The core secrets of UBER's operating strategy (absolutely dry stuff)

Uber's approach is worth learning for the Dongguan hotel industry. If the hotel industry also hopes that its drivers (ladies) will pick up more customers, it would like to see how they use policy levers to boost the enthusiasm of service practitioners.

Recently UBER's People's Uber has been very popular. This was not the case when UBER first entered China last year. In fact, we at Aite Surprise have already formed a cooperation with UBER, using high-end cars to deliver flowers to our users and pick up the protagonists to designated restaurants. Therefore, we have a better understanding of UBER's development process along the way.

It was not very popular then, but it has suddenly become popular recently. I told my friends a few days ago that I had a sudden idea and wanted to apply to become a driver for People's Uber, pick up one customer a day, and live-stream the stories that happened between me and the passenger that day. My friends encouraged me a lot. (When will Dongguan's hotel industry become interesting enough for people outside the industry to have the urge to try their hand at it?)

Actually, my initial idea was very strange. I wanted to use the half-hour pick-up time every day to get to know some neighbors from the community during work, and interview engineers near the technology park of some companies after get off work. Every time I pick up a customer, I can get a user of our product for free (even get a car fare in return! I have to admire my wit, don’t I?)

Another thing is that when I inadvertently negotiated tens of millions of dollars in financing over a phone call, I admired the surprised expressions of the passengers in the rearview mirror. It all seemed so fun to imagine it all. So, driven by this, I, who always liked to play some casual games, began to seriously study the application process for Uber drivers.

This research is not a big deal, as it found out why UBER was able to grow so rapidly with a team of no more than 10 people operating in each city. In conclusion, in addition to having strong Silicon Valley genes and solid capital strength, the most admirable thing is that they have developed a set of awesome rules of the game to improve operational efficiency. This is worth learning for every product manager, entrepreneur, and manager, not just the hotel industry. We analyze each

Real-time update of reward policies

The reward policy is different every week and updated in real time (bonuses are also paid weekly, while fares are paid immediately), which shows that they are constantly using the bonus lever to test the balance point between the increase in the number of drivers and the number of users. The subsidies are outrageous, so burning money must not be a long-term behavior.

Keep the driver running

It can be seen from the reward policy that at the current stage of competing for private car drivers with several other competitors such as XX private car, the drivers' income for each order is at least twice the usual amount, and can reach 3 times during peak periods. This number may not sound like a big deal, but it is terrifying when it comes to the drivers' income. You say your normal monthly salary is 10,000, and now it suddenly increases to 20,000. If your effort increases by 50%, it will become 30,000, which is three times the usual 10,000. My God, if you were in their shoes, would you work hard for your life?

Because drivers are also well aware that such subsidies will not be available often, and they have to seize this good period of opportunity. So the harder the drivers work, the more users feel that there are a lot of People's Uber cars everywhere around them. Look at the map, there are little red bugs crawling everywhere. It's a really good experience. "Okay, then I will use this tool in the future." With more users, it becomes easier for drivers to pick up passengers, so they will follow Uber wholeheartedly...thus the potential energy bridge between users and drivers is completed.

For Internet products, what matters initially is user habits. Once user habits are formed, the mission is basically accomplished. (Of course, a reduction in rewards will create new circumstances that require new strategies).

At the same time, we also saw that UBER has a trick up its sleeve. The reward for each trip is capped at 50 yuan, which means that a normal 25 yuan trip with a fare three times the fare during peak hours can reach a revenue of 75 yuan (25×3), which is a singularity.

If the fare is 40 yuan for an ordinary trip, you can only get 40+50=90 yuan if you multiply it by 3 times, instead of 40×3=120 yuan. I think this rule was made not because Uber cannot afford the subsidies, but to prevent some calculating drivers from deliberately taking large long-distance orders during peak hours. For example, if there is no upper limit, the amount will reach 600, and it will be too easy to make money like this.

Therefore, you don’t have to worry about it and just focus on picking up more passengers, because keeping drivers on the road more often is the core of all UBER’s operating policies.

This can still be seen in the following analysis.

