Over the last few years, mobile apps have become the main driver (get it?) in changing the way we solicit rides to get around town. Two of the primary companies offering alternative modes of transportation are Uber and Lyft. While there are certainly other rideshare companies, these are easy to compare because they have a few things in common:

• Most used transportation apps.
• Both founded in San Francisco.
• Both fighting aggressively and publicly for business.

Uber was the first of the 2, starting in 2009 and paving the way for similar companies. In 2012, Lyft joined the game and scooped up much of the riders – and drivers – Uber used to have all to itself. Today, both are faced with fighting each other for a better reputation, more riders, and more drivers.

As such, the fight is starting to get dirty.

War for Drivers

The rideshare apps are seemingly struggling to maintain a reliable fleet of drivers. The remedy? Stealing drivers from each other. Since 2014, both companies have aggressively been poaching drivers from each other, with offers targeted at drivers of the opposing companies and offering sign up bonuses.

As 2015 was just getting its start, the fight became stronger. Uber launched a full assault specifically targeting Lyft drivers to make the switch. The promotion offers that if you can verify that you are a Lyft driver, Uber will give a $500 bonus to make the switch to driving for Uber. The Lyft driver only has to have been driving for Lyft for a matter of weeks to qualify for this promotion.

GET $500 AFTER YOUR FIRST TRIP
Already a rideshare driver? Great! We’re giving experienced rideshare drivers like you $500 after you sign up to drive with Uber and complete your first trip. To qualify, you must prove you have driven BEFORE 1/8/15 on another ridesharing platform.

Ostensibly in response, Lyft put together a promotion for Lyft drivers to stay aboard while at the same time beefing up the Lyft driver base. This particular promotion was developed for Lyft drivers to invite their friends to get started driving. Lyft offered that the current Lyft driver and the new driver would get to split $2,000 upon the new Lyft driver’s first ride. Yep, $1,000 a person.

“Refer a Friend. Split $2,000. Friends don’t let friends miss out on Lyft promotions. Refer a new driver in San Diego starting today, and you’ll both get $1,000 if they give their first ride before March 5.”

As such, Uber’s offer suddenly increased to $1,000…

GET $1000 AFTER YOUR FIRST TRIP

Already a rideshare driver in San Diego? Get $1000 after you sign up to drive with Uber and complete your first trip. To qualify, you must prove you have driven BEFORE 1/8/15 on another ridesharing platform. Don’t live in San Diego? No problem, you can still sign up to drive here.

All seemed too good to be true, especially for current and new Lyft drivers able to both earn a grand over one ride.

In Over Their Heads

Too good to be true it was as the plan backfired, leaving scores of angry Lyft drivers and newbie Lyft drivers furious with the company. The promotion launched February 26, 2015 required that the new driver must pass background checks by the end of the very short deadline – March 5, 2015 – to receive the funds. Apparently, Lyft became overwhelmed, per an email sent to applicants the night before the deadline:

“Last week’s invitation – apply to be a driver, give 1 ride by March 5, and make $1,000 – brought the biggest wave of applicants in Lyft history.

As we’re processing the applications, it’s important that we continue to fulfill our safety obligations. Some of these steps, including DMV and background checks, are outside our control and can vary in length for different applicants.

It is possible that you won’t qualify for the promotion if all steps aren’t completed by the March 5 deadline, along with the ride requirement. In the meantime, you can check the status of your application at lyft.com/drivers.

We’ll be in touch again via email with another update on Friday. Thank you for your patience.”

The day of the deadline, Lyft really seemed to be reeling on their heels:

“Lyft learned a lesson this week, and we’re sorry for the frustration it caused you. We vastly underestimated the volume of applications we would receive for our $1,000 sign-on promotion, which was created to help us keep up with record-breaking passenger demand.

We owe it to the driver community and our passengers to make sure our approval process is rigorous and complete. All elements of our safety process are imperative and can take time – that means some applications haven’t been approved yet even though the applicant’s DMV and background checks are in. We know this can be frustrating.

Based on ideas from our community, here are the actions we’re taking:
Extension of deadline to March 12 for those who applied for this promotion and pass their DMV and background check by March 5. We’re still completing our internal review of many applications, but if your DMV and background checks pass by end of day today (March 5), we’re providing an extension until March 12 to meet your ride requirement.

We, at Lyft, will not benefit from an application if an applicant does not qualify for the promotion and does not want to continue through the application process. By default, we won’t use any information from the applications of drivers who don’t qualify for the promotion, unless they would like us to continue with the application.

You’ll receive an email from us tomorrow evening with your eligibility for the extension outlined above. If you are not eligible, you will have the choice of whether or not to continue with your application.”

Uber must be enjoying the seeming implosion of the referral program gone wrong.

Race to the Bottom?

Both companies have aggressively sought new funding for their services, which provides the backing for such expensive promotions. But can offering promotions like this offer a sustainable model for new drivers? Especially if the promotions are not followed through, the trust of the driving and riding community must be reaching new levels of skepticism. All this funding must be paid back…but if the drivers get fed up with empty promises, there could be trouble for the companies.

What are your thoughts? Do rideshare apps offer a sustainable model for business? Were these promotions doomed from the get-go? Let us know what you think in the comments below.

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