Brief:
- Ride-hailing pioneer Uber this week kicked off a loyalty program that lets passengers earn points to exchange for rides and food orders from its Uber Eats delivery service, according to a company blog post. Before a nationwide rollout in the next few months, Uber Rewards is now available in New Jersey and Atlanta, Denver, Miami, New York, Philadelphia, San Diego, Tampa and Washington, D.C.
- Uber Rewards has four membership levels — Blue, Gold, Platinum and Diamond — that riders can earn for every six months of participation after the sign-up date. Members earn one point for every eligible dollar spent on UberPool and Uber Eats orders; two points for UberX, UberXL, Select and WAV; and three points for the luxury rides Black and Black SUV.
- Each level of membership offers more benefits, including refunds on some cancellation fees, priority customer service support, price protection on favorite routes, reduced pickup times at airports, free food deliveries, luxury rides and access to top drivers. In areas where Uber Rewards isn't yet available, the company is letting users accumulate points that count toward future membership.
Insight:
Uber's test of a loyalty rewards program comes just days after competitor Lyft announced a similar program aimed at urging repeat usage of its ride-hailing service. While Uber Rewards is geared for passengers and customers of Uber Eats, Uber earlier this month introduced Uber Pro, which gives rewards including free college tuition to drivers for providing high-quality service. The loyalty programs are another way for the rivals to compete without resorting to costly price cuts that alienate drivers or negatively affect the customer experience.
Uber Rewards is less focused on offering cash rewards — members need to spend $250 on UberX to gain $5 in credits on future rides and food orders, for example — than on emphasizing other benefits. Instead, Uber Rewards offers perks like locking in the price of a trip to avoid surge pricing during rush hour, or receiving customer support by phone. Members who earn Diamond status receive no delivery fee on three Uber Eats orders every six months, according to the company. These fringe benefits could build consumer loyalty with the app, especially since Uber's loyalty program appears more robust than Lyft's.
On another front in the ride-hailing wars, both Uber and Lyft have introduced subscription plans that let riders pay a flat fee for discounts or a set number of rides. Lyft charges $299 a month to receive 30 rides that typically cost as much as $15, with riders paying for any excess charges. Uber's Ride Pass, introduced last month in five U.S. cities, charges $14.99 a month for discounts on all standard rides.
Ahead of Uber's expected IPO next year, the company yesterday announced that it lost nearly $1 billion during Q3 2018, and that annualized growth continues to slow. Differentiating itself from Lyft will likely be key to generating revenue and having a successful IPO in the months to come.