Of course, in addition to peak-period rewards, there are also rewards for rushing orders, which are included in the sales policies of many products. The more orders you place, the more additional rewards you will get for rushing orders. It is worth mentioning that 10 orders are a step, which means that the reward for 31 orders and 30 orders is the same, 300 yuan. If you want to get more, you must aim for 40 orders. So the drivers would secretly calculate that they have already received 38 orders this week, so why not do two more orders to reach 40, and then they can get another 400. You see, it’s still the strategy I just mentioned, which is to let more drivers drive.

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Setting subsidy thresholds

Subsidies and rewards have prerequisites. Don’t just focus on the bonus part and ignore the requirements you need to meet.

The first threshold, the star rating of 4.8 still reflects the core idea of ​​encouraging you to make more trips and receive more customers.

Many people don't realize what 4.8 means. That is, once you get a 4-star rating due to a slight lack of service, you have to raise the average to 4.8 with 4 five-star ratings. In other words, you didn't want to run this week, but because you couldn't reach the 4.8 threshold, you couldn't get the bonus, so you had to take on 4 more customers and provide attentive service every time to ensure you get 5 stars. Fortunately, they didn’t set the threshold to 4.9, otherwise you would have to get 9 more 5-stars in return if you got a 4-star rating.

This will greatly increase the difficulty, and thus many drivers will choose to give up the bonus, and gradually abandon this platform and switch to other competing products. Therefore, you see how precise the scale is, a slight increase of one point will be too much, and a slight decrease of one point will be too little. That's the beauty of game rule making.

​Let’s look at the second threshold, the order acceptance rate must reach 80%.

What is the order acceptance rate? The platform designates you as the person closest to the customer to accept the order. A circle will pop up on your client and you have to accept the order within 15 seconds. If you do not accept the order more than twice out of ten times, or you are doing other things and do not accept the order, then I'm sorry, your order acceptance rate will be less than 80% and you will not be eligible for the bonus. What does this policy guarantee? It is to ensure the user experience of passengers. Users can always get a reply within 15 seconds saying that a car is coming. What kind of feeling is that? It’s just awesome, isn’t it? Even if a taxi is coming from a distance with its empty car lights on, you cannot be sure whether it will stop, whether it will stop in front of you among the many waiting passengers, or whether it will take you to your destination. These taxis cannot give you a sense of security, but UBER can give you that within 15 seconds. The subsequent call from the car owner and driver made you feel relieved. The only thing you need to worry about is whether he can arrive on time due to traffic jam on the way to pick you up, but what does it matter? It’s already very happy to know that someone is coming to pick you up, so what’s the harm in waiting a few more minutes?

If you know that there will be someone to marry you in this life, would you care whether he appears when you are 25 or 30?

Let’s analyze the second sentence of the rule marked in red: “If you don’t believe our data statistics, you can choose not to strive for the reward, but do not come to us for a debate. Debaters will terminate your cooperation.” What a domineering clause this is?

But as a company founder and product creator, I deeply feel how important this domineering existence is. The charm of a domineering president is sometimes reflected in his domineering behavior.

Sometimes, for various reasons, we don't have the time, energy or need to explain more to our employees, partners or even users. In fact, most of the time, you just need to follow the rules I set. You just need to believe in my IQ and my experience, and the rules I set will definitely be better than you can think of. That's enough. This is a kind of trust in the leader, the product, and the brand. And this trust can reduce a lot of our communication costs.

Just do it, no need to ask why? Because I don’t have time to reply you at the moment! As a company managed by a very small elite team in the country, UBER certainly cannot accept trivial complaints from drivers one by one, so the way they choose to deal with it at this time is: do your job and don't complain. Cheers to UBER’s arrogance.

The last one is about the referral reward. After introducing a friend to become a driver for People’s Uber, you will not get a direct reward of 200 yuan. Instead, the new driver will be rewarded after completing 20 orders. You see, this is the principle I just mentioned. Drivers, get running and go out to pick up passengers... Doesn’t it sound like the voice of a mama-san in a brothel? Yes, but UBER uses economic leverage instead of direct shouting.

Serve Uber Drivers

UBER believes very much in the power of economic leverage. Because Uber drivers are only partners, not employees, they never require Uber drivers to do this or that. Instead, they suggest this or that, because if you do this or that, you will get good reviews, and as mentioned earlier, good reviews are the threshold for getting rewards, so in essence they still manage through economic means. This is the power of the rules of the game, which is better than you saying ten thousand words.

