Announcing Uber Explorer — the Uber Frequent Rider Program
No, this is not an actual Uber Press Release. However, it is a press release I would love to see Uber publish.
Today we are excited to announce the availability of Uber’s Explorer frequent rider program to anyone who spent more than $250 on Uber rides in 2017. Starting on January 1st, qualified riders will automatically be enrolled and begin earning 1%-6% CashForward rewards; these rewards can be used for future Uber rides and services.
Ride More to Speed Up Rewards
The Explorer program has three levels, as riders level-up, Uber will increase the rate at which members can earn rewards.
Each time you book your ride with the Uber App, you will see the CashForward reward you can earn for each level of car class offered.
Also, unlike most legacy frequent traveler programs, the Explorer program will use a rolling 12-month calendar to calculate member’s levels; so members won’t need to make needless end-of-year trips, just to reach the next level.
Lastly, Explorer members will continue to earn rewards even when spending their Cashforward balances on rides. For example, if an Explorer member spends $50 of her Cashforward balance on an Uber ride, she will earn another 1% to 6% reward on that as well.
Check out Your Explorer Account Today
The Uber Explorer program launched on January 1st in the US, and will be rolling out to cities across the the globe later this year. To see if you are already in the Uber Explorer program, launch your Uber app today, open the left menu and click on ‘Uber Explorer’. If you’re in the program, you will see you your Uber Explorer level based on your last 12 months of spending, your progress towards the next Explorer level, and any cashforward rewards you might have already earned. If you haven’t reached the minimum spending requirement yet, we will show you how close you are to being invited to join. Happy New Years, enjoy your rides.
I’m not the first person to explore what an Uber Frequent rider program might look like; according to some reports, Uber may already have something called VIP in select cities; however, the program seems rather hidden and the benefits rather opaque.
I really came into into this idea by accident: On a recent work trip to Paris, I was presented with a choice every Uber riders makes each time they take an Uber, what kind of car should I book? I started thinking thru what motivates me to book one car class versus another, of course availability and cost are an issue, but what if I had seen different rewards I could earn for each car class?
Where I come at this from
Let me start by telling you about my biases, that influenced my analysis:
- I took 28 rides on Uber last year, spending over $1,200 — of which 75% was business travel
- I took another 8 rides on Lyft, spending just over $100 — of which 100% was personal travel
- I rented a car 13 times last year, 85% of spending was for business travel, and almost 95% was spent with Hertz
- I flew 70k miles last year, 90% of this flying for business and 10% flying for leisure; 95% of it was on United, with another 5% on other airlines
- I had 44 overnight stays last year with 70% being at Starwood-Marriott brand hotels
- I have Gold or better status with the ‘Frequent Traveler’ programs of United Airlines, Starwood Hotels, and Hertz Rental Cars
Clearly, based on the biases I chose to highlight, I travel a fair amount, and I tend to be brand loyal, or more specifically, frequent traveler program loyal. In a completely unscientific poll friends and colleagues who travel as much or more than I do, many of them are also traveler program loyal.
Why Uber needs an Uber Explorer type Program
As airlines noticed many years ago, business travelers are less price sensitive than leisure travelers. Getting travelers who are less price sensitive drives more profitability.
While it’s no secret that Uber has been focussing more the business traveler (here’s a great post on the journey Uber took to design it’s Uber Business features), they could be doing even more.
Looking at my travel spending for reference, I rented a car half as many times as I took an Uber, but spent 20% more, and did this more often for business.
Clearly I’m not alone in being set car renting ways, the global revenue of the 4 biggest rental car companies in the US last year was over $40 Billion; many times Uber’s current revenue.
Would a frequent rider program be enough to turn ‘car renters’ into ‘riders’? Clearly, given my experience of highly favoring frequent traveler programs and my mock press release, I think Uber could compete far more effectively for business travelers by introducing a full fledged reward program.
One additional consideration for Uber (or any ride-hailing service) is that as riders become more comfortable with getting into a ‘strangers’ car, they will continue to view these services as more of a commodity (like the difference between flying on a Delta 737 or United 737). Fare comparison Apps like RideAgent will only this commoditization happen faster. Frequent Traveler programs can help to reduce this commoditizing effect; I’m surely not the only traveler who is guilty of booking a slightly higher fare based on a preferred frequent traveler program.
