Driver burnout is a serious concern for drivers – and for Uber and Lyft. But why do so many drivers quit rideshare driving with Uber and Lyft? There’s more to it than driver pay. Senior RSG contributor John Ince outlines the seven top reasons why Uber and Lyft drivers are quitting rideshare.
If you’ve spent any time on driver message boards or Facebook groups, you know they’re filled with gripes about rideshare driving. These are the places where drivers vent. The conversations are colorful and honest, because drivers are there on the front lines of the urban battlefield, contending with all kinds of people, situations and frustrations.
Frequently in the midst of a gripe thread, there’s someone – often accused of being a mole – who posts something like, “Hey if you don’t like this gig, don’t do it.” It turns out, a lot of drivers might just be taking that advice.
Churn Data Is Not Looking Good for the Rideshare Companies
A lot of drivers have come to that same conclusion: the things we put up with as drivers are no longer worth it. Driver churn rates are a closely guarded secret of the rideshare companies – with good reason. However, a study by researchers at Stanford (in conjunction with Uber) showed that 68% of drivers quit driving for Uber after six months.
From our article on the wage gap study here, senior RSG contributor Christian Perea noted,
“Within 26 weeks of giving their first ride, 65% of male and 76.5% of female drivers were considered inactive. But the numbers are probably even worse since it all depends on how you define an active driver. You see, inactive drivers in the study were defined as those who hadn’t given a single ride in the last 26 weeks. If you went out and gave a single ride within that 26 week period, that “inactivity timer” would start over again… Uber is retaining only 31.9% of its drivers after just 6 months, but due to their generous active driver definition, that number is probably even lower!”
7 Reasons Why Driver Churn Rates Are So High
I started driving over four years ago and did it part time for over three years. Then I started to cut back. In the last six months, I haven’t driven at all.
I can’t say why other drivers stop because everyone has their own reasons. But after surveying this landscape for 4 years now as a weekly blogger here with The Rideshare Guy, I think I’ve got a pretty good feel as to so many drivers call it quits so soon after starting. Here are what I see as the 7 most important explanations of high driver churn rates.
1.Pay expectations are set to unrealistic levels. Far and away the most important reason drivers bail is because the pay disappoints. Most drivers start this gig with high expectations. They read an ad or an article that suggested making $1500 a week or more was a realistic possibility.
In fact, this was the very subject of a lawsuit a few years ago. Several drivers felt they had been misled by the companies into believing that they would make more than they do. Four years ago, former Uber CEO Travis Kalanick used every opportunity he got at conferences and in conversations with the media to plant the idea that drivers would be making a lot more than they do. The figure $90,000 a year was often thrown around, and once it was repeated a few times, that expectation took root – even though it was pretty fanciful.
2. The circumstances of a driver’s life change. Put me in this category. Put simply, I found other sources of income that paid better than driving for Uber and Lyft. Many, if not most drivers, are doing it as a stop gap. Maybe they’ve been laid off from one job and need a temporary source of income to pay the rent until they get a more attractive job offer.
In many ways, being a driver is like gigs like being a server, where you do it for awhile until you figure out a better game plan. If circumstances change, I might turn on the app again.
3. The job is more demanding than drivers realize when signing up. It takes a while until drivers start to get the hang of this gig: when to cancel unprofitable rides, how to best meet bonus goals, where/when to drive, and how to handle unruly passengers.
It’s a steep learning curve, and when you run into your first major repair bill or first ticket with a steep fine, then you realize that there are a lot of downsides and pitfalls lurking behind that app.
4. Drivers start to add things up. It usually takes a few months for a driver to start to piece together the real economics of this gig. At first you’re aware you’re paying for gas and you factor that into your earnings, but you don’t think about the other expenses – like car maintenance, insurance, etc.
5. Driver has one or more really upsetting experiences. My first bad experience was a red light camera ticket that cost me $490 and a lot of hassle. My second incident was an accident which cost me over $1000 and a fair amount of frustration dealing with insurance companies, body repair shops and the like. Then I had a confrontation with a stubborn passenger.
Soon it all starts to add up, and you realize it’s just not worth all the hassle.
6. Driver just gets burned out on the job. Unless you’re doing this job for fun, it can become a demanding if not consuming job. You’re continually stuck in traffic, contending with unruly passengers. You’re dealing with unappreciative passengers. After you’ve locked horns the first time, you try to process what happened and figure out a better way of handling the situation. But after it happens several times, you begin to realize that it’s an inevitable part of the gig.
There are unpleasant people everywhere, and most of them will eventually find their way into somebody’s Uber or Lyft-mobile. Soon it’s just no fun any more. And unless you absolutely need the money to pay the rent, you’re looking for another gig.
7. You get fed up with the rideshare companies and start to feel exploited. For me, the biggest gripe at first was with the ratings system. Somehow it didn’t sit well with me to have my fate as a driver determined by some ungrateful person who had no appreciation for all the frustrations of this gig.
Somehow passengers are largely unable to process the fact that each driver has been trying to please other passengers all day long or night long. Each one thinks they deserve the best behavior of the driver, and if the driver doesn’t toe the line, they know they hold the power over the driver in the form of a one or two star rating. And they’re right. A few one star ratings can get a driver booted off the platform.
It only takes two or three one stars to pull your average below Uber/Lyft 4.6 cutoff. So it’s an inherently imbalanced power relationship between passenger and driver – at least at first when the driver doesn’t have a lot of 5 star ratings as a buffer.
After the driver has enough rides to minimize the impact of one or two bad ones, they can start to relax. Until then, you’re on edge and passengers can sense this. Add to this all the different games the rideshare companies play with pay structures, and you start to feel like a cog in the wheel – essentially powerless. All the automated emails from the compass just aggravate the feeling that just a number.
Should Churn Rates Cause Investor Concern?
If investors really knew how many drivers leave rideshare driving, the whole business model would start to look a lot less attractive. A few years ago with Uber (and Lyft’s) recruiting costs including double sided $1000 bonuses, churn rates were a serious matter of concern.
These days, the companies seem to have a sufficient driver pool to keep the streets flooded with drivers and their sign on incentives are more modest. But driver churn should still worry investors. With Uber losing almost a billion dollars every quarter, if investors stop pumping money into Uber and Lyft, the game would be over pretty quickly.
Readers, have you noticed driver churn in your market? Do you agree or disagree with John’s reasons?
-John @ RSG