taxi booking app like Uber

What is Churn Rate and Retention Rate in Your Taxi Business and How to Manage Both with an App?

As a common taxi driver, you should know the best practices for driving and knowledge of the traffic rules. But as an entrepreneur in this ride-hailing service, you have to know the business terms, and technical teams relevant to the taxi business. 

For example, churn rate and retention rate are the basic business terms that you must know. Check this blog to get more details about these rates and how an online taxi booking app like Uber helps you to manage them effectively. 

What is the Churn Rate in Business? 

Both churn rate and retention rate are the terms of business that help you to analyze your customer satisfaction. The churn rate is nothing but the percentage of customers who stop choosing your taxi service. In some cases, the term also refers to the number of employees who stop working in your firm. But in the customer segment, the first definition should be considered.

The churn rate is also called the Attrition rate which is calculated for a specific period, for example, weekly basis, quarterly basis, half-yearly basis, or yearly basis. Simply, to calculate the churn rate for a month, you should consider the number of customers at the start of the month and the same at the end of the month. 

The actual formula for calculating the churn rate is, (Lost Customers ÷ Total Customers at the Start of Period) x 100

For a startup, the good churn rate is 5% per month. However, all businesses aim for the lowest churn rate, nearly zero.  

Difference Between Churn Rate and Retention Rate

Retention rate is also a metric to scale customer satisfaction in a business-like churn rate. But the retention rate deals with the number of customers who are using your service for a particular period. 

For example, if you want to calculate the retention rate, then you need to know the number of customers you had at the start of a period, and at the end of the period along with the number of new customers signed up during the period. The formula for calculating the customer retention rate is provided below.

[(Total number of customers at the end of the period – number of new customers) ÷ number of customers at the start of the period]  x 100

If a firm has a retention rate close to 100%, then it has the best marketing efforts and strategies to maintain customer satisfaction. 

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Ways to Improve Retention Rate and Reduce Churn Rate in Taxi Business

In this part, you can check how to relate the concepts of churn rate and retention rate to your taxi business and how to manage them effectively. 

The customers of your taxi service (rider) are having a common need which is availing a ride for a safe and fast journey. Beyond that, each rider has unique expectations like luxury, comfortability, cost-effective rapid service, etc. By providing a taxi service that can fulfill the rider’s needs and expectations you can achieve a high retention rate. Let’s check the ways to do that now.

  • Focus on the Target Customers – First of all, you should categorize the customers concerned to their geo-location, needs & expectations of them, others. Then focus on each customer with unique business strategies you can get new customers daily for your taxi business.
  • Safety-First – Safety is the primary thing that must be focused on in the taxi business. Update your vehicle with safety devices and onboard the drivers who have high-end knowledge and discipline in driving only to ensure safety. 
  • Personalized Service – Allow your rides to book for the taxi with some customized features like cabs for physically challenged people, children safely, extra seaters, and others. By providing various kinds of services like these, the riders can choose the personalized pack from your taxi service. 
  • Waiting Time – Try to reduce the average waiting time for your riders. The high waiting time will affect customer satisfaction, loyalty, and relationship. Minimum waiting time will influence these things positively.
  • Customer Engagement – It is an important factor in customer retention and churn rate. You should engage your riders even after the completion of a ride. For example, you should connect with the rider and provide them with personalized emails, content, messages, and others about special offers and others. This will improve your retention rate simultaneously. 

These five are the common ways to improve rider satisfaction. Beyond this, there are many factors to increase the retention rate and reduce the churn rate. To find out about them you can use the customer feedback and data. 

In this situation, a mobile application can help you to manage the churn rate and retention rate properly.

How Can a Taxi Booking App Manage Both Rates of a Ride-hailing Business?

An online taxi booking app is a platform that allies the riders to book a taxi or schedule a trip in no time. Through this, the riders can choose the type of taxi, enter the destination and the pickup location, book a particular driver, rate the service and pay for it online.

On another hand, it acts as an effective tool for entrepreneurs like you to execute the best strategies to increase the retention rate and minimize the churn rate. 

  1. Increase Retention Rate Through Taxi Booking App
  • As the application can use the user data, the admin (you) can get the basic data like the location of the user, their need, and booking history. By using these data, you can provide personalized service. Such services have the potential to convert users to loyal customers.
  • An online taxi booking app design also plays a vital role to convince the user. An interactive, user-friendly UI and UX can make the taxi booking process easy. It also displays the brand identity and it helps to stimulate the brand remembrance for the riders. 
  • The notification facility will help you to connect with riders even after the completion of the ride. This will help you to do the marketing campaigns such as special season offers, and discounts to your customers. 
  • Loyalty programs are the most important tool to increase the retention rate. This includes providing cash backs, offers, scratch cards, and others. An effective loyalty program can be executed through an online taxi booking app that has the potential to keep your customers active. 
  1. Minimize Churn Rate Through Taxi Booking App

Nowadays people are using the internet to book taxis; especially, most of them use mobile applications to do that. So, if a customer uninstalls your taxi booking app, then it can be considered a ‘lost customer’. That means the churn rate will increase when the number of lost customers increases. 

So, you should do the needful like effective marketing programs, loyalty programs, and referral programs to avoid the churn rate increases. At the same time, some customers will be inactive with your mobile application. You can retarget such users by providing personalized offers. 

So, taxi booking app development will be the one-stop solution to manage both churn rate and retention rate. 

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Role of SpotnRides to Grow Your App User Base

Instead of choosing taxi booking app development, you can choose clone scripts to get a mobile application for your taxi business. It’ll reduce the cost and time to develop the taxi booking app and launch it. 

SpotnRides has been providing such solutions for the taxi businesses to manage their business and the business strategies. From us, you can get the Uber clone app script for your taxi business that can aid you to manage the retention rate and the churn rate. 

As it is a clone of Uber, it has a high possibility of success in the market. The interface and other features can be modified as we provide customized clone scripts. So, you can target your audience and convert them with unique features and interfaces. So, get the productive Uber clone app script from a top-rated app development firm to manage the retention rate easily. 

Summing Up

Simply, as an entrepreneur, you should know about the churn rate and retention rate and be able to manage them properly. By having an Uber clone app script from SpotnRides, for your taxi business, you can easily manage both rates and can create a huge loyal customer base. 

About the author


I am working as a Senior product developer and have developed and delivered Web and Mobile products for numerous clients.

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