Program Design Considerations
Before I begin this section, let me start by saying I believe customer loyalty programs can be designed in such a way that that benefit both parties. In designing this program, I drew on my experience from numerous loyalty programs, beyond just traveler programs (I consider Amazon Prime membership a type of customer loyalty program), to create a program that will drive customer loyalty while providing benefits to its members.
I like cash based reward systems, over opaque ever changing point based systems, for two main reason: transparency and motivation. Showing riders what they will get by booking an UberBlack car over an uberX in simple monetary terms, makes it dead simple to comprehend, and should motivate a rider to make their decision quicky, the last thing anyone wants to do is re-introduce friction into ordering up a ride.
As a brief counter example, I’m a Platinum member with Starwood Preferred Guest — if I was offered an extra 500 points to book a nicer room, I’d have no idea if I’d be getting $5 worth of points, or 50 cents worth of points — I’d have to go do some research.
I opted to call these rewards CashForward instead of CashBack, as it remind me of ‘Pay It Forward’ — riders are giving themselves cash to use for future rides.
Most frequent traveler programs today require you to enroll, which creates a barrier to participation; so I decided to flip this model whereby many riders will automatically become members. Not only does it make this dead simple for riders to start getting rewards, program membership may trigger the endowment effect on their membership level.
While there are undoubtedly some Terms and Conditions that members need to agree to, ideally these could be triggered when CashForward rewards are redeemed, which is when riders will be more willing to endure some friction.
These are fairly standard in frequent traveler programs since it helps companies to reward the most loyal (read: most profitable) customers the most. It also aligns with customer expectations, if I spend more with you, I expect bigger rewards.
I picked names that would help customers feel like they were members of a group. Words like Silver, Platinum, and Gold — don’t really have any inherent appeal (they are something you own, not something you are). I picked Pioneer for the first level as it almost feels like ‘Freshman’ — a title you can’t wait to be rid of, wouldn’t you much rather be a member of the Voyager group? Last but not least, anyone who drops $3K a year on Uber rides wants to think of themselves as a Globetrotter.
12-month Rolling Calendar
This is probably the one feature I’m least confident of; I may be overly biased against a traditional calendar because I just experienced the end-of-year crunch. From a traveler perspective, the calendar year seems completely arbitrary, and based on my years of working with IT in large enterprises, it’s probably based on the fact that trying to compute traveler program levels every month would be too costly and complex to implement.
Nevertheless, there may be one benefit to the member, it gives them a single number to try to achieve once a year; but clearly even this is too complex to manage, since airlines like United let members buy ‘premier qualifying miles’ to help you reach the next level.
I’m confident that with modern technology the costs of a 12 month rolling calendar could be kept to a minimum. I also think that with an elegant user experience design you could easily deliver a better experience than today’s traditional calendar year. Ideally, you could eventually incorporate algorithms to help members see when they will reach another level (whether up or down) based on historical spending patterns).
What’s the benefit to the provider of this complexity? Instead of making maintaining your level an annual event, you trigger this awareness more explicitly with every purchase, leading to higher rider loyalty throughout the year.
Earn rewards on Rewards
This one seemed like a bit of a no-brainer; basically, if a member is going to walk away (meaning quit Uber), make them walk away from money, since it will be hard for them to go a zero account balance. From a member perspective, they are spending cash on a ride; why not earn a reward. Finally, it probably makes the implementation of rewards a bit easier, as Uber wouldn’t need to track and handle CashForward spend differently from other spend.
Discarded Feature (and potential backlog)
I thought it might be nice to have upgrades ‘based on availability’ to increase reward — but given that drivers can already choose to take a lower class fares, this already happens today; so it’s not clear to me how riders would perceive this reward. This is different from me being able to book an Economy Plus seat at the time of making a reservation (United Premier Gold) vs. 24 hours before my departure (United Premier Silver); I clearly understand the benefit of Gold vs. Silver. This could always be added later; I think it’s better to start simpler, the airlines didn’t introduce this for the first 20+ years of their programs.
Would you like to be an Uber Explorer member?
What do you think of this idea? Obviously, any ride-hailing service could implement this, I chose to use Uber as I’m most familiar with them. Write your comments below.
Suggesting changes to someone else’s product is akin to giving unsolicited parenting advice. To the Uber product owners reading this, feel free to summarily dismiss my suggestions.