I'm A Product Guy.

Good, bad, great, all products can be better.

If you’re like me, you slightly obsess over every product you come across and are either impressed and inspired by an amazing experience or deeply disappointed by a total miss.  I can’t keep this ecstasy or misery to myself so there’s usually some rant which follows.

Uber City Pass, July Update

Uber CityPass, July Update

July 5, 2017

Last time we took a deeper dive in at an Uber CityPass concept for travelers, based on extending the trial program: Uber Ride Pass.

I was just offered the Uber Ride Pass for SF and thought I’d share more details; in case Ride Pass is not available in your city <OR> the offer has not yet been bestowed upon you by the Ubes.

Loyalty

When mobile ordering apps take their foot of the pedal with loyalty - offers and rewards - the mobile commerce engine comes to a grinding halt.  Uber is no different, but rather than discount offers, they run their entire business at a loss - funding growth through an all out market-grab with a discounted service (there’s a good Bloomberg article with more details).  Loyalty does have a price.

So essentially, Uber is one big loyalty program and Ride Pass is an even deeper discount over standard UberX and UberPool services.  The Ride Pass goes beyond CAC (customer acquisition cost) and is a cost to keep customers by making their products habit-forming, a “Customer Habitual Cost” if you will.

Update Pricing

Ride Pass pricing, at least for SF, was updated since the last time we visited this the FEB-2017 pricing for 20-ride option:

  • was: $10 fee to unlock $2.49 UberPool & $4.99 UberX lasting 30 days

  • now: $8 fee to unlock $3.49 UberPool & $6.99 UberX lasting 28 days

The est. per ride price went up for UberPool from $2.99 to $3.89 and for UberX from $6.99 to $9.49, when I spoke to them this April they mentioned they’re still tweaking the numbers, so perhaps this update is closer to their desired “Customer Habitual Cost” for making Uber part of the daily routine.   

Uber Ride Pass, Update JUL-2017    

 

Oh and BTW, I snapped up the “Unlimited” option and am planning to use Uber for my commute to/from SF’s FiDi district, see you in a Pool!  

Uber City Pass

Last time we took a deeper look at how Uber should partner to better address the needs of travelers.  

Here we’ll dig into one specific initiative: the CityPass concept, a book of fixed rides within a designated city border, geofence.

For my sake, I hope they’re listening (you too Lyft!) and my last rental car shuttle to the airport netherworld, was my last.     

Problem & Background

While Uber grows in popularity, in travel there are some hurdles to faster adoption.  With rental cars booked in advance, Uber is out of the running before travelers board their plane.  For some airports the taxi line at baggage claim and force of habit, has Uber out of sight and out of mind.   

Rental Car Bundles Shut Out Uber, for most leisure travelers rental cars (along with hotel parking, insurance, fuel, potentially tickets) are a necessary evil.  For many OTA customers, the rental car decision is made months in advance of arrival to their travel destination; completely shutting out Uber as a ground transportation alternative.    

Taxis Win At The Airport, despite great strides by Uber with airport pickup regulations it’s still an arena where taxis win big.  At the “point of sweat” when they land, most travelers would rather walk to the taxi line, in plain sight, than fire up the Uber app and wait for a driver to navigate the airport traffic lanes for a pickup.     

Hotels Account For Most of OTAs Revenue, this is a volume business and margins are shrinking.  OTAs make next to nothing on airline ticket bookings (and some even have to pay to display them).  The cost to display flights are a loss leader to capture Hotel bookings, alone or as bundles, where Expedia earns a booking fee and 25% commission - this accounts for 70% of revenue. All other travel services are included to ensure they’re the one-stop shop for all travel needs.  

OTAs Earn Little From Rental Cars,  some charge just a booking fee and others like Priceline charge 9% commission. For a $300 weekly rental, the OTA makes $27.              

Solution

 City Pass is stored as Flat Fare rides (Seattle)

City Pass is stored as Flat Fare rides (Seattle)

Ahead of the business rationale is the Must-Have User experience, the genesis of that Magical Moment which will grab new users and hold existing users; which makes Uber that addictive part of their life that they just can’t live without.

Persona

Michael is 32 and flies 5 times a year for leisure.  He takes taxis to and from his home airport and usually does the same for his destination airport.  For some trips where he’s exploring, he rents a car, but apart from a few day trips it usually sits in the hotel parking lot for $50/day.   When he arrives to his destination airport, he turns off airplane mode, grabs his bag and then starts reading signs to find “ground transportation.”  Once he’s out of the terminal, he hops in the taxi line since it’s in plain sight.   

