Will loyalty programs drive market share gains for Lyft or Uber?
Both Uber and Lyft have programs in place to vie for their drivers’ loyalty as about two-thirds of on-demand drivers work for both companies. That battle for attention ploughed into the consumer realm last week when both ride-sharing companies announced customer loyalty programs in a span of days.
Lyft announced its new “Lyft Rewards” program and enjoyed an edge over its rival for a mere 48 hours before Uber introduced its own “Uber Rewards” program. And while Lyft technically announced first, Uber was first to market as its program went live last week in nine markets (Atlanta, Denver, Miami, New Jersey, New York, Philadelphia, San Diego, Tampa and Washington, DC). Lyft’s release simply states its program “will begin rolling out December 2018 to select riders in various cities.”
Both companies are taking the pilot market approach, but as Lyft has yet to formally launch, more specific detail is known about Uber’s program:
Uber patrons will earn one point per $1 spent on all its food delivery (Uber Eats) and carpooling products (Pool and Express Pool). Riders opting for higher-end Ubers will earn more: two points per $1 for UberX, UberXL and Select rides, and three points per $1 for Uber Black and Black SUV rides.
The program will include four tiers: Blue, Gold, Platinum and Diamond. In a nice touch at launch, Uber will automatically calculate how much users have spent during the past six months and begin them in the corresponding tier. Tier status will be readjusted every six months, instead of the traditional year, because of how frequently the service is used.
The higher two tiers are designed for “power users” such as customers who use the service to commute to and from work or ride frequently for business travel. And it isn’t just more points that power users will be rewarded with — the perks unlocked at these levels appear to be well designed to cater to this segment’s needs, offering such benefits as priority pickups at airports and fixed price protection between a rider’s two favorite places.
Expected to be similar in structure, Lyft has acknowledged its program will be using a points-based system and alluded to potential perks such as ride upgrades, access to more-experienced drivers and double-points days.
Worth noting, both companies are expected to go public in 2019 and can ill-afford to experience negatively trending market share.
- This App Lets Drivers Juggle Competing Uber and Lyft Rides – Wired
- Uber and Lyft Announce Rewards Programs – The New York Times
- Uber, Lyft to Launch Loyalty Programs to Reward Riders for Choosing a Favorite – Forbes
- Get More From Rides with Lyft Rewards – Lyft
- Stress Less and Do More with Uber Rewards – Uber
- Why Uber and Lyft are Both Rolling out Loyalty Programs – Quartz
DISCUSSION QUESTIONS: What impact will rewards programs offered by Lyft and Uber have on the respective ride-sharing services’ results? What can these two companies learn from retailer loyalty programs and vice versa?