Q: There are so many of these guys who are not paying insurance driving around and pretending to be taxis/limos and stealing our business! It is crazy! They are able to undercut us good guys on all the prices! Please talk about this!
A: There has been massive research about pricing all around the country and here’s what is says: 5 to 10 percent of people buy on price because they have to. For 90 to 95 percent of people price is not #1 concern when spending money. It’s very easy to check if it’s true: just look around you. If everybody were buying cars based on price, there would be only one make on the road – the cheapest one. I believe it’s Hyundai. or maybe Kia. Do you see other cars on the road other than Kias? Are there Lincolns, BMWs, Lexuses?
If everybody was buying clothing/food based only on price, there would be only one store in your neighborhood – Wal-Mart. Are there any other stores? I bet there are.
So the question now is: if price is not the #1 concern for 95% of the people, why are these people turning into cheapskates when it comes to taxis and limos?
The answer is very simple. If you have a customer that tries to beat you on price, it’s one of three things:
1. The customer is a cheapskate
2. You are not different from your competitors. When you are the same, then there’s only one criterion left: price, right?
3. You are different from your competitors, but you are not communicating it to your customers.
Let’s talk about these three things now.
If it’s #1, if the customer is a cheapskate, you do not want them as a customer in the first place. Cheapest customers are only loyal to the cheapest price. You cannot build a stable, reliable business dealing with cheapskates.
2. You are not different from your competitors. See, if to me you look the same as the guy around the corner, the only criterion that’s left for me to make the decision about whom to use is price. Therefore, you have to be different. How? Well, there are plenty of ways. It really depends on what kind of crowd you are serving (see this article for more information about the typical groups of customers of a taxi service). Have better cars. Train your drivers. Let your customers choose the drivers. Have water/newspapers in the cars. Be always on time for pickups and give a guarantee. Yes, I know that you need balls for that last one, but it does magic. I know a guy in the auto repair business who had the following guarantee: if you are not happy with the way I fixed your car, I’ll buy it from you. In three years that he had this guarantee, he bought back one car. ONE. And now think about the marketing advantage this guarantee gave him. Compared to having to buy ONE CAR in three years.
3. Communicating to your customers that you are different. If I am your customer, how do I know that you are being different? Do you dispatchers have better scripts? Do you have free recorded messages that educate your customers on why they should do business with you and not go with unlicensed guys? Do you create your advertising with this in mind? Do you have a relationship with your customers? Is there a newsletter for them?