Back in 2015, when Uber, Lyft, DoorDash, and Postmates were still raising money from investors, it made a lot of sense to be sharing your referral codes if you are a rider, driver, or foodie. The incentives were amazing then, especially on the driver’s side. You could make $500-750 per driver on referrals (Uber and Lyft). But now, it’s 2021. And we’re still seeing content creators (YouTubers and bloggers) plugging referral codes for rideshare and food delivery brands. This doesn’t make any sense. If you are a serious driver in the gig economy, it doesn’t help you. From the perspective of elite drivers (they call them ‘power users’ in the industry) who do these gigs full-time, the referral programs are broken. Long term, no one wins. Here’s why and what drivers can do about it.
Content Creators Can’t Scale Referrals Like Before
Let’s start with the content creators. These folks make money driving traffics and exposure to products and services to their audience. Many of them don’t understand the details and nuances of the platforms they are promoting, especially when it comes to other markets. They make a video, edit it to make the gigs sound lucrative, do some example drives, edit the highlights, and make headlines with “Make $40 an hour with {insert brand} here” and then plug their referrals.
These folks don’t win long-term because most are casual drivers and lack the time and expertise to coach and help the people they refer to meet the payout requirements, especially if their referee lives in a different city. This means that a majority of their referees don’t qualify for the referral bonus.
Back in the day, they could make a great amount of money referring drivers and new downloads for food delivery and rideshare apps. But now, there’s a limit to how many payouts you can receive. For example, Uber only allows 50 payouts maximum. Lyft’s terms state that if you refer too many drivers and make too much money (over $2,000 in a month) you will no longer be eligible to participate in their program.
On DoorDash, for example, the terms say: “Referring Dashers can earn a maximum of fifteen (15) referral bonuses for Qualified Referrals in a calendar year. Referrals made by a Dasher over this limit will not trigger bonuses for either the referring or referred Dasher.”
New Drivers Struggle To Meet Referral Bonus Requirements
Even if referrers got someone to download and try a platform, the requirements are ridiculous for new drivers these days. Last I checked, you need 240 deliveries in 60 days with DoorDash to make an extra $150 (even though the app says $750). Elite professional drivers can make this requirement in less than 3 weeks. For a new driver, this number can be hard to meet.
It’s even harder now that many new drivers came into the market to fight for work because of the COVID-19 pandemic. And all the content creators are still promoting more drivers into the platforms to compete with their own referees. They update their old YouTube video titles that were published in 2017 with (Updated 2021).
So if you’re a new driver, your referrer can’t help you. And on top of it, they’re bringing in more drivers to compete with you to make it harder to meet the bonus requirements.
Referrals Hurt Veteran Drivers
How does this impact long-time faithful drivers? It’s simple. I can tell you from experience; they earn less when it matters most.
If you’ve been driving for gig economy brands like DoorDash, Caviar, or Uber, for a long time, have you noticed how on weekends when there are bonuses and incentives, you can’t seem to be able to get enough orders to clinch the bonus?
Or, if you do get an order or request, it’s usually a terrible draw that makes you go really far to pick up and drop off the food? That’s because all the casual drivers come out to play when there’s a bonus and compete for jobs with the guys who do it full-time.
It affects the ability of long-term drivers to gain a consistent and sustainable income. One of the reasons why elite veteran drivers no longer share all their secrets online is this.
Only the content creators are sharing “secrets.” And they do not know what they’re talking about at the local market level.
Gig Economy Brands Cannot Keep Drivers
Content Creators are pumping drivers into the system. The drivers are struggling to navigate the gigs. Committed drivers aren’t making consistent income.
Does this mean brands will win long term?
No. These brands are all losing hundreds of millions of dollars a year. The majority of their cost is in recruiting and retaining drivers. Most drivers quit within a few months. According to Uber’s data, half of Uber’s drivers quit after a year.
In DoorDash’s IPO filing, their CEO acknowledged that one of the future challenges for DoorDash is, in their words failing to “cost-effectively attract and retain Dashers.” Recently, DoorDash reported their first earnings report since their IPO. They lost $312 million.
How To Fix It
Content creators need to become mentors.
The COVID-19 pandemic made it clear that there is a new direction for the future of work and the gig economy. More people want flexible work than ever before.
In a recent interview with GigSmart President Rich Oakes, he told me that “COVID has accelerated gig work. When it comes to the future of the gig economy, there are two inarguable facts: More and more American’s want flexibility and control (57 million Americans completed a Gig last year). More companies want flex-labor solutions. What workers want and what companies want are completely aligned. I’m very confident gig work is here to stay and will only continue to grow.”
The gig economy is the future of work. We need a new generation of drivers that aren’t casuals. Experienced individuals need to help new drivers consistently earn. They need to become power users’ on gig platforms. So we need a new generation of content creators. Ones that are coaches and mentors to new drivers. Not just random social media influencers who plug referrals for industries they have no clue about.
Drivers need to form smaller, close-knit communities.
The majority of drivers will tell you there are many Facebook groups and chatrooms, and forums for gigs. Drivers can ask general questions and get answers from others in these groups . But when it comes to sharing secrets and tips and tricks, the elite drivers leave the casuals to fend for themselves.
The gig economy lacks small, close-knit communities that are focused on becoming power users on platforms. Especially the ones that involve driving a car and transporting people or goods. Drivers need to form small pockets of close-knit teams in their local markets where they can help each other out, share secrets and enable one another towards success. This is something that is lacking.
We need more gig-worker-focused brands.
Incumbent brands need to develop tools that are more driver-centric. They need to stop writing manipulative codes to put a carrot stick in front of drivers and make them chase incentives like rabbits.
In recent years, we see more brands emerge as gig worker-focused. These brands are providing services for drivers in areas they need that gig platforms aren’t.
I recently covered Kover.ai as a brand that provides income protection for drivers. A more recent brand, called Para, was found last year and is in beta to help drivers gain access to more information to strategize and collaborate to change market dynamics.
But we need more brands like these.
Conclusion
The current setup for referrals is broken. All it does is make content creators look like corporate shills. It throws new drivers into a situation that doesn’t help them become long-term committed drivers. And for the long-time drivers, it just makes them jaded and less inclined to ‘pay it forward’ with what they have learned through experience. And for brands, it doesn’t help them move toward profitability. New drivers need to be better mentored (I personally am committing to this more in 2021). Brands need to introduce new products and services that are gig-worker-focused into the gig economy.
