Back in June, I published a blog post on the ongoing loyalty battle between taxi-hailing apps in China. Since launching their loyalty campaigns, Didi Dache and Kuaidi DaChe have expanded to more and more cities and are fiercely competing with each other with dueling rounds of promotions. Five months later, we have a winner — at least for now.
On November 5, Kuaidi announced that it had captured 60% of the taxi-hailing app market in China, overtaking former market leader Didi. Kuaidi hasn’t just won market share — it’s won the customer loyalty battle, which is more important. According to EnfoDesk, active Kuaidi users open the app 15.82 times on average, while active Didi users only do so 12.55 times.
How did Kuaidi manage to flip the game in just five months? Simply put, Kuaidi’s customer loyalty program works better. My previous post outlined the different approaches that Didi and Kuaidi took to engender customer loyalty: Kuaidi adopted a loyalty rewards program and provided points and coupons to loyal customers, whereas Didi leveraged the power of social to replicate the success of its Lucky Money campaign.
So why did Kuaidi’s points and coupons beat Didi’s lucky money in the race for customer loyalty?
- Predictable rewards beat random rewards. Kuaidi users earn a certain number of points for each completed ride and can use these points to purchase coupons — so loyal Kuaidi users get rewards that are predictable and can be accumulated. In contrast, the amount of money that Didi users get from each lucky money reward package is completely random.
- Rewarding loyal customers outshone rewarding random customers. Kuaidi rewards loyal customers according to different levels of use frequency. The more they use the service, the faster they can accumulate points. “Normal” users get 100 points for each completed ride, while “Ultimate” users get 200. In contrast, Didi users share the lucky money package they get for each completed ride with their WeChat friends; often, people who use Didi less frequently get more money. Random reward systems rarely encourage customer loyalty.
- Better rewards inspire more loyalty. Kuaidi users can use 300 loyalty points to buy a 3-RMB coupon or 1,000 points to buy an 8-RMB coupon that they can use against their next taxi fare. These discounts are attractive, as the minimum taxi fare in megacities like Beijing is 14 RMB. In contrast, Didi’s lucky money rewards often amount to less than 1 RMB — a much less attractive proposition.
We can conclude that Kuaidi’s loyalty program is much more effective than Didi’s. Didi reached the same conclusion: About a month ago, it initiated a new loyalty program similar to Kuaidi’s, one that rewards customers with points and coupons. But Kuaidi isn’t standing still: It’s hedging its bets by also adopting lucky money rewards. The two dominant competitors in taxi-hailing apps are learning from each other in the battle to win customer loyalty. Let’s look forward to the next round.