Uber’s hidden business strategy is revealed. (It has the ultimate learning for your startup)
It is known to everyone that Uber is expanding mobility by delivering new modes of transportation. It is available in 65 different countries and completes over 1 million rides daily. Reason of this impressive success of the Uber is hidden behind its way to offer ultimate user experience. Several teams of Uber are constantly keeping their eyes on things which annoy the users and powering the app with new features to enhance the user experience. After studying the Uber’s developer page, you will get to know that Uber is bringing two to three major changes in the app in a year.
Talking about some recent news of Uber, they have added a pin feature to pick up the taxi at the airport more easily. They even have put in a quiet mode to offer premium comfort for the Uber black and Uber black SUV riders. But after knowing the reasons why Uber is spending a huge amount in research and bringing in new features only for some specific user groups, you will appreciate Uber’s way of earning more money.
In this blog, We will discuss how Uber is making its services personalized and more user-friendly with the help of simple yet effective app features and most importantly, what are the profitable lessons you can learn from Uber’s admirable business strategy. This blog will be very useful if you are an entrepreneur and planning to start an app-based service.
Your business learning starts from here:
After Uber has recently launched two game-changing features only for its premium riders, it is safe to say that Uber is following a business model which is inspired by a few world class airlines’ business models. Like all major airlines are earning more from the business class seats than the economy class seats, Uber is also earning more from its premium ridesharing services than its affordable ridesharing services. Since the premium riders are the major source of the revenue, Uber is paying more heed to their comfort and ride experience like airlines. For that, they are regularly deploying new features that present the personalized ride experience and a serene environment, only to premium riders.
Uber has never revealed the reasons behind launching new features only for specific user groups. They always promote their new features by calling it ‘user friendly features’ which apply to all the user groups. However, a business expert can easily figure out their taxi business strategy by establishing a connection between their undiscovered ambition, recent news, and app updates.
To understand Uber’s business strategy in a broader sense, we need to go bit by bit. We will first need to understand which recent features of the Uber app have been rolled out and then we will study the Uber’s new features in a more rational way.
On 13th May 2019, Uber launched a pilot project of the pin-based pickup at the airport. Pin-based pickup works in a more efficient way than the traditional pickup method. In pin-based pickup system, riders just need to show a six digit pin to a first available driver at the pickup point to commence the ride. Uber claims to handle 400 ride requests in an hour at Portland international airport with its new pin-based pickup system.
After two days, on 15th May 2019, Uber rolled out another feature. Now, riders of Uber black and Uber black SUV premium services, get the ability to personalize their rides. For example, if a rider wants to take a nap during the ride, he can tell drivers to not disturb him with the new quiet mode. Uber stated that the quiet mode is the most requested feature. Users can select “quiet preferred” or “happy to chat” mode.
Apart from this, Uber has also added a few additional features.
- Help with Luggage: This feature will let the driver know that the rider will need an extra hand to handle luggage.
- Extended pickup period: With this feature, the rider can extend the pickup time if he encounters an unexpected delay.
- Temperature control: Now, riders can demand to maintain a certain car temperature during the ride.
- Premium support: With this feature, riders get access to talk with agents and to wield premium support.
After knowing Uber’s new features, now let’s come to a very interesting part. We will study the reasons why Uber has unveiled features only for airport pickup and for the riders of premium services. The outcome of this study would be the ultimate business lesson for your any kind of startup.
The airport has its own financial benefits for the Uber. A busy airport is a place where the highest number of ride requests are made. Moreover, most of the ride requests which are made from the airport are for the Uber’s premium services as Uber’s affordable services allow riders with only limited luggage. As if this is not enough, all major airports are situated far away from the city centers. That means, Uber makes more money, handling the long distance rides.
Due to these many financial reasons, it is always beneficial for Uber to figure out ways for streamlining airport pickups.
Now, let’s discuss another hot-button which is Uber’s new feature for the premium riders only. As we have discussed, Uber is following a business model which is very popular in the aviation industry. The major source of Uber’s revenue is premium riders who are paying $60 base fare, $35 more than Uber’s affordable service, UberGo. This is why, by targeting premiums riders, Uber can make sure that they can bolster up their RPP (revenue per person).
Wait, don’t leave your seats. We reach to the very informative part of the blog. We will now get to know the very beneficial business term, RPP. To make this learning simpler, I will give you an example of none another than Uber.
Assume two different scenarios.
Scenario 1: Uber has 100 live UberGo rides which charge a $25 base price. To handle that rides, Uber utilizes 100 employees. That means, Uber makes $2500 from that 100 rides.
Scenario 2: Uber has 100 live Uber black rides which charge $60 base price. To handle that rides, Uber utilizes 100 employees. That means, Uber makes $6000 from that 100 rides.
Now, If we compare both the scenarios, then in scenario 1, a single employee helps Uber to earn $25 while in scenario 2, a single employee helps Uber to earn $60. That means the RPP (Revenue per person) is higher in the premium service than affordable service.
Summarizing the learning of the whole blog in a single sentence
Define and distribute the services according to the user groups and put more emphasis on premium services and premium users!
Vishal Virani is a Founder and CEO of Coruscate Solutions, a leading taxi app development company. He enjoys writing about the vital role of mobile apps for different industries, custom web development, and the latest technology trends.