Uber Technologies, the parent company of Uber and Uber Eats, set the tone for gig platforms in early February when it posted a $1.87 billion profit for 2023.
That number comes on the heels of two years of solid growth figures. According to mobility data from Gridwise, Uber’s trips increased 66.3% from Q1 2022 to the end of 2023. While not as high, Lyft’s numbers rose 52.1%. DoorDash, the giant of the food delivery companies, saw trips soar 34% in almost the same period.
But investors and hedge fund managers know Uber’s profit comes at a cost. Uber’s annual numbers also revealed that the rideshare leader spent a whopping $529 million on driver incentives, which they label contra revenue. That’s more money that could have gone back to the bottom line.
How can investors tell if the gig platforms are wisely investing in boosting driver loyalty? How can Uber and the other gig platforms get ground truth data on what works? The answer lies in transportation analytics from the Gridwise Annual Gig Mobility Report.
Here's what we cover:
Mobility data is a gateway to understanding gig driver loyalty
When evaluating a gig platform, investors should ask, “Do their programs attract and keep drivers?” Gig companies can quickly expand their apps to handle the added demand. It’s more challenging, however, to scale the number of drivers needed to meet the demand. A shortage of available drivers leads to long waits for the customer. It can diminish the gig platform’s reputation and compel end users to seek other options, either driving themselves or using public transportation, and in the case of food delivery, picking it up themselves.
The various incentive programs gig platforms use to get and retain drivers include
- Driver referral bonuses—Many gig companies, especially rideshare, offer current drivers bonuses for referring new drivers. The amount of these bonuses and other requirements vary by region and the need for new drivers. In the past, they’ve been as high as $500, according to a post by SmartWallet.
- Guaranteed incomes—A gig company will guarantee a certain level of earnings for new drivers in a specified period. The gig company will make up the difference if the driver fulfills the requirements but does not reach the amount.
- Returning-driver incentives—Many drivers quit driving during the pandemic or for other reasons. The gig companies often email these drivers with a bonus offer for returning and meeting specific goals.
- Driver retention programs—The gig companies regularly offer bonuses to drivers for completing a specific amount of rides during a specified period or in a defined region. Examples of these include the Uber Quest bonus and Lyft Sprints.
These are the most common programs, but there are others. They all cost the gig platforms money (more than half a billion in Uber’s case), with some being more effective than others. Ground truth information in the form of mobility insights and delivery data paves the way for smarter, more equitable decisions by all stakeholders.
Why should investors be concerned about driver loyalty?
Driver loyalty translates into benefits for a gig platform, all of which can affect the bottom line. These benefits include
- a fleet of loyal drivers, which means the gig company can meet growing demand.
- increased driver loyalty, which means less money spent on driver incentives.
- drivers who are more likely to recommend the platform to others, resulting in lower acquisition costs.
- happy drivers, who are more likely to deliver better service, which reflects positively on the company and its brand.
Data analysis of driver earnings across all platforms
How much are drivers making across the various gig platforms? This chart, part of the Gridwise Annual Gig Mobility Report, provides accurate insight into that question.
Gross monthly earnings for gig drivers (rideshare and food delivery, 2022–2023)
| Service | Gross Earnings (Avg, 2022) | Gross Earnings (Avg, 2023) | YoY Change (%, Gross Earnings) | Work Hours (Avg, 2022) | Work Hours (Avg, 2023) | YoY Change (%, Work Hours) |
| Uber | $1,699.58 | $1,409.71 | −17.1% | 58 | 56 | −2.9% |
| Lyft | $1,032.23 | $1,058.32 | 0.025 | 51 | 44 | -12.90% |
| DoorDash | $704.04 | $703.17 | -0.10% | 49 | 50 | 0.032 |
| Instacart | $661.60 | $606.50 | -8.30% | 38 | 36 | -4.50% |
| Uber Eats | $558.49 | $472.72 | -15.40% | 28 | 27 | -3.80% |
| Grubhub | $445.07 | $471.77 | 0.06 | 25 | 28 | 0.136 |
Source: Gridwise Analytics
It’s not all about compensation
The report also reveals what attracts drivers to gig work. Compensation actually comes in second place. What attracts drivers the most is the ability to have flexible hours.
The leading motivators in choosing gig driving work
Source: Gridwise Driver Survey 2023
Gig driving is also increasingly seen as a permanent occupation. Almost half (45%) of drivers surveyed see it as a long-term plan.
