An impromptu trip to Vienna, Austria began with a – “Thank god they haven’t banned Uber there”. We were traveling Uber style and for the most part it worked like it always does; magic. One of the attractions was a vertical strip of island located on the Danube river – for those familiar with Vienna. We pushed the button for an Uber and a Mercedes Benz E-class pulled over. A suave driver with an exotic accent welcomed us in English, and we were on our way. The GPS was whispering away quietly in German. 20 minutes into the ride we discovered that we were going around in circles for a while. After a discussion with the driver, we decided to drop the plan and go somewhere else. Who’s fault was it? Uber’s? Unsure! Nonetheless, I felt the 26 EUR charge was not justified for the trip. I contacted Uber via the app, service rep promptly responded with a 20 EUR rebate saying you only pay for “most optimal route”. All done under 20 minutes. No annoying phone line or “Speech recognition”.
Over the years, I remember dealing with Apple Customer Service – 3 times to repair issues with Macbook, 2 times to repair iPhone and once to complain about slightly squeaky headphones. Result? Every time Apple delivered – replacement headphones, replacement iPhones, and wait for it, replacement Macbook motherboards! Good quality? probably not; customer service? Top notch 100%.
I kept wondering why that is, and one of the hypothesis came to mind that it may have to do something with the economics of their business models. We all know Uber charges about 30% commission on the rides, makes them cash rich – I mean its the dream business model, right? We also know Apple probably makes better margin than any other company on their products. Cash rich too. There are lots of reasons why the premium brands are premium however, that would be a much wider topic! So, premium brands have much better margins and therefore can invest in better customer service, thereby increasing the “feel good” factor. This feels like a virtuous circle. What comes first? A premium brand or great customer service? I don’t think there is an easy answer. I think the premium brands such as Uber realise that they want to differentiate not only on the basis of product but also on the basis of customer service, so the margins are alway higher. Perhaps the competition can undercut them on price, but they will find it hard to undercut them on the service with lower margins. For the record, this is a completely untested, un-researched hypothesis. At least at the outset it makes sense though! Tell me what you think in the comments.
As we reach Prague on the train, it reminds me that I don’t have any Koruna’s! Damn… open that Uber app to the Hotel.