Last updated on November 1, 2018, 6:22 PM

Growth hacking with common sense at UBER – excuse as a growth factor

UBER is well known to most people. The ride-hailing service, which is in conflict with the entire taxi industry in many countries, is a true revelation for economists. With the reams of data UBER generates every day, economists can make their wildest free market research fantasies come true.

The well-known economist John List had a very bad UBER ride to a conference and then thought to himself - “Why didn’t the driver or the ride service apologize for it?” This gave him the idea of ​​taking a closer look at this topic, the “science of apologies”, i.e. the science of apologies. In another excellent episode of the freakonomics podcast -> “how to optimize your apology” this is discussed in more detail and I also noticed that this topic is also an immense growth hack at UBER, which is already being used at many other companies.

The apology as a marketing ploy for companies

In the podcast mentioned above, John List, with the help of his colleague Ben Ho, analyzes together with the moderator what types of apologies there actually are and which ones are actually best received. Ben Ho had already been doing research on this for several years and with the data from around 15 million trips per day on UBER, they were able to set up some very nice experiments.

While listening to the podcast, it occurred to me that I have experienced this technology myself many times. I first consciously noticed it at Mc Donalds a few years ago. If you have ordered something and there are problems and the whole thing takes a little longer, you get a burger for free as an apology for the complications. Countless other companies do the same thing. But hardly anyone could back up this marketing trick with as much data and scale up the experiment as large as UBER.

The growth hacking experiments with excuses

As already mentioned, Ben Ho is an expert in the field of “apology research”. His hypothesis is that the most effective apology must cost the company something. And the consumer has to realize that too. In order to test this hypothesis at UBER, vouchers were sent to passengers after particularly “rough” journeys that may have taken far too long or where there may have been other complications.

First, it was analyzed how many customers are actually lost due to bad trips with UBER:

“LIST: We did a huge analysis of all of those trips in the 5 percent worst kind of trips, and these tend to be trips where you’re delivered between 10 and 15 minutes late. And those types of trips end up costing us 5 to 10 percent in terms of revenues lost.”

So there was a loss of 5-10% in sales due to these very bad trips that arrived much too late at their destination. Therefore, the aim of the study was to reduce these costs or to find out whether this is possible through apologies.

A wide range of options were then presented and experiments were carried out with the factors of time and the amount of the voucher value. So, for example, the question was raised:

• Is it better to send the passenger a voucher 5 minutes after the bad trip or 30 minutes later?
• What type of apology or wording is better received and results in more rides after that very bad UBER ride?
• Do we achieve just as good passenger retention if we only give them a 10% voucher for the next trip or does it have to be 50%?

and much more.

Results and insights from the study on apologies

I think you’re starting to understand the possibilities that are possible with a setup like this. A very interesting finding from the study (and the podcast) is: Just an apology with pure words resulted in (almost) no measurable success. Only when the passengers somehow noticed that UBER costs something (= $5 coupon / voucher for the next trip) was there a measurable success in the apology measure.

In any case, the basic message is that UBER can constantly carry out Growth Hacking with the help of its economists and has also achieved incredible success with this “Apology Growth Hack”. And let’s be honest, it’s actually common sense :) If you get a voucher to make up for a bad experience, you’ll immediately be a little more appeased. Then you might click on the UBER app again instead of others.

For the companies that want to imitate it this means:

• Recognize customer pain points (or set up the setup first to recognize them), and perhaps always have an open ear for the customer support department :)
• React immediately when you recognize (and can measure) the bad customer experience
• Set up growth hack experiments to find the right excuse to make amends

And every company should actually concern themselves with this line of thought. It is better to “reverse the polarity” of the bad-tempered customer into a happy customer. Of course, this saves you a lot of money in the long run (in order to perhaps win the customer back) and you always have a healthy customer base that can continue to grow.

More on the topic of DIY growth hacking can be found here.

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