Uber, Lyft Partner With MADD on New Year’s Eve

Uber and Lyft, the two most prolific and controversial ride-sharing companies are working for a good cause this New Year’s Eve. The two companies are partnering with Mothers Against Drunk Driving (MADD) during one of the most dangerous evenings of the year for impaired driving.

According to MADD, 70 people died last New Year’s Eve due to drunk driving. Certainly Uber and Lyft will be very busy on the last day of the year and will be donating money to MADD. Both of the programs consist of a one-dollar per ride donation to the anti-drunk driving organization, however, there have been critiques of the charity methods.

For example, the Lyft program will cap out at $10,000 and for the Uber program to work, riders must text “MADDNYE” in order to activate the donation. It would seem logical many partiers on New Year’s Eve would forget to the text for charity. However, the controversy surrounding these organizations has nothing to do with their methods of charity and everything to do with sudden price increases on busy days like New Year’s Eve.

For Uber it’s called “surge pricing.” It involves the sudden increase in prices due to higher demand. On Uber’s website they explain it by saying, “With surge pricing, Uber rates increase to get more cars on the road and ensure reliability during the busiest times.” Uber claims riders will have to agree to any higher prices before they get into the vehicle, to avoid pricing confusion and possible upset customers.

For Lyft price surging has a different name, they call it “Prime Time.” According to an official posting on the Lyft website, “When ride requests greatly outnumber available drivers, our system will automatically turn on Prime Time. When Prime Time is in effect, you’ll see a circular icon on the top bar of your app’s home screen, and a pop-up notification with the added percentage before you confirm your ride request.” The price increases are something that while stated for customers, isn’t always understood.

According to a KARE11 report out of Minneapolis, Minnesota, one couple saw the Uber price surge, but still didn’t quite understand the situation. A woman and her husband told the news station that they took an Uber ride last New Year’s Eve at approximately 2:30 a.m. When they accepted the ride with their smart phones, it read $25 dollars plus three point five times the rate. The couple accepted, however they misunderstood. The ride, which lasted five miles, cost the couple about $100 dollars. Uber has stated that if customers call for rides during surge periods they will be told of the pricing disparity. The key price surge times for the ride sharing company are reportedly between 12:30 and 2:30 a.m.

What lessons can dealers take away from this pricing strategy by Uber and Lyft? In this case, an important lesson is that it’s always important to think about customer experience. Supply and demand are laws of economics, however it’s important for ride-sharing companies to do everything they can to ensure their customers know what they will pay. If they don’t do that and surprise the riders, they may have a first and last time client, whereas, more transparency could pay off. If a customer feels a company is being upfront with even a higher price, the organization appears trustworthy.

Even though Uber and Lyft have every right to ask more money during high demand riding periods, pricing communication between their organization and their customers will be critical if they want pricing surge holidays such as New Year’s Eve to serve as opportunities to attract long-term clients.