Permanent ban

"Permanent account suspension" is a disaster for drivers who work hard to make money on this platform. Therefore, drivers must read the numerous "permanent account suspension once discovered" clauses carefully, and they have to consider whether it is necessary to take these risks.

For example, this one, "Contacting customers without permission after completing the trip" and "Once discovered, the account will be permanently blocked", will not work for those who want to meet beautiful women and pester them in this way. Of course, if the flirting is consensual, the victim will not complain, so it will never be discovered. Not only will they not complain, they will also be grateful for such a platform.

However, the UBER platform may be more concerned about not wanting drivers and passengers to form long-term contract relationships, because if too many such relationships are formed, there will be no dependence on the platform. So it must be eliminated.

Vehicle type requirements

Uber's car model requirements are not high, a car worth more than 80,000 yuan will do. Although many luxury car owners are joining out of curiosity, there is no different price because of their luxury car models (I am referring to People's Uber).

In other words, due to the high fuel consumption of luxury cars, if you really want to do this business, you will not make as much money as low-priced models. This seems unfair. You provide luxury cars for users to show off, but you cannot charge a higher price. You must feel unfair.

But in fact, the smart UBER has seen through all of this. If you want to show off with a luxury car, then please go for the premium series, or Uber black. That one is more expensive. If you just want to get around, please use People's Uber's ordinary cars. If you are lucky enough to meet a tall, rich and handsome guy driving a Mercedes-Benz, you can just be thankful.

UBER is also very clear that these tall, rich and handsome guys are just here for fun. Curiosity and fun are the driving forces, and their enthusiasm is only short-lived. They don't need the money at all, so how could they go around the streets to pick up passengers for you? There are also rich girls who go to KTV to work as hostesses, but they just want to have fun and make some money at the same time. Do you expect her to be a hostess every day? Stop dreaming, isn't this the truth? For example, my original intention was actually to write stories for my column "Nie Marshal Says", and then I thought of attracting customers. Am I crazy to leave my own company alone and go into the business of receiving customers?

Therefore, there is no need for people to make a special price for your so-called luxury car, because they know you won’t be able to play with it for long. However, in the early stages, such influential customers still play a very important role in word-of-mouth and marketing, so they spare no effort to guide this point. About tall, rich and handsome men, about romantic encounters, about romance... It is because there are so many promotional stories like these that girls have developed some kind of fantasy about UBER, thinking that using UBER has the same effect as getting into the Cheung Kong Graduate School of Business. So according to background data, young female passengers account for a large proportion of UBER users.

This effect is a positive cycle. With more female users, male drivers feel that their opportunities have also greatly increased, and they have expanded their chances of picking up girls from bars to UBER. This way of finding a rich husband is indeed much more effective than going to Jiayuan.com in terms of implementation and accuracy. Annual income may be written on dating websites, but do you believe it? There’s no tax on bragging!

The Uber driver actually has a nice car in front of him, which cannot be fake. Even if one in ten thousand people rents it and dares to rent a car to pick up passengers or pick up girls, I have to say that he is a talented person. The idea is exactly the same as that of our users who use elevator posters to find marriage partners: we hang large and exquisite dating posters directly in the elevators of high-end communities in the city. No matter whether you rent or buy the house, the people who can come and go in this high-end community can't be too bad, so economical men can be directly filtered out. Simple and effective!

Strict complaint handling

UBER is very strict when it comes to handling complaints. Because they have a very generous reward policy, drivers are flocking to them. It is like giving money to the drivers, so no matter how stringent the requirements are, drivers will comply.

Are you kidding? When the boss gives you a red envelope and scolds you a few words, shouldn’t you accept it with a smile? You dare to talk back? With such strict management, if other companies do not have the financial strength to support it and rashly follow suit, the results will definitely be different. The drivers will say: Damn, I can't make much money, and I'm still oppressed by your various strict systems. I quit!

Complaints are classified into primary, intermediate and serious levels, and the tolerance for mistakes varies. Why do they take complaints so seriously? The experience of C-end users is always the foundation of Internet products. What about drivers? That is leveraged by capital, and anything that can be solved with money is not a problem.

So it doesn’t matter if the driver bullies you. He may be soft-hearted if he gets paid. If he accuses you wrongly, it’s unfair. It’s better to kill someone by mistake than to let him go. And the user is the one who pays and is God. UBER has a clear understanding of the relative importance of the two.

