Customer Analytics ROI: How The Lyft Team Solved a Supply/Demand Dilemma

Market Trends - August 28th, 2013 by Natalie Issa.

For the second story in our Customer Analytics ROI series, we chatted with Cory Jones, founder and principal consultant at SOMA Strategy, who completed a project for car-sharing company Zimride (the same team behind Lyft, the pink mustache donning fleet of cars you may have seen around your city).

lyft_car_on_road

In this case study, Cory explains how Zimride was facing a challenge where they had more passengers than drivers, creating a supply and demand imbalance. Below Cory tells us how he was able to use behavioral analysis of Zimride’s user base to find a solution.

The Challenge

What was the challenge that your client faced?

In Spring of 2012, my partners at ride-sharing platform, Lyft – operating as Zimride at the time – were early in their journey toward taking the world by storm. They launched one of the first US-based communities for social transportation by partnering with universities in 2008, and added a public network in late 2011, connecting drivers and passengers like you and I on a mission to build a more social and green transportation community.

The Zimride experience works like this…You and I are feenin for fresh powder in Tahoe this weekend. My Forester has 3 extra seats and a roof rack for two. Chip-in $25 to cover gas, maintenance, and my Red Bull habit, and let’s do this! Oh, and I hope you like AC/DC.

The Zimride model is consistent with others in the new marketplace/collaboration economy, relying on the right balance of customer supply & demand. In mid-2012, as their public markets expanded, they saw more demand from passengers wanting to get from A to B, than those willing to drive from a similar A to a similar B.

How was this challenge impacting your client’s company or team?

In spite of tremendous user growth, this imbalance between drivers and passengers heading the same way at the same time was creating an organic churn among valuable, frequent users in the community. They needed to get more users driving, drivers driving more often, and to focus acquisition efforts toward prospective users expected to be drivers. And do so quickly.

What, if anything, was your client doing at the time to address this challenge? Why wasn’t it working?

Fortunately the amazing leadership team at Lyft/Zimride acted quickly and partnered with me for a resolution soon after the supply/demand imbalance became a real issue.

The Solution

Can you describe the solution you implemented to address your client’s challenge?

Lyft/Zimride needed a comprehensive marketing and product solution to:

  1. Get more members to post as a driver
  2. Get members that posted as a driver to post again
  3. Get more new members that want to drive

To accomplish those goals we needed to first understand user behavior, particularly drivers, and identify all the key touchpoint opportunities where we could influence them and send them down the drive path. As a first step, we conducted a comprehensive customer lifecycle analysis on the existing database, performing cohort analysis and identifying key segments to understand key behaviors like:

  1. What profile characteristics and behaviors are predictive of frequent drivers?
  2. Are drivers also passengers on occasion? Which are they likely to do first, and more often?
  3. When are members most likely to post a ride as a driver?

We leveraged these insights to:

  1. Tweak the signup and ride posting flow to feature the drive option, and the benefits of being a driver, more prominently.
  2. Create a comprehensive user lifecycle communication plan connecting drivers with paying passengers on their route, at the time they were most likely to drive, and with a strong drive call-to-action.
  3. Refine acquisition marketing targeting on Facebook, Search, and other channels to optimize traffic from driver “look-alikes”.

In what ways did you use customer behavioral analyses to direct your client’s business decisions?

The comprehensive customer lifecycle analysis we conducted informed every element of the implemented solution, from strategy to tactical implementation. We shaped targeting, messaging, and timing of communications based on behavioral insights, and implemented changes to Zimride.com that drove desired behaviors in the midst of the product experience.

The Outcome

What results have you seen since beginning the project?

Existing driver engagement increased and more drivers joined the network as a result of focused marketing efforts. Just three months after implementation, the supply/demand balance had shifted in target markets, and Lyft/Zimride refocused growth efforts back to passengers to keep up with growing supply.

Bottom Line: What was the ROI impact of this project?

In the year following, the Zimride network continued to increase in value, selling to Enterprise Car Rental company in July 2013 for an undisclosed amount. So as far as ROI, we’d have to ask the Lyft/Zimride team how heavy their wallets are feeling.

(Note: Lyft, launched by the Zimride team in Summer 2012, continues to operate as a private business, helping users “share the ride” locally, currently in 7 major markets.)

How do you think organizations in general can benefit from understanding customer behavior?

Understanding customers’ interactions with your brand enables valuable organization shifts from a focus on products and channels to customer-centricity. The ultimate goal for most organizations should be a single comprehensive view on the customer, tracking all interactions across channels, and delivering exactly what the customer wants at the time and place they want it.

As more and more organizations shift their focus, they’re finding the combination of customer insight-driven product design & business models, and relationship-based marketing optimizes their acquisition & retention/engagement efforts, and drives revenue and profitability.

About The Author: Cory Jones is founder and principal consultant at SOMA Strategy, a leading San Francisco-based consultancy specializing in driving best customer engagement and intelligent growth for startups via customer-centric analytics, marketing and business strategy. Reach him at cory@somastrategy.com and follow @wcoryjones.

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