BMW’s ReachNow CEO Is Also an Uber Driver
Steve Banfield learned firsthand what’s it’s like to drive strangers around—the good, the bad, and the downright strange.
The Uber experience is a mixed bag. You get a different car and a different driver each time. That’s the price you have to pay when you want to be ubiquitous. But BMW is taking a more focused approach, and thinks it can craft a better ride-sharing or ride-hailing service—and maybe improve both.
When it launched its car-sharing service earlier this year, BMW’s ReachNow seemed to be an answer to Daimler’s Car2Go car-sharing service, which populates select cities with free-floating Smart Cars that members could book and pick up in one place, then drop off in any legal parking space within its operating zone (take that, ZipCar). ReachNow operates in a similar fashion, but with a wider range of vehicles, including electric i3 and 3 Series sedans. But now, it seems they’re also taking on Uber in the mobility race.
Last month, the company expanded its services to include a ride-hailing component, which enables members of its pilot program to request on-demand rides within the app. That makes ReachNow unique; it’s the first company to combine ride-sharing and car-sharing within a single app. Another differentiation is the level of service. Unlike Uber or Lyft, ReachNow drivers are contracted specifically to drive for ReachNow. And, of course, the drivers arrive in a BMW.
The expansion seems to be aimed in part to block Uber from dominating the ride-hailing market, and a way to showcase its presence in the new-mobility field. But it’s also a way to ensure that people who can’t physically drive cars themselves—such as the elderly or disabled—can still take part if the offerings and be a part of the BMW brand, which is something ReachNow CEO Steve Banfield might have realized first-hand during his stint as an Uber driver.
“I’m probably the only executive with a 5-star rating,” Banfield said in an interview.
Banfield signed up to be an Uber driver when he became the mobility company’s CEO earlier this year. In anticipation of the ride-hailing service, he wanted to see what Uber was doing right, and how he could make their service better. He's incredibly politic when asked about his experiences, and doesn't share any bad or creepy stories that are familiar to heavy users. Rather, he highlights the times he helped people, such as ferrying an elderly woman, who had trouble walking, to the senior center just down the hill.
Through this type of experience he learned that Uber's strength—that you can hail a ride pretty much anywhere, at any time, for an affordable price—is also its weakness. To facilitate its rapid expansion into 524 cities, Uber had to lower its once-high standards with the introduction of UberX. In exchange for a lower price and higher availability, riders had to compromise vehicle quality and driver professionalism. In the process, Uber users often end up with some stories to tell, sometimes complete with video on Instagram.
“Uber’s model is for users to weed out the bad drivers," Bandfield explained to The Drive at the Los Angeles Auto Show. "There’s a market-forces logic to that, but it still exposes customer to [bad drivers]. We’ve all had those not-optimal experiences. We want people to have a good experience from the beginning.”
To avoid instances of DJ-ing while driving, ReachNow is using professional drivers who will operate the company’s vehicles when responding to ride requests. Drivers are trained on aspects of customer service as well as the vehicle. And that’s another reason that BMW is getting into the ride- and car-sharing space: ReachNow isn’t just a transportation service, it’s a marketing opportunity.
“We have data that shows people are using our cars to test drive and then going to dealership to buy the car,” says Banfield, who recounted instances of members arriving at dealerships in a ReachNow vehicle. “People drive an i3, and then go to dealership when they know what they want, and then talk about colors.”
Regardless of what transportation pundits say, ride sharing and car sharing are not the death of car ownership, Banfield says. BMWs are aspirational vehicles, and by creating a car- and ride-sharing network serviced by its vehicles and opening it to any licensed driver over the age of 18, the company is expanding the market, not contracting it.
The company's goal is to create members loyal to the BMW brand who use the app every day—not just a one-time transaction. Staying visible in the market as it transitions to on-demand everything seems to be part of the rationale for its existence, but ReachNow doesn’t see it that way.
"This isn’t a science experment, this is a business," says Banfield. "And our business model says we can be profitable.
But profits are hard to come by in the competitive ride-sharing space. Uber reportedly lost $800 million last quarter, and is on track to lose $3 billion this year, according to news outlet The Information. Competitor Lyft has promised investors that it will contain losses to $150 million per quarter. Both companies and other international players in the ride-hailing space have been engaged in a price war to drive costs down—and competition out of the market.
In the car-sharing space, ReachNow is up against Turo, GetAround, and ZipCar. With less competition and market penetration by deep-pocketed ride-hailing companies, it stands a better chance. The difference in pricing between ReachNow and its nearest competitor—Car2Go—is 6 cents per minute. On a 20-minute ride, it’s an extra dollar to take a BMW rather than a SmartFor2.
ReachNow will have a hard time being the biggest, and that may be ok; its focus is on being the best. But being the best means it probably can’t be the cheapest, but neither can it be the most expensive. It has to be consistent, yet flexible. It has to be something that represents the brand, and still serves the customer's needs. Regardless, it still has to be the ultimate driving experience.
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