Premium Algorithm

I think the premium algorithm and the automatic matching algorithm to be discussed below are the core of UBER's entire product, so I will discuss them last.

Everything mentioned above, about how to attract drivers, how to invest capital, how to fool users, how to provide a good experience, and how to manage drivers, it doesn’t matter which company does all of this, as long as they master the method.

I believe that the reason why UBER is so popular in hundreds of cities around the world is because of these two core algorithms. The premium algorithm is based on their 100% belief and 200% understanding of the regulatory function of the invisible hand of the market. I have to admire that people who have been educated in old-school capitalist economics have a much deeper understanding than those of us who have been delayed by the planned economy for a few years. Otherwise, the capitalist society that started so many years earlier would have worked in vain.

As they themselves said, "The premium is not planned, but is based on the dynamic balance of supply and demand." We don't know the specific algorithm, but we can still guess the basic logic. The premium coefficient must be determined by the ratio of the demand sent by users in that area and the number of drivers. Because of the emergence of the premium, when more drivers rush to the scene to put out the fire, there may be a situation where there are more drivers than passengers. Therefore, decisively canceling the premium will reduce the coefficient, so it is said to be a dynamic balance.

Of course, the peak hours in a region are roughly predictable, and all previous data can be used as a reference. However, as the number of UBER users and drivers increases every day, the situation will be different every day, which does require a complete algorithm design solution to deal with it. This involves many aspects such as big data, user growth forecasts, and even local traffic jam forecasts (such as the end of a concert), which is a test of the R&D team's strength.

Automatic matching algorithm

Automatic matching algorithm: Unlike other software, UBER does not require you to fight for orders. Instead, you assign them to the nearest driver. They believe this maximizes the overall resource efficiency of society.

Therefore, drivers do not have to be in a tense state every day to grab orders. This state is indeed prone to neurasthenia over time. Not to mention, if you grab red envelopes every day during the Spring Festival, your waist, neck and elbows will be sore. You will know how it damages your body to maintain this state all year round.

This frees up the drivers' nerves, so they don't have to worry about the problem of grabbing orders, but they then need to consider another question: In what geographical location am I likely to get orders? This is actually the question that the designated drivers have to consider as to where it is easier to get work, whether it is in restaurants, hotels, cafes, office buildings or airports, these drivers know it very well.

Regarding UBER not having reservations, their argument is: when there is a car available within 3 minutes, then there is naturally no need to make a reservation. This is of course correct, but it is somewhat idealistic. Why does the "waiting for a ride" exist? Because some places have good business, while some places are remote and have no customers, so the fewer customers there are, the less people like to go there. There are many such blind spots in every city. No matter how abundant the number of drivers is, I believe that blind spots must exist. If there are blind spots, you need to make an appointment, and it is impossible for a car to come within 3 minutes.

I wonder if UBER has thought this through. If you don't make reservations, there will definitely be passengers who leave their contact information with the driver and contact him privately, thus getting rid of the transaction on the platform. This will definitely happen!

Future multi-passenger ride plans

It is said that the never-ending multi-person ride plan developed by the Silicon Valley headquarters has already started in San Francisco, and this algorithm is even more amazing.

The driver takes A to place A, and on the way receives a request from passenger B who wants to go to place B in basically the same direction. So the driver continues to travel to place A or B along B (whether to go to place A or B first depends on the plan), and then this process repeats endlessly, taking C, D, E... In theory, a 4-seater car, if the algorithm is proper, can indeed always keep passengers going in the same direction getting on and off, just like a bus, but the route is never certain, and the boarding and alighting locations are never certain and change at any time... This is easy to say, and it is really awesome in terms of program design. I am quite looking forward to coming to China... Wouldn't it be interesting to have friends changing like a revolving lantern along the way? Does the famous chicken soup theory that life is like riding a bus need to be revised?

To briefly summarize the above analysis, UBER is a company that believes in using market-based economic levers for regulation. They use this as a baton and formulate relevant rules of the game. The core of the rules is to do whatever it takes to keep drivers running, because this is the foundation for the platform to attract users. When the user base reaches an inflection point, it is possible to unleash more nuclear reactions mined from big data. So, may I ask, as you also work in the service industry, what have you learned?

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