Why Uber Just Made A Wrong Turn

Uber is healing a rift with its drivers, but it may be creating a new one with its customers.

Uber Technologies last month took action to heal a rift with its drivers, but it may have inadvertently created a rift with its customers.

The company announced a class action settlement with its California and Massachusetts drivers, who had sued Uber for classifying them as independent contractors, rather than as employees.

The settlement, if approved by a San Francisco judge, would leave the independent contractor classification intact, but would also give Uber drivers some new rights.

Among those new rights is allowing drivers to post signs in their cars soliciting tips from customers.  And that’s where Uber’s ride might get a bit rocky.

Uber and its ride-hailing app arrived on the scene in 2009 and the company has enjoyed spectacular growth ever since.  Fueling that success has been Uber’s innovative customer experience – which isn’t just great… it’s magical.

With the push of a smartphone button, a private car rolls up curbside, ready to take you wherever you need to go.  You get in, you go, you get out.  That’s it.

There’s no fumbling for cash to pay the driver, no math problem at the end of the ride to calculate a tip from a fare meter.  Uber just charges a flat fee for the trip to the credit card on file for the customer.

It is, in a word, effortless for the passenger – both physically and mentally.  But that could change if drivers start soliciting tips.

Uber’s app has no facility for adding a tip to the fare, and the company has indicated it has no intention of incorporating that functionality.  So the cashless interaction, a hallmark of Uber’s customer experience, is replaced by one that looks and feels a lot more like a traditional taxi cab.

Furthermore, a service that had been free of the emotional baggage of tipping (should I or shouldn’t I, and if so, how much?) will suddenly become more mentally taxing.

Instead of feeling liberated from the typical taxi fare ritual, Uber riders may feel guilted into tipping their driver (especially since Uber’s bidirectional scoring system lets drivers and passengers rate each other).

In Uber’s defense, it’s possible tip solicitation was the least of all evils that they had to choose from at the settlement negotiating table.  What’s troubling, though, is that tipping – as it would be handled in the Uber ecosystem – undermines a key point of differentiation for the service.  What was effortless before, suddenly becomes effortful.

That could present a problem for Uber down the road, and perhaps even give a lift to Lyft, their primary competitor in this space (who, incidentally, does offer cashless tipping via their app).

In order to survive long-term, businesses have to adapt, be it to changing circumstances, marketplaces, regulations, or other environmental influences.  What’s important, though, is to make sure those adaptations don’t undermine foundational elements of your company’s value proposition (in the case of Uber – rider convenience).

Southwest Airlines, for example, has long resisted charging fees for baggage, even as the rest of the industry has jumped on that bandwagon and collected billions of dollars in revenue as a result.  Why?  Because they view that as a central component of their passenger-friendly policies – policies which, to quote their stated brand purpose, give people the “freedom to fly.”

Southwest has also avoided flying any aircraft other than the Boeing 737, viewing that operational simplicity as a critical ingredient to delivering a superior passenger experience.  (Southwest’s entire acquisition of AirTran in 2011 was almost derailed over this point – until Southwest got Delta to take over every non-737 airplane in AirTran’s fleet.)

So, follow Southwest’s lead and ask yourself:  What elements of my firm’s customer experience are truly sacrosanct?  What are the characteristics or components that are so central to our brand experience, they should never change?

Put your finger on those elements now, when you’re not in the midst of a difficult, stressful business decision that might cloud your judgement.

Then, do your best to protect those pillars of the experience, limiting adaptations and accommodations to areas that are less likely to dilute the brand differentiation you’re trying to cultivate.

With Uber opening the door to gratuities for its drivers, we may be witnessing a “tipping” point in the evolution of the company’s customer experience (and not for the better).

Avoid putting your business in a similar situation by clearly identifying – and preserving – that which sets you apart in the marketplace.

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Jon Picoult is Founder & Principal of Watermark Consulting, a customer experience advisory firm that helps companies impress their customers and inspire their employees.  As a consultant and keynote speaker, he has advised thousands of business leaders across some of the world’s foremost brands.

Contact Jon at www.watermarkconsult.net, or follow him on Twitter @JonPicoult.