Drivers understand that eventually Uber/Lyft subscription services will, now and in the future, become an important way, possibly the main way, rideshare passengers end up in your car.
The article referenced in this blog post discusses Uber/Lyft current marketing efforts with various subscription plans.
It’s logical to believe both companies are testing a wide variety of plans and in several markets (cities) before deciding which plan(s) will be used for larger rollouts.
Personally, I think subscription plans could be very good for drivers.
Imagine a passenger who has committed to a subscription plan so has paid up front for transportation. Since the subscription service payment is done, it’s out of mind and hopefully passengers will be more likely to tip drivers… at least the ones they like (polite and friendly.)
Over the past couple of years, I’ve read numerous articles pointing out that there is essentially no passenger loyalty to one rideshare company over another. Most passengers are simply looking for the cheapest ride and possibly the rideshare vehicle that can pick them up the fastest.
From my passenger’s stories I know that Uber and Lyft give discounts and freebies however I’ve not seen any pattern to their give-away practices.
I’ve had passengers who take a lot of rides say: “I never get discount offers” and passengers who are infrequent users say: “I get emails all the time offering free discounts.” I’ve heard the opposite too… no pattern I can decipher.
The article referenced for this blog post talks about Uber/Lyft subscription service (like a monthly bus pass) and this is the first significant sign I’ve seen suggesting Lyft, Uber, and the other TNCs are seeking reasonable ways to capture passenger loyalty without “giving away the store” with freebies.
As Uber and Lyft prepare for their presumably 2019 initial public stock offerings (IPO), Uber/Lyft have to make the best possible case that they will someday be profitable… and it’s not going to cut it so just say: “Eliminating drivers with robot cars will makes us profitable.”
No doubt drivers are Uber and Lyft’s largest operating expense however very few people believe 100% of Uber/Lyft trips will be in self-driving in the next few years.
Some of my passengers need to be walked through my thought processes why robot cars aren’t going to be picking us all us anytime soon but when I explain the “speedbumps” which will have to be passed… my passengers typically say: “Oh! I guess it will be a while.”
And funny, when I’ve asked, most of my passengers agree when I say: “I’m ready for other people to take robot car rides but I won’t be ready until millions of driverless rides have been given.”
My passengers are also shocked to hear Uber and Lyft are not profitable companies and that the reality is (my opinion) they never will be until at least one of the following is true:
- There are no human drivers behind the wheel – robot cars
- They drastically reduce their business overhead - focus on rideshare business
This is not an “invented by Uber” business model… Amazon started out selling books online and lost all kinds of money over the years doing things I never thought would work… and look at them today.
Amazon’s story certainly updated my thinking as an analyst.
In the United States Uber and Lyft are in fierce competition (price war) for the lowest possible passenger pricing trying to gain market share.
Market share contributes to Uber/Lyft’s public stock offering business case and passenger subscription services will evolve and someday likely to be as common as paying for Amazon Prime.