In November, Uber invited some of its customers to use a new feature, Uber Rewards. The program is now official and will be offered to more passengers in the coming year. What is it? What are the benefits? And how will it affect passengers and drivers? In today’s post, RSG contributor Gabe Ets-Hokin wades into Uber’s legalese to get the answers.
As rideshare giants Uber and Lyft approach looming IPO deadlines, they’re looking for cost-effective ways to court passenger (and driver) loyalty to boost share value. Uber’s latest effort, launched last November, is called Uber Rewards, aimed at Uber’s most-valued passengers. Here’s what it is, what it does, and what it could mean for passengers and drivers alike.
Uber Rewards: Incentives to Pile on the Miles
Uber’s investors and corporate officers are likely nervous about the success of rival Lyft, a company that gets an impressive chunk of market share despite being a much smaller operation than Uber. One possible response is Uber Rewards. Reminiscent of various credit-card reward programs, it combines a pay-back program with four tiers of benefits. As Uber’s press liaison told us, “We want to deepen the relationship with our customers, and reward them for their continued use of Uber.”
It’s important because it’s the first loyalty program we’ve seen offered to U.S. Uber or Lyft passengers, and even though Lyft announced it would have a rewards program (shockingly called “Lyft Rewards“) last year, we have yet to see it in action, as Lyft has yet to publicly post the terms of its program (however, Lyft has posted terms for its new Lyft Business rewards program, and they’re pretty generous: a $5 credit for every 5 business rides). It’s likely popularity will be depend on how easy it is to receive the benefits—and how good those benefits are.
Uber Rewards is a quasi-cash-back program, using points like other card-benefit programs. For every 500 points you rack up, Uber gives you $5 worth of “Uber Cash” rewards, which you can spend on Uber products like UberX or Uber Eats, applied to your account. Uber gives you one point per dollar you spend on Uber Pool, two points for UberX, Uber Select and UberXL, and three points for Black and Black SUV.
Now how much would you pay? But wait, there’s more: Uber offers a menu of bennies, depending on how much you use Uber. Depending on how many rides you took in the preceding six-month period (and yes, Uber will count your last six months before you enrolled in Uber Rewards), you are assigned one of four tiers: Blue, Gold, Platinum and Diamond. You will keep the benefits of the lower tier as you climb in Uber status above the sluggards far below you. It looks like this:
Blue: (Automatic upon enrollment)
Cash Rewards : $5 for every 500 points, which can be redeemed for Uber rides or Uber Eats orders. As you can see, this translates to 1-3 percent cash back, which combined with an actual cash-back card and pre-purchasing of Uber Cash (a program that lets passengers pre-pay for Uber rides and Uber Eats, with a 5-percent cash-back incentive) itself can push the total discount into very low double digits.
We at RSG raised an eyebrow or three when we noticed Uber seems to be incentivizing UberX over Pool, which seems to counter its attempts at portraying itself as a green-minded company interested in reducing urban congestion and emissions, not to mention finding a path to profitability that increasing the percentage of Pool rides.
Gold: (Requires 500 points in six months)
Flexible Cancellations: A Gold member can cancel a ride (as long as it’s not Pool or Express Pool) and have the fee refunded if they rebook within 15 minutes. It can only be used three times per month, and “may not be available in all locations, such as certain airports and venues/stadiums,” according to Uber’s benefits terms page. And in case you’re wondering, no, drivers will not be stiffed; Uber will pay the cancellation fee.
Priority Support: Uber promises access to the “priority support team” in the app, but provides little clarification about what that means and “makes no guarantees about response times.” Given many drivers and passengers find Uber’s support…lacking… I find it ironic that Uber considers providing better customer support a privilege of some kind.
Platinum: (Requires 2500 points in six months)
Price Protection on a Route: This could be where passengers make the most money. Rewards members will be prompted to pick two favorite locations, for instance home and work, or maybe school and the gym, or for the typical San Franciscan, a bar and a slightly different bar. Uber says you can change this once every 30 days by accessing your new friends in the priority support team.
Once set, UberX trips are “price protected,” with a locked-in price. During surges, the price will remain capped until it hits a 35 percent discount from the non-protected price, shielding passengers during busy times. This could save heavy users a hundred bucks a month—or more, making it what may be the surprise biggest benefit, at least in dollar amounts.
