to people that were doing all these reposting, and finding that they didn’t see the address, the pickup address, they couldn’t see it, they didn’t notice it when they went into the app, even though we thought it was really obvious where it was. They push the job and it’s going through, and then at that point they’d realise it was the wrong address and they’re trying to bail out of it. It was not good moment. And, of course, with iOS, there’s a big delay in getting new versions of the app into the App Store. We had to wait a week at a time to get new versions into the App Store.

DAVID: Yeah, right. Yeah, I know it’s painful.

NED: Yeah, it’s pretty painful.

DAVID: It is. I think everybody’s experienced that pain, yeah. [Laughter]

NED: If it’s around Christmas or Thanksgiving, I think that took a lot longer.

DAVID: Right – which is probably what happened. You probably tried to push something up, you know, based on some things coming up and you wanted to get this release up before that but –

NED: Now we don’t release new versions leading up to Christmas period because it’s just such critical time for this, you know, a big ramp-up.

DAVID: Yes. We gotta go into that lock-down.

NED: Yeah, essentially.

DAVID: Yeah. All right, very good, I mean, that’s great. Thank you very much for your time.

NED: No problem. Thanks for having me.

DAVID: Is there anything you want to tell about what you’re up to next or anything we should watch out for?

NED: No. Wait until it’s out there in the public domain, but definitely we’ve got some pretty exciting things in the pipeline, some very cool new features. We have rolling out features to provide better solutions for business users in particular, to help them manage their expense claims and how they charge travel to their company. So we definitely plan to make some more announcements around that and we’ll be sure to let it everyone know via the media.

DAVID: Yeah, very good. Actually I wanted to ask you just one question on off the back of that product change that you made. Do you have any tips in terms of how to actually get people to update faster? Sure it’s painful to get it through the App Store, then how do you actually try and sort of drive people over to upgrade the app?

NED: Well, we got a feature to force people to upgrade if we need to, and we use it more on the driver side. It’s usually when we make a fundamental change on the driver’s side, it’s just essential that they would upgrade.

DAVID: You can’t use this app until you upgrade.

NED: Exactly. There’s been a couple of instances where we’ve done that on the passenger side as well. So, that would be one key way. And also just sending out an email, a bulk email to all engaged users saying “no direct link to the App Store”, I think, is probably pretty effective as well.

DAVID: Would you use push for that?

NED: Yeah. We’ve done a little bit of bulk push notifications, and that’s something I want to integrate more into our communications that we’re using. But I’m a big believer that push – SMS is incredibly effective, probably not very cost-effective though for really large audience like our passenger base. But with the drivers we get great results when we SMS all the drivers.

DAVID: You have a fiscal relationship with them, right?

NED: Oh, yes. So when we send communications out to them, generally the drivers are pretty interested to find out what it is because we have that close relationship with them. But I do think push notifications is a pretty powerful channel as well. I mean, it ties in with the branding and you’re out and then they select on the push notification type something into the app, and I think it’s better than the SMS in that way.

DAVID: Yeah, it’s interesting in Henry Cho’s podcast, I think maybe number 1 or number 2, he talked about using push notifications for banking pins, and he said it was a complete fail from that because people go looking in the SMS.

NED: Oh, all right.

DAVID: Yes.

NED: It’s hard to retrieve the contents in a message afterwards, I think, so that’s one challenge.

DAVID: Yeah. You should be using the right platform for that! (StreetHawk)

NED: Yeah, right. [Laughter]

DAVID: All right, that’s great. Thank you very much for your time.

NED: Thanks a lot, David.

DAVID: Cheers.

NED: All right, cheers.

DAVID: We’re now shaking hands. [Laughter] Cheers!

 

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