Lyft Expands Subscription Ride-Hailing Test to Dozens of Cities
Lyft is hoping to lock in customers as competition with Uber heats up in the U.S.
(Bloomberg) -- Lyft Inc. is testing a subscription service in more than two dozen cites, hoping to lock in customers as competition with Uber Technologies Inc. heats up in the U.S.
In recent weeks, the San Francisco-based company began experimenting with a variety of subscription packages, now available in 30 markets. Lyft President John Zimmer said he sees subscriptions as the future of his business.
“Eventually, the majority of miles traveled in the United States will be on a network like Lyft,” Zimmer said in an interview on Bloomberg TV’s “Studio 1.0,” which airs Wednesday night. “You’ll be subscribing to a Lyft transportation plan similar to how you have a music program, maybe Spotify, or a minutes plan like you have on AT&T or Verizon.”
Achieving his vision would take time. Zimmer said ride-hailing services account for 0.5 percent of miles traveled in the U.S. today. A significant increase in usage would likely require more sophisticated self-driving cars, which technologists hope could lower the cost of transporting passengers. Lyft and Uber are working on autonomous-vehicle systems and collaborating with automotive and technology companies.
Uber is also experimenting with subscriptions. Charging by the month instead of per ride discourages customers from shopping between Uber and Lyft for the best price and can build loyalty to a single service.
Over the years, Uber deployed billions of dollars to drop prices and discouraged investors from backing competitors. Lyft struggled to compete with Uber’s fundraising machine. “For a while, investors and others looked at us as, ‘Oh, you guys are nice.’ And we said, ‘OK, we believe it’s important to treat people well. Not just because it’s the right thing to do, but because it’s great for business,” Zimmer said.
Lyft’s friendlier approach paid dividends when Uber was dogged by scandals last year, including a boycott where hundreds of thousands of customers deleted the application from their phones.
“In the early days, people misunderstood it as a weakness,” Zimmer said. “We are aggressive but in our own way. We are aggressively working to treat people right, aggressively working to win.”
To contact the reporters on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net, Emily Chang in San Francisco at echang68@bloomberg.net.
To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Molly Schuetz
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