Priority Pickups at Airports: Rewards members “may,” according to Uber’s lawyers, get picked up faster at some airports, depending on how drivers are queued. Like the spelling of the word “queue,” it is unclear how this is supposed to work, or if getting an Uber at an airport is even an issue. It’s possible this will work with Uber’s
Diamond: (Requires 7500 points in six months)
Complimentary Upgrades: In yet another vague benefit, Uber will “sometimes” deign unto its Rewards passengers an upgrade from UberX or Pool to Uber Select, Uber’s “high-end” ride service that features entry-level luxury cars like BMW 3 Series or Mercedes C Class. As of press time, Uber has not said how these upgrades will be awarded and there’s no formula in the legal terms, but I’d assume they’ll do it enough to keep the Diamonds happy, no? DOn’t worry Select drivers: Uber confirmed you will be paid at the Uber Select time and mileage rates
Highly Rated Drivers: Diamond Jims and Janes might not really need that Complimentary Upgrade bennie, as they will automatically be matched to the highest-possible rated driver in striking distance, subject to availability, of course. This means they could wind up with a higher percentage of rides in a Select Driver’s swanky car (since they tend to have higher ratings) while only paying for UberX or Pool. Since we’ve written about Uber Pro, I assumed this could also mean Diamond Rewards passengers would be matched to Uber Pro Diamond drivers, but Uber told us this is not the case.
Premium Support: Not to be confused with the Priority Support the Gold-tier commoners get, Premium Support means you get to call Uber Customer Support. Now you can be immediately frustrated by the unsatisfying, boilerplate response to your problem rather than waiting 20 minutes for a nonsensical, copy/paste response to some completely unrelated issue.
Three Free Deliveries: Upon reaching Diamond status, Rewards members get three free Uber Eats deliveries. That means only the delivery and booking fees are waived, so no free sushi for you. Still, this could be a $15-20 value. As far as I could tell, this is a one-time thing on achieving Diamond level.
Who’s Going to Use Uber Rewards?
Snark aside, that’s a pretty generous list of benefits. Compared to most Airline mileage programs or credit card travel-rewards programs, it’s pretty generous; most of those programs offer just one percent back, whether in cash, miles or frequent-flier mileage.
So who will take advantage of this? Since the program (right now) is invite-only, it seems likely that heavy Uber users—passengers who exclusively use Uber, and use it a lot—will be the bulk of Uber Rewards program members. And of those passengers, the ones who really use Uber will get the most benefit.
And I mean really use it. To get to Blue, all you need is a pulse. For Gold, which offers pretty minimal benefit over Blue, you can be a pretty casual user; 500 points is just 55 $9 UberX rides, less than 10 a month.
After that, things get a little cray. As in do people really take Uber that much? A Platinum pax will need to take 277 $9 rides in six months; about 1.5 every single day. And El Diamante? They’re in an UberX 138 times a month, almost five times a day. But these heavy users, at the Platinum and Diamond level, will likely save some serious dough, especially during weekday commute hours, if they take advantage of that Price Protection benefit. Of course, they’re spending $5,000-$15,000 a year on Ubers, so it’s kind of reminiscent of the Simpsons episode (“Lard of the Dance,” Season 10) where Homer thinks he’s going to get rich after learning there’s a market for bacon grease.
What Uber Rewards Means for Drivers
That’s a big, complex program, and Lyft’s will likely be similar (one important difference is Lyft’s program will tell you how close you are to “unlocking” your next Lux upgrade). But is it worth enrolling?
It sounds like unless you’re one of these $5,000-a-year Power Users, you’ll probably see limited benefit as a passenger, maybe saving a few bucks here and there. But if you enroll in both companies’ programs, you’ll get a small discount and there’s no downside.
But if you spend enough money on Uber every year to buy yourself a nice used car, you might enjoy the status in the same way high-mile airline passengers enjoy their secret lounges and free upgrades. So it seems like a good way for Uber to buy some brand loyalty, but I question if there are really that many customers to take advantage of the Diamond tier.
What will it mean for drivers? I don’t think we’ll notice, although it will likely keep some Uber passengers from migrating to Lyft. A Pew Research Center survey of Americans conducted last year found that only two percent of American ride-hail users use it once a day, and just four percent use it once a week (up only one percent from 2015). I just don’t see this rewards program as an effective way to grow ridership, as it focuses on customers already using Uber heavily. However, drivers might see a bump in regular morning and afternoon commuters, which is nice if you’re chasing consecutive-trip or Quest bonuses.
A final note: Uber did say it will always pay drivers for the full time and distance of a ride, regardless of what the rider pays, and will pay cancellation fees even if the rider is refunded. However, it’s unclear if Uber Select drivers would be assigned to the Diamond passengers as Select or UberX drivers. I’d be surprised if Uber paid for Select, but let’s pray for a glitch that makes Select drivers a bit more money. It could happen!
Readers, what do you think of Uber’s new rewards program for riders?
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-Gabe @ RSG
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