Magical Moments

When Michael books a trip to Paris on expedia.com, he notices an Uber “City Pass” book of 10 Uber flat fee rides in the checkout flow, just above the rental cars.  He thinks about the cost and hassle of renting a car, parking, and driving in an unfamiliar city and relief washes over him as he clicks the buy button for his Uber 10-pack and even schedules roundtrips to Charles de Gaulle Airport.  Flights, hotel, and now ground transportation, they’re all locked in and he booked ahead and saved.

When Michael lands in Charles de Gaulle Airport, he turns off airplane mode, grabs his bags, clears customs and receives a rich notification from Uber that his driver is nearby.  Michael selects force touch on his iPhone 7 and it opens the Uber app to the map so he can find his ride; moments later he’s in his Uber and on the way to his hotel.  As they pass the long taxi line of exhausted tourist, he thinks “love Uber!”    

User Benefits

First offer discounts to change behavior and change the mindset that for trips to major cities it makes more sense to use Uber CityPass over car rentals.  Then continue to use offers, although less rich, to make Uber/Lyft the new norm for city travel.   

  • lower cost than car rental: no parking fees, fuel cost, potential tickets  

  • remove uncertainty of taxi prices (and Uber prices)

  • less hassle than car rental: accidents, driving stress

Pricing, Packaging, and Launch

The CityPass pricing and packaging is similar to the Uber Flat Fares, which were tested this year in select cities.  The launch will take place in the same cities: Chicago, Los Angeles, Miami, New York, Boston, San Francisco, Seattle, San Diego, Washington D.C., with the addition of London and Paris.  Again this is an extension of the Flat Fee test, and price adjustments will be considered after availability of more data.  When compared to rental cars and hotel parking, there’s plenty of room to increase price.

Example City, San Francisco

  • 5 pack: $5 fee to unlock $8 flat fares = $5 + $40 = $45 ($9/ride)

  • 10 pack: $10 fee to unlock $7 fat fares = $10 + $70 = $80 ($8/ride)

  • 20 pack: $20 fee to unlock $6 fat fares = $20 + $120 = $140 ($7/ride)

Terms and Conditions Apply

  • Each CityPass ride is only valid for rides totaling $30 or less, and limits may be lower in some cities. If the ride costs more than the allotted amount, riders are responsible for paying the flat fare plus whatever amount which exceeded the maximum

  • Uber CityPass is valid in participating cities, during the trip duration.  If the trip duration exceeds 30 days, the Uber CityPass is valid for the first 30 days of the trip.   Any time during the trip, additional CityPass packs can be purchased but the same initial duration applies.

Additional CityPass Purchases  

If travelers use up their rides while on a trip, we’ll offer an extension to their Uber CityPass.  The important point here is that we’re changing behavior and proving that they can get around a city without a rental car; that Uber is a safer, less stressful, less expensive option to renting a car while traveling.   Uber does not pay Expedia a commission for these additional CityPass options since the transaction occurs through the Uber app.   

Expedia Partnership

In return for listing Uber CityPass flat fares in the checkout flow, above rental cars, Expedia receives the following terms:

  • Six month exclusive for Uber CityPass, no other OTA, Airline, Hotel, including AirBnB.  Why?  partnership goodwill, sometimes there are no direct metrics for a decision and there’s some work on the part of Expedia, in my experience an exclusive period smooths out potential bumps in the road to a happy partner.

  • 10% commission on Uber CityPass packages booked through Expedia - same as rental cars (again, this is marginal revenue for Expedia).

Decisions Which Require Further Analysis

  • Pricing adjustments.  Additional data includes a comparison of flat fares to what would have been the unbounded ride fares for these rides.  For example compare the 10 pack rate ($8/ride) to what these rides would have been as normal UberX rides.  Use this to adjust future pricing.

  • Analyze Expedia data and survey their customers to understand more about rental car and travel patterns.  For example, how many Expedia travelers select rental prior to arrival?

  • What’s the price sensitivity and what’s the best pricing across customer segments.

  • Which cohorts and user segments make sense for this initiative?  For example, we’ll start by not targeting the bargain traveler who books compact cars and stays outside of the city.  

Bottom Line

Rideshare companies like Uber and Lyft are addictive, habit forming forces that are changing our cities, how we think about car ownership, and moving from A to B.   But there’s still one major blindspot with travel use cases.  Uber and Lyft are losing at the airport and OTA partnerships offer a great way to change consumer behavior, to grow riders and rides from airports and in destination cities.  Be it through referral bonuses, coupons, ads and other promotions, there’s a cost to changing consumer behavior and a City Pass concept of flat fares for travelers is a great way to offer riders inexpensive, low risk alternatives to car rentals, parking, and local cabs.  Hopefully, the airport car rental shuttle, hotel parking valet lines, and shady local cabs will no longer be the travel norm.     

