Uber Growth Strategy – From 0 to 40 Million Users
Uber was founded in 2009 as “Ubercab,” and launched in June 2010 – In less than 7 years they achieved over 40 million users? But how –
What was the Uber growth strategy?
The service connects passengers with vehicles for hire. Users make reservations via the Uber mobile app. The cost is similar to that of metered taxis, but all money exchanged is handled by Uber, not the drivers.
Like the digital loyalty platform Belly, Uber focused intensely on one launch city at a time, starting in San Francisco where early growth was fueled primarily by word of mouth. Like most successful services, Uber started with a high value solution to a very specific problem.
Hailing or hiring a cab is a nightmare involving delay and cumbersome, old-fashioned cash payments. That is if you can find a cab to hail. With Uber, which is integrated with Google maps, users can see the available cars nearest to them, as well as the driver’s information and ratings.
Once a car is hired, a meeting point is set and scheduled, with the driver calling or texting to confirm the reservation. The cost of the ride is charged to the user’s credit card — no need to deal with cash. The entire process removes the friction from hiring a cab, which is immediately clear to anyone who does so on a regular basis.
Based primarily on ease of use and satisfied early adopters, Uber went from launch in June 2010 to almost 6,000 users / 20,000 rides in six months.
“By choosing to launch in San Francisco, where cab service is notoriously bad, they not only illustrated their value proposition, but also became known in an important tech community”.
To enhance their visibility, the company also sponsored tech events and offered free rides to show the quality of their cars and drivers.
Word of mouth is so critical to Uber’s growth that the company says that 95% of all riders have heard about the service from someone who has used it previously. They estimate that for every seven Uber rides, one new Uber user is generated.
The Uber Growth Strategy THAT WORKS…
Not surprisingly then, referrals are a strong growth engine. Each user receives an assigned referral code. If a new user signs up with the code, both parties are awarded $10 toward their next Uber ride.
Growth is especially strong in some cities where the benefit to riders is even greater. Chicago, for instance, has a major nightlife and sports scene, but intense weather that can make getting around extremely difficult. In Washington, D.C., the service has seen month-over-month growth of 30-40%.
The Uber growth engine is so effective, the company simply repeats it over and over again:
- Intense launches in well-chosen cities where a real need exists.
- Caveats like free rides to gain media and potential user attention.
- The “wow” experience of using the appfor the first time and having a frictionless car-for-hire experience.
- Word of mouth from satisfied and enthusiastic customers.
Their steady success has given Uber the necessary confidence to trust the value of the service it offers. This is not a tentative company. They believe that once a user has the Uber experience, they will prefer the service over using a cab.
That confidence allows the company to routinely hand out $20 ride credits to new users, an incentive that removes any remaining barriers for new riders to become long-term customers.