Uber, the brand most synonymous with the term “disruptor” in recent memory, is emphatically stepping into the world of customer loyalty. Announced this past Wednesday, a full-scale loyalty program, branded as “Uber Rewards”, is now live across New York City, Miami, Denver, Tampa, Washington, DC, Philadelphia, Atlanta, San Diego, and New Jersey, with a broader US-wide roll out planned for the coming few months.
It features a free to join, opt-in driven, points-based platform that rewards riders for their use of multiple ride sharing options as well as Uber Eats. Beyond the technicalities, the potential impact it might have on Uber’s business model and market equity is being introduced at a critical juncture for the company.
There’s no denying that Uber has faced its share of challenges over the past few years. As early as last year, Uber began exhibiting loss of market share and declining passenger utilization to blossoming competitors. Lyft continues to gain upward momentum (in fact, Lyft announced its own loyalty game plan; the aptly-named “Lyft Rewards” was announced November 12th, scheduled for a December 2018 launch for select riders in various cities). In fact, the ride-share market is becoming so saturated that new competitors are cropping up on a regular basis; even manufacturers such as BMW are beginning to leverage the format.
For customers, the program presents an opportunity to earn more value and could potentially hoist the Uber brand clear of recent market setbacks. And for loyalty marketers, there lies a fascinating opportunity to study and understand the mechanics behind loyalty evolution in the face of competitive pressure and increasingly dynamic consumer behaviors.
An Inside Look At Ride Sharing Brand Loyalty
The core of the program borrows from time-tested structures; points awarded for customer use of Uber’s core services (its rideshare operations and its food delivery service, UberEATS), and a multi-tiered status hierarchy formatted from a basic membership to elite (the actual tiers are labelled “Blue”, “Gold”, “Platinum”, and “Diamond”). The points valuation is straightforward, with 1 point equal to one penny of Uber credits, and allows customers to begin earning points as soon as they join the program. Points earning is stepped up by Uber service, effectively directing members towards services they might not normally consider. The breakdown works out like this:
- 1 point per dollar for UberPool and UberEATS
- 2 points per dollar for UberX, Uber XL, Select and WAV
- 3 points per dollar for UberBlack, Black SUV
Uber Rewards includes additional service related benefits and flexible program rules. Here’s a snapshot of further perks that members will enjoy:
- Superior customer support as they advance throughout the status hierarchy
- Flexible cancellations
- Earnings periods and tiers that remain active for 6 months once they are unlocked
- No cap on points earned
- Beginning at the “Platinum” tier, members have the ability to lock-in prices on a specified route (for example, the price will not change as per Uber’s usual algorithmic pricing calculations, and riders are insulated from surge pricing)
An example of the platform in action.
And, there’s one clever benefit that Uber Rewards hopes to leverage to drive enrollment; the program gives credit retroactively for the customer’s last six months of Uber activity, accelerating the customer’s path to a reward.
From the customer’s point of view, joining the program is a no-brainer: it’s a way to earn rewards from a brand where no formal rewards scheme was previously offered, and the free-to-use format (contrasting the growing popularity of “pay-to-play” schemes) promising immediately available rewards is certain to whet the appetites of gratification-hungry consumers.
The risk in the structure adopted by Uber is the complexity of the point earning rules. Points are earned in 6-month dashes, with perks earned being valid for the balance of the existing period and the following 6-months as well. Point levels reset every 6-months and the combination of requirements to reach the Blue, Gold, Platinum and Diamond tiers as well as associated benefits did not ring clear to us upon first reading. The abundance of program rules in place by using these 4 tiers is one of the reasons why best practice recommends that tiers are introduced gradually after a program launch, as customer behaviors become clearer and opportunities to release “good news” are highly valued.
Why Uber Rewards Matters
In principle, a class-leading loyalty program is central to an overall strategy to secure a fickle customer base and recapture the buying behaviors of indecisive consumers. Tech Crunch reported that Uber’s new loyalty program “incentivizes you not to check Lyft or the local competitor”. Not so fast, we caution. The category needed to take a step forward and return more benefit to customers as ride-sharing becomes an accepted part of daily life. At the same time, there were probably more creative experience and service driven options available as a strategic approach.
The best implementations of loyalty vigorously build brands and elicit powerful emotional responses; they do not simply exist only to dazzle customers with rewards or obscure their gaze on brand x, y, or z, tactics that create only temporary advantage.
The best brands ask challenging questions like: why did our customers fall in love with us in the first place? What do we offer that no competitor can? How can we construct a lasting two-way relationship with our members? Is everything connecting back to a broader brand story? The most daring loyalty programs even tackle one of the most difficult questions of all: which customers could we do without?
It’s early days for Uber Rewards, and only time will reveal the true colors of the initiative. But one thing is certain – if Uber can genuinely recapture its powerfully innovative beginnings within Uber Rewards, customers will be delighted, and loyalty marketers are in for a treat.
By Lanndon Lindsay and the editorial staff at The Wise Marketer.