Uber’s madly giving points can’t raise iron fans. Why does it require customers to pay for subscriptions, which doubles the membership and saves profits?

There are no loyal customers in the world, only asking where is the beef? That’s the lesson of Uber, the ride-hailing and food-delivery platform. The latest performance is amazing on Wall Street, because Uber Eats has spent 7 years since its establishment and learned that using the wrong membership system will step on thunder. Only using the membership system correctly and finding the right point of application is the key to throwing off the opponent.

In early February, Uber announced its financial report for the fourth quarter of last year. Revenue and earnings per share (EPS) both exceeded expectations. The financial website CNBC reported that it is expected to achieve full-year profits this year, breaking the long-term negative fate of investors.

In contrast, Lyft, a rival in the ride-hailing industry, has not only expanded its losses, but also has weak financial forecasts for the next quarter. The day after the financial report was released, its stock price fell by more than 30% in an avalanche, and fell by 12% in March, while Uber’s stock price rose by 33%.

Offer sufficient discounts to paying members,
the booking volume is more than 3 times higher than that of non-members

The biggest contributor to assisting Uber in delivering a beautiful financial report is the membership subscription program Uber One launched in November 2021. The number of members doubled to 12 million last year. Members with subscriptions are more likely to hail taxis or order meals, and they make 3.1 times more bookings than non-members, which helps Uber keep its advertising costs flat but boosts its revenue.

But the attraction of Uber One is not that users particularly identify with and die loyally following the Uber brand, but that the plan is very cost-effective. Uber One users only need to pay a minimum monthly payment of about 8 US dollars (Taiwan’s minimum monthly price is 100 yuan), and they can have discounts covering two daily needs of car calling and food delivery. The price is similar to other platforms, but it has more uses.

However, what makes people suspicious is that Uber has already had a food delivery business, so why didn’t it launch an integrated subscription plan earlier to demonstrate its cross-service advantages as soon as possible?

What is reflected behind this is that the wrong membership system was launched at the beginning, mistakenly believing that its own brand is distinctive enough to automatically attract loyal customers, and not focusing on value-added solutions to grab customers.

Before the launch of Uber One, the first membership system was launched as early as 2018: the point-based “frequent customer program” (Uber Rewards). Users can join for free, and encourage users to actively spend more and accumulate points in order to obtain more rewards. After that, Uber launched a new system to terminate the frequent customer program. The discounts that belonged to the old program were all included in Uber One, which showed that the point membership system was not effective in cultivating loyal customers.

Robbie Baxter, founder of Peninsula Strategies, an American consulting firm with clients such as Netflix and Yahoo, pointed out in the book “Detonating the Membership Economy” that most companies have point-based membership systems, but in fact they are very It is easy to step on mine.

The first minefield is that the discounts are considered to be personal, but in fact they are similar to the competitors , which leads to the lack of interest in accumulating points among members.

Uber’s frequent flyer program offers free shipping, discounts on every order, matching drivers with high ratings, etc. In fact, DoorDash and Lyft also have subscriptions. The US news website Mashable reported in 2019 that many netizens thought Uber’s discounts were “very stingy” and “had no motivation to be more loyal.”

“Forbes” pointed out that the company where the point membership system is most effective is the coffee giant Starbucks (Starbucks). Not only has the number of active members of the Starbucks point membership system increased year after year, but in 2021 as much as 55% of revenue will come from member contributions.

Members of the highest level of Starbucks can get a golden card with their name printed on it, and can also pay directly, successfully stimulating the desire of members to climb to the highest level. In 2020, Starbucks will cancel the issuance of physical gold cards due to environmental protection reasons, but still provide personalized discounts such as birthday gifts and early tasting of new products.

The second minefield of the point membership system is that the industrial form is not suitable , resulting in limited special discounts.

Instead of playing loyalty, push value-added sense
to stick to users and attract drivers to join

Uber’s ride-hailing and food delivery industries are in a similar situation to the airline industry. Baxter pointed out that airlines all have frequent flyer programs that accumulate mileage and upgrades, but the implementation of the discounts is expensive, and the discounts for each company are similar. In addition, passengers actually care most about flight routes and convenience, resulting in frequent flyer programs It is becoming more and more cost-oriented, and it is difficult to improve the goodwill of members.

Similarly, customers in the ride-hailing and food delivery industries are most concerned about convenience and cheapness. In addition, Uber and others have long been burning money, and it is difficult to change the discounts to new tricks. Instead, Uber is now switching to a subscription membership system that requires users to pay a monthly fee in order to highlight its advantages.

Users prefer to use Uber for consumption, and it also solves the shortage of drivers that once occurred during the epidemic. Seeing that it is easier for Uber to make money, drivers have joined in one after another. The number of drivers in the new quarter hit a new high, compared with the number of Lyft drivers.

In order to face Uber, Lyft also adopted a similar strategy, and jointly launched a subscription system with the food delivery platform Grubhub. However, Uber has a larger market share and a first-mover advantage. Tom White, a senior analyst at investment research firm DA Davidson, doubts that Lyft will be able to catch up. “Lyft is increasingly looking like a distant second place,” but Uber The reason why the first step fell through the eyes of everyone is just the result of the real advantage leveraged to achieve the greatest effect.