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Uber Logo and Cabs

These days there’s an app for just about anything that you can think of and with the public increasingly relying on their smartphones for different functions it’s not a bad time to be in the software development business. Uber, a startup that is best described as a transportation network company, is well known by many consumers already for the ease in which its application makes getting a nearby taxi and paying its fare.

Uber’s application makes connecting customers with drivers a more seamless process. The application connects independent contractors who have signed up with the Uber service with customers who have downloaded the Uber application. Customers are able to see where drivers are, an ETA for their arrival and review data related to how customers have perceived their services in the past. For anyone who is familiar with the traditional dispatch model for taxis this will most likely come as a breath of fresh air given the transparency and predictability that this approach provides. Uber makes its money by taking a portion of the fares generated from the business that it provides. So for Uber there is a clear incentive to bring more drivers on board to be able to ensure that services are delivered as efficiently as possible and to get more people to rely on its application for transportation services. For both customers and drivers the appeal of Uber relates to its ability to reduce the time both parties wait for the other. Drivers spend more time taking customers where they need to be instead of waiting for them and customers spend less time waiting for their transportation.

Uber’s business model has already begun to eat away at traditional transportation companies’ market shares and it appears to be positioned to continue that trend. An article in Bloomberg Businessweek takes a look at the company’s decision to open up its software platform to close to a dozen partner companies including some big names that include Open Table, United, and Starbucks. This move should help further the company’s goal of attracting both new customers and new drivers.

The best way to understand what the implications of this are is to think about it in terms of some examples. For instance, imagine you’re planning a night out with a friend and want to make a reservation through Open Table. You’ve found a great restaurant, but it is not within walking distance and after reading the reviews you’ve learned that the restaurant’s bartender is renowned for his cocktails so it’s not looking like driving will be an option. As you confirm the reservation and begin to think about logistics an option shows up in the Open table application to book a cab through Uber.

Whether that cab is booked then or later, there’s a good chance that you’ll be doing it through Uber; especially given that Uber is able to provide you with information on the ETA for selected cab options. This is the marketing power of these partnerships for Uber and for its partners the ability to integrate Uber’s services into its applications offers the ability to provide added value to its customers in making their experiences easier to plan and act on. It’s also possible that some of these companies are receiving some compensation for the referrals they are providing which could be a nice added source of revenue.

The secondary pitch is a tried and true method of marketing and it appears to be a wise opportunity for Uber in the form of partnerships with other companies that offer applications. In addition, it provides the transportation network company with an opportunity to raise awareness of its services with those unfamiliar with the company, or for those who were skeptical of its legitimacy, gives it the air of credibility (through its association with the brands of its well-known partners) needed to motivate them to give it a try.

From a marketing management perspective here are some interesting questions to ponder:

  • What other companies would you want to partner with in order to integrate Uber’s services into its applications and why? How would you integrate Uber into those apps in terms of placement in the flow of the user’s experience with the app?
  • How would you measure the effectiveness of these partnerships? What are some of the key performance indicators that you might want to focus regular attention and what might they tell you?