Does your business model support your "Brand Equity?"

When we talk about brand building, we tend to ignore if the business model supports it! However, if your business model does not support the brand ethos, positioning and promise to the customer and other stakeholders of the ecosystem, there is no way your business will succeed as a “brand”.

Let us look at Cab haling platforms

Let us rewind to 2010-2013 when Ola and Uber were launched. I remember using Uber to book Mercedes, Audi etc. for trips in Delhi NCR. The price was equivalent to the normal cabs would charge! I was happy to travel in a luxury sedan, drivers were happy as they got good price, fantastic incentives. The gravy train continued for next 4-5 years, the luxury sedans got replaced by taxi cabs, hatch backs were introduced, autos were added to the platform and pre-covid you could share your rides as well. Drivers were getting renumerated well and customers had to pay less, obviously investor money was being put to good use! People started writing epitaphs for car ownership. When you can get a cab in 2 minutes, why own a car!

Behaviour change strategy or thoughtless growth

Some argued it was about behaviour change, get the passengers used to cab hailing on phone, get the drivers to accept any and all types of rides on offer. The incentives were designed to get drivers to accept short ride, long rides, rides which were at a distance from cab location. Incentives were in place even for getting the drivers work long hours, odd hours and graveyard shifts!

But the gravy train had to stop, the platforms need to make money!

This meant, low or 0 incentives, but continued higher commissions, from drivers. The fares needed to be competitive as customers indicated high degree of price inelasticity. It meant increased burden on driver partners not able to pay EMIs for the cabs, income being below sustenance for their family. Cabs started to become unkempt, unmaintained, drivers irritated always ready to fight, indulge in unethical practices, Ask, extra money for AC, ask for cash or better still cancel the ride and pay me directly demands or I will not go. Some would even offer to share the commission saved. In cities like Bangalore, they tried even hacking the demand supply algorithm, they will keep cancelling rides in the hops the algorithm would consider it as increased demand and offer higher fare. Apparently, they succeeded as well!

Irreparable damage to Brand Equity!

Today, we are saddled with a situation where we have a situation where we have drivers who are unable to make both ends meet, cabs which are smelly, unkempt, uncertain service delivery. Obviously, there is unmistakable damage to the brand and brand experience and no amount of brand communication and ads would be able to salvage this.

While I have taken cab hailing platforms as an example, there are other businesses whose brand equity is getting compromised because of wrong and exploitative business models; Healthcare, Food Delivery, Quick Commerce, Advertising are a few examples. Think are you running a business whose business model exploitative of supplier & provider ecosystems? Your brand equity will get damaged, and you will fail as a business sooner than later.

Silver lining in the Cloud

Slowly, but surely there are winds of change blowing in the right direction. ONDC is changing the game. The ride hailing platforms are shifting to positioning their business as SaaS and have introduced fix subscription fees for the drivers. This will mean the days of super profits are over and I am not how will these EBITA stressed platforms will work out in the long run. But at least the ecosystem providers like drivers will start getting remunerative fares and hopefully that would lead to better service experience.