Have you received a postcard in the mail from Uber asking you to be a driver? Probably not, because they’re only sending it to newbies, not to experienced drivers.
In this video and blog post, I’m going to share with you the strategy that Uber has now to attract new drivers and stick around, because at the end of the video I’m going to share with you why I think this strategy will work.
Uber And Lyft’s Big Problem: Profitability
Uber and Lyft have a big problem. The big problem is you and me, we are the drivers and they need us. They need us in order to conduct business. We are the most customer facing part of their organization, yet we’re also their biggest expense and as we all know, Uber and Lyft have not been profitable.
What is Uber and Lyft to do? Well, one strategy we uncovered is they are sending out postcards to newbies, and I’m going to share that postcard with you in a few minutes here. Driver Pay has basically gone down and down and down. It used to be that we got paid a percentage, in my case with Lyft, it was 80% of the passengers fare. Pretty simple.
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Then a year or so later, like the United States in 1971 when they got off the gold standard, Uber and Lyft decided to get off the percentage of passengers fare and they went to this time and distance model, where you get a base rate and then you get so much per mile and you get so much per minute. That gave Uber and Lyft a lot more power over us, because they could just lower the per dollar, the per minute and the per mile rates and it had nothing to do with what they were charging the passenger, and that’s exactly what happened.
Note: Uber has switched back to the percentage model in California, but most other states have not yet adopted that system yet.
Our Top Tips for Drivers:
Cuts, Cuts, And More Cuts
At the end of last year in my market of San Francisco, they dropped the per mile rate, they increased the per minute a little bit, but on a trip to San Jose, I calculated I would make $10 less on a ride. I would make three to four dollars less on an airport run.
And then recently in Los Angeles we saw the per mile rate cut a dramatic 25%. Per minute did go up a little bit, but overall I calculated that was a 10 to 20 percent decrease for most drivers, depending on what kind of a driver you are.
What that has done is created some very bad blood between drivers and the companies. What does bad blood look like? Well, it looks like anger. That’s what I felt when they cut the rates in San Francisco. Tremendous amount of anger, because this is how I make money and they’re basically taking money from me and I don’t like it. You don’t offer a man this rate and then you play takeaway.
And we’ve also seen with the Uber Pro, they offered us some bonuses of a 3% to 6% pay bump, and they took that away also. That’s what Uber did. And what’s it look like? Two days before Uber went public, there was strikes all over the world of drivers uniting and saying, “We’re mad as hell and we’re not going to take it anymore.”
Uber’s Postcard Campaign to New Drivers
Here’s the campaign. They’re sending out postcards to people that don’t know any of this history and they’re appealing to people that don’t have cars and showing how it’s very simple to get started with Uber, because they have a lot of ways in which you can secure a car, try it out, and get started. And it’s a very clever strategy, because drivers like you and me who have been doing this for awhile, we have the bad blood.
We know that the rates started here and they’re now down here. But to a newbie, now the rates are like right here, right? They have no point of reference. To them they’re looking at, wow, I could drive around a little bit and make a little extra money.
Newbies Don’t Know How Much Drivers Used to Earn
It’s not going to be less money than they made before, because they don’t have that point of reference. For somebody, for example, like my daughter, she just started driving for Uber and Lyft and she doesn’t need to make a lot of money, but she loves the freedom and the flexibility, so she can do driving for three months before she resumes her studies.
And there are lots of people out there still who haven’t driven for Lyft or Uber for whom this will look like a great opportunity, because they don’t have that point of reference.
Why This Campaign Will Work
And that’s why this campaign will work. Because the same reason you and I started driving is the same reason people will start driving now. For a large chunk of the population, that’s still a good deal, because they can drive whenever they want, make money whenever they want, and let’s face it, it’s an enjoyable way to make money. You got to give it up to Uber. It makes a lot of sense, and the strategy will work.
The key takeaway is that there are always going to be people who want to drive to make money and whether they make 100% of what we’ve made in the past or 60% to them, that’s the new normal and the freedom, the flexibility, the ability to work and then do other things that you want to do, it’s just too darn attractive. And there’s always going to be a market for drivers to come in and do the work.
This is Jay Cradeur with the Rideshare Guy. I want to say thanks for watching and reading! . Stay on top of your game, and go out and have a great day.
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