A Review of Lyfts Referral Program


(Preet) #1

Lyft introduced a new referral program that will make it easier for drivers to recruit new applicants and also keep them. The new program offers some exciting features and is another of Lyfts marketing combat tools for success. The course aims to outdo all the rideshare competition (wink wink, Uber).

Bonuses

Lyfts new system is to spread the bonus over every ride, where the new driver as well as the referring driver both receive the bonus income. Why is this better and how much does it pay?

The new bonus pays $800, and it is paid via per-ride increments immediately. So, the more rides a driver does, the quicker they get their bonus. Also, the referring driver gets their bonus too. Another good aspect of this bonus is that it is spread over 60 days and not 30. This way the driver has much more time to enjoy learning the ropes rather than to dash off into a scrabble for bonuses immediately.

The old system might have paid more but was it better? While the old system paid more, which was paid out per rides in 30 days, which worked out at $3.50 a ride for 100 rides, but you only got paid the bonus after you completed the requirements. The new system only offers $1.89 per ride, which means you have to make 424 rides in 60 days, which is 212 rides a month.

In comparison, the old system seems better, but is it?

Why is the new system better?

The old system would force drivers to burn out quicker, and the burnout would deny both drivers their bonus. For instance, having to reach certain requirements or not receive a bonus was one psychological block, the other was knowing how to and where to drive to maximize the number of rides to attain the bonus. Finally, most new drivers do not start out as full-time drivers; they are seeking a supplementary income and work during the day, adding Lyft and Uber as another source of income. By pressuring them to complete a bonus, the task was asking them to become fulltime drivers immediately.

The new system offers a steady income over time and immediately pays out to both the new driver and the referred driver. It also allows the new driver to ease into the job, learn the ropes and maximize their income. The extra $1.89 also improves their perception of income as they feel they are already making money from the bonus.

The referring driver also enjoys more and will most probably refer more new drivers to try and maximize their supplemented income. After all, if a driver refers more than one new driver, they get to gain much more income for the following 60 days. If they stagger the referrals, they can implement a continuous supplement all year round. This, of course, depends on the driver's ability to refer new drivers on a monthly basis.

Why is it better if the new driver gets less?

Most new drivers are part-time drivers; they have no intention of driving 100 rides a month, as such, they had a psychological block that would wear them down and disenchanted them, what is termed new driver burnout. With more drivers not meeting the bonus requirements, older drivers would refer less and less, one of the by-products of burn out was a strain on experienced driver's relationships with their friends that they referred. So, when the number of new referrals decreased, Lyft realized it had to change its tactics. They created a more "social" bonus, making the spread work for both new driver and referring driver adds to both the inter-personal bond as well as to strengthen the relationship between the new driver and Lyft.

Lyft's other bonuses remain the same, for instance in San Francisco there is a $1,000 bonus for 500 rides in 60 days, which is 300 rides a month. Maybe Sand Francisco can provide the numbers, after all, the larger the city, the higher the chance to get more rides per day. 300 rides a month is around 10 a day for 30 days work, and 10 rides can take anywhere from 4 hours to 8 hours depending on where and when the driver works. So, this bonus is a full-time commitment.

Notice: Most drivers don't connect the dot's and get so excited after driving around for 8 hours, every day, the excitement levels will drop.

The Best Bonuses

So far, these are the best bonuses on the market today. The new egalitarian bonus seems to be a great new idea and should be introduced everywhere. Sure, Lyft most probably enjoys not paying out bonuses and getting fast change over drivers every month, but if they want to compete with Uber and other new companies, they should build on their fleet of drivers and invest in improving and strengthening this resource. The driver is the face of the company and passengers will relate to a nicer and kinder face. Another issue with burnt out drivers are that some can be a negative impact, and that is why there is a lot of bad social media.

Conclusions

Bonuses are a great way to sell a product, Lyft and Uber will continue to offer bonuses, but it's how you offer them and how you use your natural resource, the driver to reach recruitment milestones that change how the system works. Sometimes the size of the bonus is not as important as the spread of the bonus. If the new driver knows that they are getting the bonus from day one, even if it is only in increments, the chances that they will not burn out are high.