A Travel Friendlier Uber

Lately Uber is in everything from autonomous cars to flying cars, even autonomous flying cars...

but they’re missing some basic use cases for travelers, running, um, flying before crawling.  

Over the past few years when traveling I’ve spent less time in rental cars and more time in Uber and Lyft ride shares. For business trips, I can’t remember the last time I rented a car. For personal trips, it’s Uber from the airport and short trips like dinner and daily car rentals for the occasional exploration excursion. 

Let’s pick one travel partner, Expedia, and explore how Uber could be friendlier to travelers.

Business Rationale: Why Expedia

It makes sense for Uber to find and capitalize on new partner integration opportunities with Expedia as it’s the largest OTA and operates more than 200 travel booking websites across 75 countries. Expedia  has more than 350,000 lodging listings, and 500 airline listings. Major brand extensions, sites, and apps include Expedia.com, Hotels.com, Hotwire.com, trivago, Venere.com, Travelocity, Orbitz, and HomeAway.  Expedia offers Uber numerous partner integration opportunities to accelerate deeper penetration of travel market and augment customers’ travel experience.  

There are several compelling reasons for Uber to expand the Expedia partner integrations, let’s unpack these:

  1. Large, active install base: with 84 million MAUs to Expedia web properties Expedia offers a giant user base for Uber.  With $6.6 billion of their $8.7 billion 2016 revenue in Core OTA services, Expedia offers an active install base.       

  2. Growth through new customer use cases, the travel customer experience, especially airport round trips and ground transportation during trips are an underserved slice of the overall ride pie.  Expedia offers deeper penetration into travel use cases to grow riders, rides, and bookings.   

  3. Motivated partner, for a partnership to last, it must be mutually beneficial.  Expedia travelers want ridesharing services and deeper integration of Uber into the Expedia customer experience will drive customer satisfaction.  Furthermore, Uber revenue sharing present opportunities to augment their existing ground transportation segment.  For example, for an average weekly car rental, $300, Expedia collects just $27.

Repeatable, the initiatives and integrations we build with Expedia can be replicated to other OTAs, Airlines, Hotels, AirBnB.  With a limited time exclusive we can then grow this segment by rolling out these deeper integrations across the travel segment.

Expedia New Initiatives

Before digging into the Expedia initiatives, it makes sense to review basic evaluation criteria to be sure we’re meeting the stated objectives.  As with brainstorming exercises it’s easy to get off target, the criteria will help with focus and prioritization.

Evaluation Criteria

The stated, primary goal is to increase riders, rides, and bookings, but a larger set of criteria is needed to ensure continued success.  Some of these offer metrics to quantify alternatives for estimating expected impact and then tracking progress.

  1. New Riders: Does it add new riders, would the rider have used Uber without it?  Metric: count of new users from Expedia, using account phone number, email, or device ID (mobile app) to estimate the expected new users and track progress with actuals.

  2. New Rides: Does it add new rides, would these rides have been booked otherwise?  One way to grow new rides is to offer new ride use cases or replace alternative transportation options with existing Uber riders.  With est. 5.5 million* Uber rides per day, does this move the needle (*based on 1 billion in 6 months). Metric: count of new rides  all rides from new users would measure as new rides.

  3. User Delight: Is there a wow factor, is the user delighted?  This is crucial in creating a compelling reason to use the new initiative, beyond just buying the rides with deep discounts and other rich offers.  Measure: user surveys and user study groups.

  4. Value To Expedia: Drive business for Expedia? Does this improve their customer satisfaction, grow their user base, introduce new revenue streams, offer a competitive advantage?  Measure: revenue sharing and Expedia customer surveys.  

  5. Habit Forming: Will it stick with riders?  Will the integration change behavior, maybe beyond this immediate use case to make Uber the service people can not live without. Metrics: count additional rides during trips, count uplift to 3 month trailing average rides for these riders.

  6. Growth Through Replication: Is it repeatable to grow with minimal integration work? Metrics: count of additional partnerships after the exclusivity period has expired, measure of time to roll out each new partner initiative

  7. Increased Bookings: Does it increase bookings? While Uber is still in a high growth period to gain market share and change behavior, we don’t want to add rides at the complete expense of bookings. Metrics: bookings from this program (however it could get complicated as we factor in substitution rates, i.e. would these rides have occurred without the initiative?)   

The following new initiatives are prioritized in order of how they performed against the criteria (based on publicly available information).  Before giving these the green light, we’ll verify assumptions, conduct deeper analysis, and conduct user surveys (if needed and when available).

