The good, hard working folks over at Uber just sent out an email to some of their best and earliest users to inform them that the 15% FoundersCard discount select customers have been enjoying is being phased out.
For those unfamiliar with FoundersCard, it offers founder-types and entrepreneurs select deals on everything from travel to business services. Uber had set up a discount for 15% off the first 100 rides for FC members. The goal was to entice early adopters who would evangelize Uber’s service.
From my anecdotal experience, it worked beautifully. My friends and I sang Uber’s praises far and wide (and drummed up quite a bit of business for Uber in the process).
Tonight, however, Uber notified all FC members that regardless of how many ride discounts a customer has remaining, Uber is reducing the number of discounted rides to 10 (or less than 10 if that’s all that was remaining). I still had 69 rides remaining.
As FoundersCard membership has expanded, Uber was probably finding themselves giving away 100 x 15% to a wider and less exclusive audience. I totally understand that Uber can’t be giving away 15% to every founder wannabe and late adopter.
In my humble opinion, however, this change could have been handled much better. Uber made several mistakes that could have been easily avoided.
1. Customer Segmentation 101
First of all, Uber should have realized that the FoundersCard members and Uber’s target customer base are effectively the same. Uber might have had an instinctual sense this was true, given that they offered a discount via FC to acquire users in the first place, but they might have failed calculate the full potential impact of 100 rides x 15% off x #Users on their bottom line.
2. Stem The Bleeding
No doubt Uber must have been giving 100 x 15% off to a significant number of their customers. (see point 1 above)
If that’s the case, though, Uber should have just turned off the tap much earlier. If you start seeing everyone using a FoundersCard discount, then quietly modify it for all new members to be 10 rides at 15%. Or remove the discount entirely. This limits your future exposure while keeping your earliest adopters blissfully ignorant and happy with your brand.
3. Broken Promises
Instead of quietly modifying the discount to something less juicy for latecomers, Uber made a blanket decision to reneg on their promise to EVERY FoundersCard member, regardless of when they joined. So stragglers and early adopters alike are getting the same raw deal.
One could argue that 10 x 15% off, plus all those historical savings, is still very nice and more than Uber had to do in the first place. But that’s not the point.
Uber entered into a contract of sorts with their members. They made a promise to us of 100 discounted rides. Now they’re breaking that promise. Those of us who run companies understand balancing a bottom line, but do the math before you annoy your customers. Rational or not, this FEELS like Uber is nickel-and-diming their best, earliest customers.
That leaves a bitter aftertaste.
4. Fictional Savings?
One of the most awesome things about the 15% discount I was enjoying was that it made taking an Uber a no-brainer for me. Whenever I was on the fence between calling an Uber or taking a cab, I would just call an Uber. In fact, it got me to take Uber several times when I could have just waited a few extra minutes and hailed a cab. Instead, I said “Screw it, I’m going in style!” and took an Uber.
In the back of my mind I rationalized the extra cost by knowing I had a slight discount. And when that discount ran out organically, I probably would have just kept on riding out of habit and a passionate love for the brand. I might not even have noticed it ran out!
Now that our attention has been painfully drawn to the fact that the discount will soon be gone, I suspect many infrequent users are going to think twice before taking an Uber. Those on the fence might opt for a cheaper, if more inconvenient, option. Given their love of math, I hope Uber crunched the numbers on this one carefully, because there’s a chance they just lost a lot of users who were on the bubble.
5. Bruised Brand
Perhaps the biggest problem with this situation is the black eye Uber just gave its brand.
Uber’s brand is all about style, luxury and feeling like a baller (even if only for the length of a ride). Uber is selling convenience and affordable luxury, but even more than that they’re selling a FEELING! The feeling of awesome.
You know what doesn’t feel awesome? Having a discount you were promised yanked from underneath your feet.
Being penny wise doesn’t fit with Uber’s brand.
Reneging on a promise doesn’t fit with Uber’s brand.
And lumping your earliest adopters and evangelists into the same bucket with wannabes and hipsters who came late to the FoundersCard party does not fit with Uber’s brand.
For the record, I still love Uber. I know several of the people who are running it on a personal level. They’re smart, hard working, genuine people who care passionately about their users and are building a great company. I applaud their efforts.
That said, I think they fumbled this one. It feels clumsy to me. We all make mistakes, and this one isn’t going to totally derail Uber, but it does not fit with the brand image they’re trying so hard to create.
That said, this isn’t going to stop me from riding Uber, and it shouldn’t stop you, either. If you haven’t already, go sign up and experience the awesomeness for yourself.