Business model canvas — Lyft

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Objective

Create an exhaustive business plan using the Business Model Canvas (BMC) and detail out the value proposition of the product using the Value Proposition Canvas (VPC).

Context

Lyft is an American ridesharing company. The company provides its ride-sharing services across several major cities in the USA and Canada. Considering the huge demand for ride-sharing services in the Indian market, the company is looking to expand its business to India. You have to create a business plan for the launch in the Indian market and also evaluate the value proposition of the product.

BUSINESS MODEL CANVAS

Lyft is a carpooling marketplace that aggregates riders with drivers. Users can search for a nearby cab through their app and book the ride for commuting through point A to point B. On the other side, Lyft driver gets a notification when user books a cab. According to the convenience & availability nearby drivers can accept or decline the ride. Lyft riders can select from the pool of different modes like Lyft, Lyft lux, Lyft shared saver, Lyft shared and book a trusted highly-rated driver. This aggregator model allows riders to track, rate, and pay the driver through the app so there won’t be any hassle of cash change. Lyft targets the domestic market, focusing on on-demand carpooling and taxi services. It initiated self-driving vehicles, values multi-modal transportation and brand authenticity.

1. Customer segments: Lyft generates revenue based on the customer segment the tap in.
   There are 2 categories to customer segments —
   1). User: They basically target users who don’t own a car and maybe want to avoid car ownership, people who can’t drive a car, People who are looking for cost-effective methods to travel, Those who don’t want any hassle of parking a car at any place.
   2). Driver: These users want to earn extra money and owning a car, people who love to travel and drive, People looking for a flexible work environment.
2. Value proposition: Lyft has the customer first approach there are following value proposition that they drive, This segment is also divided into the following parts
   For Riders:
   - book the cab at lower prices than normal tax services
   - safety and security
   - easier transaction
   - cashless rides
   - Map tracking and estimated time arrival for the cab
   - Rent a car: Lyft has car rentals options when you need reliable wheels with no wait times.
   For Drivers:
   - Easy to get started
   - Freedom to choose working hours
   - Opportunity to earn
   - Easy payments
   - Easy to access more passengers
   - Tips/Perks/bonuses on busy locations: Real-time bonuses, such as Personal Power Zones, will appear directly on the map in your Lyft Driver app when they become available.
3. Revenue streams: Lyft business converts the value proposition or solution’s to the customer’s problem into financial gain. There are various revenue streams.
   - Trip fees
   - Surge trip price
   - Alternative streams on a multi-model basis: Lyft, Lyft lux, Lyft shared saver, Lyft shared
4. Channels: Social media marketing, campaigns, mobile apps, websites these are the main channels to attract more customer and become part of their sales cycles
5. Customer relationships: Rider/Driver support, review & ratings, feedback system, digital marketing, Rider perks, Driver bonuses are major roles to maintain the customer relationships. This helps and clarifies the points of engagement between Lyft and their customers and modes that used to related their customers, it also helps to create a user-journey mapping to provide better service.
6. Key activities: Develop a relationship with the driver, Hire drivers for full time or part-time and managing their payout, platform and app development enhancement, Marketing and customers acquisition, Customer support, partner relationships
7. Key resource: Improving its algorithms and data analysis day by day, a huge network of drivers/riders, Digital platforms, Skilled drivers, AI-driven cars, Technological infrastructure plays vital roles for their business growth.
8. Key partners: multiple key partners are there to sustain the Lyft business such as — Drivers, Investors, AI self-driving car partners, autonomous vehicle providers, Payment option providers, Map API providers, Insurance companies, Partners with Food companies like Grubhub.
9. Cost structure: Most of the portions they spend on building technological infrastructure and using that leeway to build the transportation ecosystem.
   There are the following expenditure structures involved in the Lyft business:
   - Technology infrastructure setup/running cost/maintenance
   - Research & development
   - Overall infrastructure cost
   - customer support
   - Salaries to employees
   - Insurance cost
   - Legal & settlement cost
   - Marketing expenditure
   - Launching events
   - Lobbying & compliances
   - Advertising cost
   - Payout to drivers.

Value Proposition Canvas

Lyft’s business model emphasis solving the commuting problem that occurs in the daily life of people. It does that in a way that benefits not only riders but the drivers as well.

There are the following ways that Lyft provides value to their Riders:

• Comparatively lower fares than traditional cab rides.
• Don’t have to wait long for a taxi
• Get free rides and discounts occasionally: Under passenger perks and rewards programs, users can earn free rides or some credits. It is beneficial for both referred rider and referring rider.
• Fixed prices for common places like airports/stations etc.
• In-app payments make it easy for customers to pay the fare from the app so there is no need for worrying about cash payment or changing problems.
• People with accessibility needs can book a ride with a wheelchair too.
• Ride options for customers’ every need:
• Lyft standard, Shared, Shared saver for economical rides
• Lux and Lux black for comfortable and luxurious rides
• Lux XL and Lux Black XL for accommodating more riders

Drivers are the heart of the rideshare business. So, having an ideal business model that enforces driver’s trust is necessary. With the handsome rewards and perks, drivers would love to drive for a company that allows flexibility and freedom. Lyft has also come up with some new benefits and https://www.lyft.com/driver/rewards for drivers.

• An additional source of income for drivers.
• Flexible working schedules, Allows flexible working schedules where drivers can work part-time, full time, or whenever they want.
• Offers easy payment procedure and earning management platform. Lyft takes a 20% cut from the total amount paid by a passenger and the rest 80% cut goes to the driver.
• Lyft offers drivers Insurance(https://www.ridester.com/lyft-insurance/) which covers liability, injuries, and other damages to the vehicle.
• Those who wish to earn money and love to drive can pursue this as their hobby.
• Lyft helps its drivers to earn more by suggesting areas where they could get more customers.