Uber Expedia CityPass, Car Rental Alternative

This initiative offers Expedia users a special Uber Flat Fare pack during the Expedia trip checkout flow.  The flat fare packs have similar pricing, packaging, availability, and T&Cs as the Uber Flat Fare packs tested this year in select cities but are limited to UberX class of rides.  The packs can be purchased from both Expedia websites and mobile apps, starting with expedia.com and Expedia mobile app (iOS and android, then Microsoft). Packages also include add-on fixed trips to and from the airport that don’t count against the 10 ride pack.

uber-expedia-blog-expedia-citypass.png

Uber Booking With Expedia Notifications

Expedia is the hub for real-time trip data, from flight information to hotel location and check-in time.  This initiative adds Uber booking through Expedia app notifications.  How does this work?  An initial use case is the “airport to hotel” flow.  Once the flight lands, the Expedia app sends a notification to request an Uber to the destination hotel (also known by Expedia).  This request notification remains in the lock screen, at the fingertips, until the user dismisses it.  The expedia notifications allows Uber to be situationally aware of the traveler’s experience.  It’s crucial to send the request before the traveler exits the terminal and sees the taxi stand.  At that point, Uber is out of sight and out of mind.  There’s also some delight to the Expedia traveler who doesn’t have to fumble around with typing in the correct hotel destination, for example arriving at the wrong Marriott in Seattle (which may or may not have happened to me).  Also this could be extended to hotel only travelers (who may have booked flights with another service); cruises; and “things to do” experiences all based on travel time to known destination.

Earn Expedia+ Points with Uber Rides

This initiative allows Expedia+ Loyalty members to earn points when riding with Uber.  An exclusive will make Uber a more attractive alternative to other ridesharing services and taxis.  How does it work?  Expedia+ members link their accounts to their Uber account and earn points whenever the ride with Uber.  The offers would start with Expedia+ members (like with similar Expedia+ partner programs) but could extend to all members.

Highlight: This initiative offers an added incentive to earn double points during an Expedia trip.

Airport Driver Specialist

Like George Clooney in “Up In The Air” road warriors have their flight routine set down to their shoes to ensure a swift pass through security.  For most other travelers, making their flights can be the most stressful part of the trip.  Uber Gold Drivers know their cities better than anyone else and will find the fastest route possible.  This idea has already been tested with Starwood partnership and black cars.  If needed we can have drivers apply for this status and earn more for these rides (consider supply side).  This initiative offers Expedia customers to book an Uber Gold Certified Driver, matching concerned travelers with navigation experts.  The ride can be scheduled anytime within 3 hours of departure time based on Uber ride length.  This is not available for Uber Pool.

Next time we’ll dig into one of these option, spoiler alert, it’s the Uber CityPass!  In the meantime, check out this press release, fake news much?  yep.


Press Release

Uber and Expedia Launch, Uber CityPass - Uber Flat Fares Packs For Expedia Travelers

Expedia and Uber offer travelers to book ahead and save.   

FOR IMMEDIATE RELEASE

SAN FRANCISCO - July 26, 2017 - Uber today announced the launch of Uber CityPass with Expedia, enabling travelers to book Uber Flat Fee packs ahead and save.   

“Uber Expedia CityPass removes the stress of driving in an unfamiliar city as well as the hidden expenses of hotel parking, fuel, and tickets associated with car rentals” said Uber Head Of Partner Products, Garrett Gaudini.   He went on to add, “This makes Uber an attractive option over renting a car on trips to major cities.”

Uber CityPass is a set of flat fee ride packs available on the same page of the Expedia trip checkout as Rental Cars.  Expedia customers simply select the pack that works for them based on their trip duration and plans.  

Uber CityPass is available immediately in for Expedia travelers booking trips to Chicago, Los Angeles, Miami, New York, Boston, San Francisco, Seattle, San Diego, Washington D.C. with the London and Paris expected next month.  If your final destination city offers Uber CityPass, it will display above the rental car options in the checkout flow.  The Uber Expedia CityPass packs are available from Expedia.com and the Expedia mobile app (iOS and android, then Microsoft).  

Expedia Uber CityPass packs are available for UberX with 5, 10, and 20 ride options.  There’s a fee to unlock the flat fares and pricing slightly varies by city.  

Aaron Price, Chief Marketing Officer, Expedia explains “we’re excited to offer the Uber CityPass to our customers who want to make arrangements ahead of time but don’t want the risk of driving in an unfamiliar city.”  

Travel blogger, Nomadic Matt, notes Uber is already more convenience than renting a car.  Many "rental car centers are not at the airport, they’re miles away.”  Besides the extra time spent picking up and returning the vehicle there’s the hunting for gas to avoid paying a steep price for returning a less-than-full tank.”  The Expedia Uber CityPass packs bring this convenience to Expedia customers with the added benefit to book ahead and save.