Brief:
- Ride-hailing service Lyft next month will begin testing a loyalty program that lets passengers earn points to redeem for trip upgrades or access to more experienced drivers. The company will invite riders in select cities to participate in Lyft Rewards by email before expanding the program to all users next year, according to a company announcement.
- Lyft's app will let members track their accumulated points to see how close they are to receiving a reward, such as an upgrade to Lyft Lux that usually charges more for a ride in a high-end car. The program is also set to offer double-points days and other perks.
- Lyft's new loyalty program follows several efforts to reward repeat usage as competition in the ride-hailing space heats up. The company this year started letting business riders earn points for personal travel, much like a frequent flyer program offered by airlines. Delta rewards members also can earn airline miles by linking accounts and riding with Lyft.
Insight:
Lyft and chief rival Uber have continuously added new services like loyalty programs and incentives to build more personalized relationships with customers who likely grab the nearest available car or cheapest ride when they need to go somewhere. Loyalty programs provide another way for ride-hailing services to compete without resorting to costly price cuts that alienate drivers or negatively affect the customer experience.
In recent months, both ride-hailing companies have introduced subscription plans that let riders pay a flat fee for a set number of rides each month. Lyft charges $299 a month to receive 30 rides that typically cost as much as $15, with riders paying for any excess charges, according to the Verge. Uber's Ride Pass, introduced last month in five U.S. cities, charges $14.99 a month for discounts on all standard rides, USA Today reported. Lyft's new loyalty program comes shortly after Uber launched a rewards program for drivers in order to encourage them to stick to the gig and maintain an ample supply of available cars.
In addition to discounts on frequent riders, Lyft has also executed creative marketing campaigns to drive more eco-conscious consumers to participate in ride-sharing, by challenging residents of select cities to forego their personal vehicles for a month in exchange for credit on Lyft trips or other mobility services.
The efforts come as Uber and Lyft fiercely vie for customers as the companies prepare for IPOs as soon as next year. Wall Street banks last month said Uber may be valued at $120 billion, giving the company a bigger market capitalization than General Motors, Ford and Fiat Chrysler combined. Lyft has hired several banks to lead an IPO earlier in 2019, The Wall Street Journal reported.
