Uber’s Good Deed Doesn't Go Unpunished

In the wake of every natural disaster, there are the inevitable follow-up stories about miscreants seeking to exploit the situation for their own selfish purposes. A service station starts selling gas for seven dollars a gallon. A hotel doubles its room rates. A grocer prices milk, eggs, and toilet paper as if cows, chickens, and trees are about to go extinct.

Sandy is no different. In the wake of the biggest storm to hit the Northeast in recent memory, the taxi and car service Uber has been accused of playing the profiteer’s role. But the label is undeserved. Uber’s sin, if any, was one of omission, not commission. In the end, the only thing the start-up did wrong was under-communicate the details of a decision that ultimately helped ensure that its New York City customers could find rides at a time when transportation options were increasingly scarce.

To provide such a public service was corporate leadership and social responsibility at its best. Had communications been a higher priority, that brand-building narrative is all that we would be talking about today.

With the subways shut down and thousands of NYC cars up to their windows in water, demand for services such as Uber’s shot through the roof. As a result, Uber’s contracted drivers doubled their normal rates. So, rather than tell its customers that they were simply out of luck, Uber chose to pass the increased costs on to the riders.

From the consumers’ perspective, it wasn’t a perfect solution, but at least they had the option of paying Uber’s “surge pricing” rates if they chose to do so. Uber didn’t make an extra cent on the decision and customers who needed rides could secure them. Not exactly a win-win, but it’s hard to see Uber’s move as anything less than making the best of a bad situation.

The problem was that the details behind the switch to surge pricing weren't adequately communicated at the outset. With no information to go on other than the jacked-up rates, it wasn’t long before consumers and journalists jumped to their own conclusions and alleged price-gouging. One blogger epitomized the “rush to judgment” nature of today’s digital media environment--penning the headline “As NY floods, ‘Robin Hood’ Uber robs from the rich and… Nope, that’s about it.”

To its credit, Uber responded well to the misinformed criticism. It reinstated its normal prices for one day, and took a $100,000 hit in the process. The company also responded with a blog post from its NYC staff that explained every last detail of its move to surge pricing. The post pointed out the demand factors that led to the decision, and noted that surge pricing “tripled the number of cars on the road and kept them out longer.”

The post also candidly communicated the fact that Uber simply couldn't sustain its decision to charge riders normal rates while paying drivers double and that, as such, surge pricing would be going back into effect. But to soften the blow, Uber announced that it would not be collecting even its normal fees, with 100% of fares going directly to the drivers. It also noted that its mobile app would offer “clear pricing notification” at the time of a car request.

That explicit level of sacrifice, service, and transparency defines crisis communications. But imagine if these messages had been deployed at the moment--or preferably just before the moment--Uber made the jump to surge pricing. Uber would have assumed immediate control of its own narrative, rather than allow others who lacked all the facts to tell the company’s story instead.

It was Uber’s only misstep. Unfairly, it put successful startup into a crisis situation from which it is digging itself out; rather than a brand-enhancement opportunity to further build and reinforce customer loyalty from the get-go.

Follow Richard Levick on Twitter and circle him on Google+, where he comments daily on the issues impacting corporate brands. Richard Levick, president and CEO of LEVICK, represents countries and companies in the highest-stakes global communications matters from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church. Mr. Levick was honored for the past three years on NACD Directorship’s list of “The 100 Most Influential People in the Boardroom,” and has been named to multiple professional Halls of Fame for lifetime achievement. He is the co-author of three books, including The Communicators: Leadership in the Age of Crisis, and is a regular commentator on television, in print, and on the most widely read business blogs.

[Image: Flickr user Holly Northrop]

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2 Comments

  • Jonathan Rick

    Richard -

    Excellent article, as usual.

    Here’s something else that Uber
    should be shouting from the rafters: According to a presentation from CEO
    Travis Kalanick last night at DC Week, the average DC taxi driver makes
    $10/hour. By contrast, the average Uber DC driver makes $20/hour.