Lyft is testing a new subscription service in 30 markets that will lock in customers and allow the ridesharing company to better compete with Uber.
“Eventually, the majority of miles traveled in the United States will be on a network like Lyft,” Lyft president John Zimmer said in an interview on Bloomberg TV. “You’ll be subscribing to a Lyft transportation plan similar to how you have a music program, maybe Spotify, or a minutes plan like you have on AT&T or Verizon.”
There were reports last month that the ridesharing company was working on this type of service. While terms of the subscription model may vary, there was speculation that the service would focus on riders who spend at least $450 per month on rides. One plan gives riders up to 30 standard Lyft rides for $199 a month, while there’s also a $300 package and $399 subscription that gets riders 60 rides each month, which covers rides up to $15.
Charging by the month would discourage customers from price-comparing between Uber and Lyft, while building loyalty to a single service. With that in mind, Uber is also experimenting with subscriptions.
In the past, Uber has taken on Lyft by spending billions of dollars to drop prices and discouraging investors from funding its competitor.
“For a while, investors and others looked at us as, ‘Oh, you guys are nice.’ And we said, ‘Okay, we believe it’s important to treat people well. Not just because it’s the right thing to do, but because it’s great for business,” Zimmer said.
But Lyft’s nicer approach seems to be paying off. The company’s revenue grew more than $1 billion in 2017, beating Uber’s Q4 growth by 2.75 times. In addition, Lyft provided 375.5 million rides in 2017, up 130 percent year over year, and provided rides to a total of 23 million different passengers, which is a 92 percent jump from the prior year. It also had 1.4 million drivers at the end of 2017, up 100 percent from the end of 2016.
“In the early days, people misunderstood it as a weakness,” Zimmer said. “We are aggressive, but in our own way. We are aggressively working to treat people right, aggressively working to win.”