Uber: understanding how to apologize

How does it all start?

UBER is one of the companies that has adopted experimentation most intensively. It has even created a team dedicated to running experiments, in particular focusing on optimizing user-experience, under the leadership of economist John List, an expert in experimental economics who also headed the Department of Economics at the University of Chicago. 

In particular, in this article, we will study one of his most interesting experiments, which has even motivated an allusive academic article published by the National Bureau of Economics (List, Ho, Halperin, & Muir, 2019) and has opened the door for him to the field of "the economics of apologies".

Ready to go?

Uber's experiment: effectively asking for forgiveness

Over a six-month period, Uber conducted an experiment in several U.S. cities, involving samples of thousands of platform users.

The experiment consisted of testing different ways of apologizing to users whose trips had been delayed due to driver delays, in relation to the expected delay reported by the application when confirming the trip.

Some users received a simple apology message, while others were offered financial compensation, such as a discount coupon on their next trip.

Several messages were even tested, with varying degrees of customization.

The economy of apologies

The findings of the experiment were revealing. Contrary to conventional expectations, it was found that a simple apology message was not enough to remedy the user experience. However, when the apology message was accompanied by financial compensation, user perception improved significantly. This phenomenon, called the "economics of apologies," highlights the importance of combining apologies with tangible actions to restore customer trust and satisfaction.

Among the main conclusions of the experiment, the researchers found that:

• Delay without apology reduced the average subsequent use of Uber in a persistent way for affected users. persistently for affected users..
• Apologies "at no cost to the company" (i.e., based only on "words") are not effective in avoiding this impact (and may even make it worse).
• On the other hand, apologies "at cost" (5 USD coupon) cancel out the negative effect.
• For new users, it even overcompensates, generating a persistent effect of increased usage after the effective apology.
• Interestingly, the apology works more and generates a greater effect in high delays, where the experience is more frustrating.
• The gift certificate works best in association with an apology rather than randomly assigned (i.e., it works best when it is perceived as an "apology" associated with a frustrating experience rather than as a promotion).
• The effect of the apology is enhanced by a promise to "do better" in the future. But patience and credibility wear out quickly: the effect wears off after the 3rd apology.

Lessons learned and the future

The findings of the experiment were published in an academic paper by the National Bureau of Economic Research in March 2019.

It was a study that also had an impact on the media, as it promoted a novel approach in the field of behavioral economics.

The novelty of Uber's experimental approach, along with the practical implications of its findings, made it a topic of discussion in the business community and in the emerging field of the "economics of apologies."

Uber and Jhon List's experiment in apologizing offers valuable lessons on the importance of combining apologies with tangible actions to restore customer trust and satisfaction. Ultimately, it shows that apologies are not only an act of courtesy, but also a powerful strategy in managing the customer experience and building strong relationships with users.