The draw of multi-apping
The gig driver alternative to driver loyalty is multi-apping, the driver practice of operating and responding to several apps at once. There are several methods of multi-apping, all which affect driver loyalty in different ways.
- Multi-apping within a category—Drivers have apps open in the same category, such as rideshare, and pick and choose rides based on perceived profitability and other factors. According to a Gridwise blog post, Want to Improve Gig Driver Loyalty? Use Data to Stay Competitive, 31% of drivers multi-app.
- Multi-apping across categories—Drivers have apps open in rideshare and food delivery, again picking and choosing based on their preferences. According to the previously mentioned Gridwise blog post, 21% of drivers multi-app in this fashion.
- Switching between apps—Peak demand for food delivery is between 12:00 pm and 2:00 pm, and 5:00 pm and 9:00 pm. Some drivers work food delivery during those hours, and then switch to rideshare, which is often more profitable in the later evening hours.
Multi-apping is a tool that drivers use to increase profitability. Gig companies, however, would rather have drivers loyal to their platform. To encourage this, they often structure retention programs to encourage drivers to remain on the app to accept rides or orders. Uber Eats Pro and the DoorDash Top Dasher programs are examples of retention programs that encourage drivers to remain on one app.
The gig platforms also take other measures. Uber and Lyft often void Quests and Sprint promotions if a driver ignores a ride or turns off the app during a prescribed period.
Mobility data shows delivery wins the loyalty contest
Mobility data analysis in a Gridwise Analytics blog, Want to Improve Gig Driver Loyalty? Use Data to Stay Competitive, indicates delivery platforms get the highest driver loyalty ratings.
Here are some of the findings:
- From Q2 2022 and the beginning of Q3 2023, 60%–65% of DoorDash drivers drove strictly for that service platform.
- Between 45% and 50% of drivers were loyal to Instacart during that period.
- By the beginning of Q2 2023, Amazon Flex drivers who drove solely for that platform reached about 45%.
More broadly, data analysis shows that over 75% of drivers stick to one gig type during a working period. Only 24.3% of drivers switch between apps. Nevertheless, there remains a high level of interest in multi-apping, as data shows that 41.7% of drivers have experimented with different gigs.
The impact of tips on driver loyalty
Tipping is a big part of the gig driver economy. A recent review of gig driver platforms reveals that all allow the customer to tip the driver through the app, and all companies pass on 100% of the tips to the drivers.
Tipping serves two purposes:
- Tipping augments the driver’s income, and 78.4% of drivers agree that tips matter significantly to their overall income.
- Tipping also reinforces that drivers are doing a good job, with 68.6% of drivers indicating that tips affect their enthusiasm and job satisfaction.
What is interesting to note is the disparity between tips by rideshare drivers and those in food delivery. Rideshare drivers receive an average of about 10% of their income in tips, whereas food delivery drivers receive 51% of their income in tips.
Also notable is the frequency of tipping in the different categories:
- 28% of rideshare passengers give their drivers a tip.
- 74.5% of grocery delivery customers give their drivers a tip.
- 88.5% of food-service customers give their drivers a tip.
Investors can learn from Gridwise mobility insights
Mobility insights and transportation analytics can inform the decisions of investment researchers and hedge fund managers who are eager to provide healthy returns for their clients and investor base.
It’s interesting to note that DoorDash and Instacart have a solid lock on market share in their categories, and their drivers have the highest monthly earnings. These same companies also have the highest driver loyalty rates in those categories, indicating that driver loyalty figures into the battle for market share in the gig industry.
Investors can also use Gridwise Analytics to determine whether the various platforms’ driver incentive programs contribute to driver loyalty. Gig platforms with lower driver loyalty rates need to be using the most successful incentive programs.
Gridwise Analytics provides mobility data and transportation analytics, affording unique insights to companies involved in the broader transportation infrastructure, and demonstrating how people and goods move from one location to another. The data shows where trips originate, where they end, and the primary travel corridors. This data also reveals the success of the gig platforms in building market share and increasing driver loyalty.
Gridwise Analytics’ partners marvel at the data’s clean nature, allowing them to integrate the findings into their existing datasets with little or no manipulation.
For a demonstration of how Gridwise Analytics’ vehicle trip data can sharpen your transportation analytics, contact Gridwise Analytics.
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