I was a very early customer of Meru Cabs in Mumbai around the time it got started. I was blown away by the customer experience. My calls were answered quickly, an SMS message to confirm my reservation came within seconds of making the reservation and most importantly the driver showed up on time with a clean car. This experience repeated every single time in 2007 and 2008 that I became an evangelist of the service recommending it to all and sundry. During the time I also “interviewed” a lot of the drivers to get a more detailed view on how the company was run. I learnt about how they initially made a mistake about compensation policy where they paid a fixed minimum salary resulting in a number of drivers doing nothing. Later they switched to drivers paying a minimum each day and that resulted in more hard working drivers staying on. I learnt how about how they screened, interviewed, trained and fired the drivers. The screening included medical tests, behavior testing etc and drivers could get fired if more than two complaints came in about them. I also learnt that most drivers not only made more money working for/with Meru but also reported much better quality of life given the quality of the clientele they were picking up. This was all great stuff: happy customers, happy drivers, and hopefully a happy company as a result.
This honeymoon period lasted about a year or so and after that it became impossible to get a cab if you did not plan 24hrs in advance. When I asked about the reasons for this from one of the drivers (I assumed that Meru was able to easily spend the money to get new cabs given how much demand there was for the service) the driver told me that it was becoming difficult to find more than 150-200 reliable drivers in Mumbai! I literally fell off my “chair”. At a population of 15M+in the greater metropolitan Mumbai area a company that was offering higher pay and better work environment could not find more than 200 good drivers! I could not believe this.
Eventually, Meru also opened up in Hyderabad and Bangalore and as the case was in Mumbai, the service initially was fabulous. But as the company grew the service levels progressively declined. Cabs would occasionally not show up, driver quality degraded, wait times increased significantly etc. I also learnt that drivers were extremely worried of accidents because the liability of any damage was completely on the driver. The final straw for me was a cab ride on June 22nd 2009 when they sent an extremely aggressive driver for an airport drop. The driver was weaving through traffic at high speed and I repeatedly asked him to slow down but he would get angrier. I tried calling Meru to complain but there was a 45 min wait on the call. So I sent an SMS message and I got a “Key word does not exist, Pl select ASTRO, LOVE, NEWS, CRI” reply! From the cab I then wrote an email message to email@example.com (this was the email on the dash) but the email bounced back from firstname.lastname@example.org saying that the email account was disabled! I was done.
I hired a Meru cab one more time about a year later just to see if things had changed – they had not – and now I have completely stopped using them. I know countless people who have reported this degradation in service quality.
Canvera now has a corporate account with Orix and while the cost is about 20-25% higher it is worth every penny because they are rarely late and there is a full team dedicated to quickly helping out in case of issues. I have also interviewed a lot of their drivers and I learnt that like Meru they too take a lot of time to hire, train and weed out drivers. They have gone one step further and also created a “career path” for drivers who can eventually own their cars and therefore making them part owners in the business. Today from personal experience I can tell you that each driver has a sense of what clients expect of Orix! A pretty tall order to have achieved. All this, it seems, took a long time (6-7 years) to stabilize but today, about 13-14 years after the service got started it seems like their competitive position is as strong as ever. But they had to patiently work through the teething years.
I started using Meru around the time Peeyush and I were starting Canvera and I took away many lessons from this experience for us to remember as we grow the business:
- You cannot take the supply chain for granted. It is common for VC/PE funded companies to pour money into marketing once product/market fit has been established, but it is extremely critical to be sure that for your particular business will you be able to deliver if the demand picks up. I was not inside the Meru board rooms, but from the outside it definitely seems like capital was deployed too early in the business.
- Hiring is tough! No matter how young India’s population is and no matter what the labor costs are relative to developed markets, for every type of position hiring good people is going to be very tough. It is often said that in India the problem is “not unemployment, but unemployability”! Not being able to find 200+ good drivers in Mumbai is Exhibit A.
- Everyone must win. In free markets a company can get away with bad practices for some time but eventually it will catch up. As with Orix (and I have heard similar things of CarzOnRent) it was critical to develop a long term plan for each driver so that they would day in and day out feel motivated to build the best car company possible.
- It will take time and sometimes a company may have to give up short-term growth. For PE/VC companies this is the hardest thing to accept because there is constant pressure to grow fast. And yet, done incorrectly, it could wreak havoc with the long term prospects of the company.
At Canvera we are still working through all these issues and we have a long way to go. But we always think and act with these key lessons in mind. One of our customers Kshitiz Anand recently wondered on twitter if Canvera would give up quality in order to grow. I gave him my personal commitment that this would not happen. In fact 2011-12 is a time of consolidation for us. We are hiring very little right now and are primarily focused on improving our internal operations so we can maintain quality at every level of scale.
We survey our clients regularly and while all areas in the company can do with improvement the biggest area for improvement is our design services. We have been hard on work on this for the past 2 years with particular emphasis in the last 1 year. This has not been easy and I will be the first to admit that we are not where we need to be. This is a complex service to deliver as the quality of the deliverables are very subjective. We are today focusing on breaking down the entire delivery process from the requirements gathering to each step along the way and putting metrics and quality checks for each step. The plan is that once we are able to improve system throughput while maintaining quality we can then focus on scaling the team. Not simple, not easy, but there is no other way.
Bottom line is that a company is only as good as its last customer experience and making sure that sales & marketing work in tandem with delivery & operations is absolutely critical to long term success. I leave you with an interview with Paul Smith that Om Malik recently shared on his blog where he talks about the importance of service and experience (amongst many other goodies).