Ride-hailing giant Uber lost an estimated 200,000 users after a popular hashtag called it out for allegedly disrupting a taxi strike in protest of President Trump’s travel ban. But the effects of #DeleteUber will be far-reaching and potentially felt for years — stretching well beyond the initial dent to business — according to a study by a New York-based consulting group.
App users’ perception of Uber has dived on the heels of repeated scandals, including #DeleteUber, video footage of the company’s chief executive lashing out at one of its drivers and claims of widespread sexual harassment at the company, according to the New York consulting firm, cg42.
The study found that “negative perceptions” of Uber tripled, to 27 percent in the wake of Uber’s scandals last winter and this spring. More than half of former Uber users who ditched the app said they switched because of “negative news that brought poor business practices and ethics to light,” according to the study. Further, one in four customers are exploring alternatives to the service and plan to use Uber less often, cg42 concluded, with Lyft as the ultimate beneficiary.
Still, the share of users who had actually switched ride-hailing apps thus far was relatively low — about 4 percent — according to the study.
“This is a low switch rate, especially when considering barriers to doing so are low,” the study concludes. (Nearly half of respondents agreed that all ride-hailing services were the same, meaning the only real hurdle to switching was downloading and familiarizing oneself with a different app.)
The study, an online survey of 1,502 ride-hailing customers — 1,047 of whom primarily used Uber — showed the fallout from repeated scandals has had a significant effect on customer trust, even if the dent in business has been relatively minor, according to Stephen Beck, founder and managing partner of the firm.
“You have 81 percent of their users aware of the news. That means people are paying attention, and that means trust is eroding,” Beck said. “If gone unchecked … this has the potential to be a major, longer-term problem for them, as it relates to where business is going to go.”
Recent reports suggest Uber is valued at close to $70 billion.
Beck said customers’ distrust of Uber could affect whether they trust the business enough to adopt the company’s autonomous vehicle services once they’re launched to the public.
“The likelihood of a consumer to want to get in there and let the robot that Uber created drive them is relatively lower than many other companies that are pursuing this,” Beck said. “And trust in the organizations that are behind it will be central.”
An announcement came this week that Uber competitor Lyft had struck a deal with Waymo, the self-driving arm of Google’s parent firm, to test driverless car technology. Uber is piloting self-driving vehicles in Pittsburgh and Arizona.
“If Uber is a brand that isn’t trusted, how likely are its users to entrust their lives to them, and to the they put into the market?” Beck said. “To us, the 4 percent is interesting. The short-term revenue impact is interesting. But the bigger issue is: the long-term view of trust is only going to become more important in this category, not less, and Uber better find a way to win back trust and they’ve got a lot of work.”
Beck said winning back trust is contingent on a culture change within the company.
“It’s not like their missteps were not at the core of how the company has been run historically,” Beck said.
Uber is embarking on a number of initiatives to rebuild trust in the wake of the scandals.
It hired former attorney general Eric H. Holder Jr. to conduct an investigation of the company’s internal culture after a former employee penned a blog post detailing alleged sexual harassment, and said the employee was propositioned by a manager.
Cg42 said its study, “Fact or Fiction: Uber Study,” was representative of the U.S. market, and the survey was conducted March 13-17. That period was notable because high-profile executives were fleeing the company, in the wake of repeated scandals, about the same time.
Uber did not immediately respond to a request for comment on the study.