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There are lot of startups who start their journey with lot of enthusiasm, however over the period of time they lose the momentum due to competition or lesser consumer acceptance, wafer thin margins etc.
However MERU cabs is a one great story from which one can learn a lot of things. As mentioned in management books one should offer a product/ service which fulfils consumer need or at least makes him feel that his need is fulfilled.
So what is the problem that MERU has addressed?
Whenever one has to travel by private transport, one is at mercy of taxi/auto drivers. One has to make several attempts to get the taxi/auto to the desired destination. If you are travelling for a longer distance, god help you.
What MERU has done is,they gave the consumer the sense of reliability that they will get a cab to any destination within the city. I feel it’s a BIG positive factor, i.e. of trust.
Whenever we talk about MERU cabs, we talk about their technology, GPS, call center for order booking etc. Yes technology has played a vital role in MERU’s success; however there are many important factors that have helped MERU to be successful.
I feel technology can enable businesses however mere good technology won’t lead to a successful business.
Let’s look at what are the other factors
The Economical Factor
I was traveling by MERU cab and was chatting to driver named Mishraji. Mishraji told me that MERU cab is 60% costlier than normal taxis. However the people still prefer MERU, due to its punctuality, readiness to go to any corner of the city and overall customer service.
Though I feel 60% is too high. According to me MERU is 5 to 10% costlier than normal taxis
So the consumer will pay you premium, provided you make him feel that he is getting value for money
Every company feels that they are paying the best to their employees and every employee feels that he is underpaid. However in case of MERU, the employee pays the company and both are happy. I will explain briefly the MERU model
MERU hires the driver with certain driving experience and train him on soft skills.
- A contract is signed between MERU and the driver.
- MERU buys the car and gives it to the driver
- The fuel cost has to be borne by the driver
- The maintenance of the car is taken care by MERU
- MERU helps the drivers by providing the booking to drivers through their call centers
- The driver is free to take fares if he doesn’t get the fare from the call center
- In return the driver provides Rs. 800 per day to MERU
- Whatever the driver earns above these 800 rupees is his own income.
Now MERU has enabled the employees to earn what they want to earn and they have not only given them employment but a business
Provide employees the opportunity to earn to their potential. (May be through Performance Linked Incentives or any other innovative way that fits your business)
The Employee Trust
While talking to Mishraji, he told me that the company CEO MR. Gupta is a great person and he is happy to work for a person like him. When I asked him about the competition, he said, in Mumbai nobody comes close to MERU. As per him Easy Cabs tried to replicate the MERU’s business model, however they are not very successful. He told that Easy Cabs have 400 cabs, whereas MERU has close to 1700 cabs. Easy Cabs drivers have to pay 900 rupees to Easy Cabs and also bear the cost of fuel as well as maintenance of the vehicles. Whereas in MERU the driver have to pay 800 rupees and the company bears the cost of maintenance. This shows how much Mishraji believed in his company.
The point which I am trying to drive here is that the employee should believe in the management & the company for it to succeed, i.e. walk the talk.
So if one gets these things right for a business, it can lead to a successful business. Well it’s easy to say but it’s difficult to implement and that’s why all the startups are not successful the way MERU is.
What’s your opinion?
[Guest article by Mahesh Bendre.]