Uber is facing a drop in new Driver Loyalty!


(Brandon Bhangoo) #1

It is high time that the global passenger commuting service company, Uber gets a grip to its relationship with its drivers. After all, Uber would be nothing more than just an app if it did not have drivers and their cars; the company would have ceased to function otherwise. If Uber doesn't open a hearing ear towards its primary employees, i.e., the drivers, then Uber can soon meet an unfortunate death in the times to come. The future of the company majorly lies with drivers, and thus, it is crucial to treat the drivers equally as the company does with its customers in hearing out their issues and solving them effectively.

Why are the new Uber drivers quitting soon while the veteran drivers are still hitting the road?

Things at Uber's end have been growing worse with the passing of each day. The CEO, Travis Kalanick has stepped down from the company on 21st July this year. A recent analysis by the app analytics firm, Apptopia has revealed that Uber is currently suffering from a steep downslope in the retention rates for the new drivers in the US. The analysis that TechCrunch received from Apptopia shows that there has been a shocking 47% drop in the very beginning of the year in the number of drivers that are still using the Uber app after 30 days of the initial installation.

However, at the same time, the study also has concluded that there has been a 20% increase in the driver app downloads. So, if the data crunching is accurate, then one may come to the conclusion that even if Uber is successfully driving new drivers into the system initially, in the long-run the company is failing to sustain their interest. It is from April that the fall of the percentage has become all the more dramatic. The monthly rider usage of Uber was also looked into by the app analytics firm who have said that despite all the social media campaigns and various other scandals, the new downloads are consistent and that there is not much of a dip in the usage of the app. The monthly usage for riders in the United States has risen around 60%.

The Rideshare Guy's take:

The driver churn, according to Harry Campbell is by far the biggest hit on the face of Uber, despite all the press blows about its internal work culture issues. With Travis Kalanick, the previous CEO's resignation, it is not going to be easy for whoever becomes the next CEO to handle the driver churn. He has rightfully presented the opinion of the drivers that Uber will no longer have a business model if it continues to keep drivers in the fold.

The picture about Uber's driver churn issue was not so clear until Apptopia did this analysis. Before this detailed analysis, the observant drivers only had anecdotal evidence or the figure that faintly indicated that half of Uber's drivers have quit within a year, to rely upon since Uber was very strict in protecting their data. All of that to save the company from a drivers outrage of sorts.

The demand from the passenger's end has not decreased. Obviously! Who would not want a convenient commute option with subsidized ride fares? But, the equation on the driver's end is not the same. It is true that new drivers are getting attracted to Uber due to the aggressive advertising of the company and the attracted incentive promises offered by the company. Thus, Uber is certainly having frequent new driver sign-ups, but the more and more new drivers are simultaneously leaving the company soon. The recent cutting of driver pay is the main reason for this. Previously the percentage of each ride's fare that the driver used to get was 80%, but current statistics show a sharp drop there.

However, Uber has finally decided on addressing the driver complaints by adding a tipping feature to the driver's app.

Are Uber and Lyft public nuisances?

According to the people of San Francisco, an influx of both Uber and Lyft car driving has resulted in blocking bicycle lanes, clogging city streets as well as double parking when the drivers wait for the passengers to arrive. So, yes, the legal investigation that has begun on these two ride-hailing companies causing growing public nuisances is not unusual. The ride services are still undergoing investigation. The estimation is that there are about 45,000 drivers in the city. Most drivers are truly distracted and why won't they be when they have such a demanding job. But, the investigation would be justified when it would also include the number of accidents that the drivers are in when it is not even the Uber driver's fault.

Do Uber drivers have the potential of being reclassified as employees rather than contractors?

The Labor Commission of California has recently ruled out that an Uber driver in the state is not a mere independent contractor but is an Employee. Despite Uber's attempt of holding on the fact that the drivers are independent contractors, this has been ruled out. There is obviously a justifiable reason for the same. The Labour Commission has given out this rule based on the fact that Uber has huge control over the details of a driver's job. The company's involvements in the daily operations of their job leave no space for the drivers to be classified as independent contractors as the drivers do not get enough work freedom. The device that the driver uses is also controlled by the company in both terminating their access when ratings are below 4.6 stars and also monitoring their approval ratings.

This is the latest regulatory and legal challenge that Uber is struggling with at the moment. The regulation has as of now only affected the state of California which is Uber's home ground. But their fear is justified, as it can potentially set a path for the regulatory bodies of other states also to pass similar rules. If Uber drivers are reclassified as employees, Uber will have to include them under the direct payroll of the company which would inadvertently make them applicable for all other employee benefits.

The news is this that other countries are also gradually formulating similar rulings. So, it is evident that Uber cannot pull of the misclassification of drivers for long. It is only a matter of time that courts will come to a consensus that the drivers are not independent contractors but employees and deserves to be treated like one.


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