Another argument for Uber to launch a loyalty program

By Sarah Lacy , written on January 2, 2013

From The News Desk

Earlier this week, we wrote about Uber's bend-over-backwards messaging attempts to make sure everyone knew that surge pricing was going to be in effect on New Year's Eve. You can't really fault them this year on communication, given the lengths they went to -- including saying it'd be a lot more expensive and building in alerts and even a sobriety test to make sure you knew what you were signing up for. They stopped short of dropping leaflets from the sky.

But people were still upset. Predictably, I got a lot of emails and Tweets about it, given how harsh PandoDaily has been on Uber. For most of these users, I don't feel a lot of pity. I actually think in times that are not natural disasters, surge pricing is a great innovation. There are definitely times -- during shift change, in a rainstorm, when I have to get to a valuable meeting and I'm late, when my babysitter has to leave-- that I'd be happy to pay six times a regular cab fare, and if I want to pay it, why can't I get priority?

But there were a group of disgruntled users that may have had a point: Regulars. There are -- apparently -- at least a vocal handful of Uber users who have forgone cabs completely and almost totally rely on Uber. They buy the marketing schtick that this is like their own personal driver. So why on the biggest night of the year, they argue, is "their personal driver" charging them six times the normal rate? Has that loyalty all year bought them nothing at all in a peak time of demand? Many of these people knew surge pricing was coming, but the sentiment was that just because you told us you were going to gouge us doesn't make it okay.

This goes back to something I've advocated for a while: Uber is missing a huge opportunity by not offering a loyalty program. Let's face it, as the ride-sharing market heats up, Uber is going to need more ways to distinguish itself and defend its premium pricing. Regular travelers -- even if you are traveling in the same city -- are greatly swayed in day to day purchasing decisions based on having loyalty with a given vendor.

Loyalty points for OpenTable were stupid. It was a bad program for a long time, and there was no other mass reservation engine so why offer them? But Uber has more in common with a commuter airline. If people support it regularly, they're conditioned to expect extra benefits. Those benefits could include getting regular or favorite or higher-rated drivers, or perhaps a surge discount for the very top of the Uber power user pack. Uber's differentiation was easy when it was the only game in town, but that's rapidly chaining with chapter services like Lyft and Sidecar and the newly heavily funded Hailo.

Uber would, no doubt, still argue there's differentiation. And granted, I'd rather ride in a slick, black town car than a loser-mobile with a pink mustache on it. But these are all ways to get around and not everyone feels that way. Some people just want convenience.

A well-done loyalty program could be another way of impressing on that premium "this is your driver" feel on customers. After all, that's always been Uber's real edge -- as the name implies. It's not just about getting a car via your iPhone when you want it, but a sweet car with a personal driver feel. It's always sold the experience. Take it from hotels and airlines, loyalty programs are the most cost effective way to make the people who need to feel like VIPs feel like VIPs.

What's more, Uber has already run its own stealth programs like this, as we've reported before. From our earlier coverage about Uber's London launch just in time for the Olympics:

I have it on good authority that Uber ran a stealth campaign along these lines for the London Olympics. A VIP friend tells PandoDaily that he happened to get the same driver multiple times in London. Flummoxed, he asked how this had happened and whether there weren’t many Uber drivers in London yet. The coincidence seemed uncanny.

The driver confessed that Uber had specially trained a SWAT team of elite drivers and flagged certain VIP accounts. They were told to make the VIPs feel like Uber was the most magical thing on earth.

Uber clearly gets this is the key to winning markets. Why not just make it official and let regular riders enjoy it?