Ridesharing mainly has been a story of two competitors in the U.S. Uber was and still is the more aggressive and dominant in the minds of most riders. Lyft developed the reputation of a distant number two. Some recent moves show how Lyft is changing its approach to business and working to build a stronger reputation that won’t be the equivalent of Uber’s shadow.
In business, things change, and sometimes quickly. Uber, and CEO Travis Kalanick, has tripped time and again. It has angered employees over allegations of sexual harassment, drivers regarding the way they are treated, and many passengers concerning a perceived indifference to protests over the Trump refugee and immigration ban in January. Lyft has been able to take advantage of the flubs and profit at Uber’s expense.
Profiting from a competitor’s errors is fine, but business strategies need more than reaction. Lyft has steadily worked to move beyond the context of Uber and toward being recognized as important in its own right. Here are six of the smart moves the company has been making.
1. Brand building, not Uber bashing
The single most important change is a recognition that the company must have an existence in the mind of consumers independent of a bigger competitor. Lyft’s new chief marketing officer, Melissa Waters, wants to shift promotion from Uber-related reactions to building brand awareness, as explained by Waters in an interview with The Wall Street Journal — itself a major step. Here’s the mental framing she’s using:
We take for granted in Silicon Valley that everyone knows what Lyft is. We know for a fact that isn’t true. We know that people make a choice about ride-sharing and who to share their time and money with, and they want to feel good about the choice they’re making. There’s more of a story to tell about a company that puts people first, a company that focuses a lot on experience and making sure we demonstrate how we treat drivers and passengers really well.
Interestingly, she’s taking an approach that parallels the advice linguist and cognitive scientist George Lakoff has offered to politicians. The most important thing to get people on your side is to address their values. If she can carve out an association on this front, Waters also keeps Uber from easily taking the same positioning and, without directly trying, puts it into an unfavorable light.
2. Self-driving deals
Because of economics, the future of the rideshare industry may depend on self-driving vehicles. Paying drivers to work as independent contractors and maintain their own vehicles is expensive. There are few natural economies of scale. Self-driving cars would allow a company to offer service directly and gain economic benefits from bulk purchases of vehicles, fuel, maintenance, and insurance. Lyft has inked partnerships with some of the big names in autonomous vehicle technology, including Google sibling Waymo and General Motors, which is one of its investors. A few more smart deals and Lyft could start to prevent others from easily expanding in the same ways.
3. Delta SkyMiles connection
Ground transportation, particularly rental cars, has long been integrated into the airline promotional infrastructure. Lyft has made a big move in that direction with the offer of Delta SkyMiles, with each dollar of a fare generating a mile. Currently, there’s even a window of bonus miles and a potential $20 ride credit for new Lyft users. The deal opens the door for increased cross-promotional opportunities and shows that Lyft is looking at marketing in a broader sense.
4. Blue Cross health care tie-up
Speaking of promotional partnerships, Lyft has a brilliant new national one with the Blue Cross Blue Shield Association:
Over the next several months, BCBS will incorporate Lyft services into an innovative service delivery model for select Blue Cross and Blue Shield companies — at no cost to members. The model couples BCBS technology with Lyft’s convenient ride-share services to reduce the number of missed appointments for non-emergency medical care in areas without optimal transportation alternatives servicing health care facilities.
It’s a smart relationship. Lyft gets a new source of business as well as a way to improve its brand recognition. BCBSA likely gets additional location data that has become critical to new approaches to health care management and, ultimately, cost controls.
5. Tighter patent strategy
If the present and future of ridesharing is technology, a strong set of intellectual property protections is vital. CNBC had an analysis done by IP asset management firm M·CAM International. Lyft’s and Uber’s patent strategies differ significantly, and one has an understated advantage.
Lyft’s patents are more focused, specifically on the development of an improved rider experience. Uber’s portfolio is more vast but less likely to bring the company a specific advantage, covering everything from search and mapping to autonomous driving, found MCAM, which analyzed the patent quality of all 838 Disruptor nominees for 2017.
As Dex Wheeler, M·CAM’s chief analyst, said, “Uber has many more patents than Lyft, but they are, in my opinion, more protectionary than visionary.” Protection is important for the present. Vision defines the future.
6. Keeping drivers happy
It will likely be some time before self-driving cars broadly replace drivers. Also, computers don’t build relationships; people do. Drivers are the face of a company. The Rideshare Guy Blog ran an unscientific survey of its readers. Still, the results were interesting to consider. Just under 50 percent of drivers said they were satisfied with the experience of driving for Uber. Compare that to the 75.8 percent of drivers satisfied with Lyft.
Drivers are in business to make money. Many work for more than one company, and Uber is where the clients are — for now. But as Lyft makes more headway and gets additional consumer mindshare, driver satisfaction could become an important factor in where people can more easily find rides. And happier drivers will likely mean happier customers who come back.