There was a time in the not-too-distant past when sleeping in a random person’s guest room, asking a stranger to walk your dog, or getting a ride from someone who wasn’t driving a yellow taxi were seen as…well…a bit out of the ordinary. In recent years, though, the sharing economy has made such events not just acceptable, but common. Even if you’ve never used services like Uber, Airbnb, or TaskRabbit yourself, the prospect of using such services probably doesn’t seem all that far-fetched by today’s standards. And doing so is only going to become more and more common. According to Brookings India, the sharing economy as a whole is expected to grow to $335 billion in 2025! – up from a mere $14 billion in 2014.
The reasons for this explosive growth lie in both the consumer’s and the provider’s side of the equation. On the consumer’s side, sharing economy services are typically easier and cheaper to use than their traditional counterparts – without much of a dip in the quality of service provided (if any at all). On the other side of things, individuals who provide these services enjoy the flexibility and self-reliance that comes with the gig – as well as the ability to put resources they already own to their maximum usage. However, even though the sharing economy continues to grow at a rapid pace, loyalty to a single company (either as a consumer or provider) remains rather elusive. As Brookings India reports, “It is difficult for any one company to form a monopoly since the cost for customers to switch between sharing economy services is quite low.”
Many consumers typically don’t care whether they get a ride via Uber or Lyft – they just need a ride; they don’t care if the person they’re staying with is paid through Airbnb or FlipKey – they just need a place to stay for the night.
The question, then, is: How can companies within the sharing economy cultivate loyalty among their customers?
So, without further ado, let’s dig in.
Stand for a Cause
Earlier, we alluded to the fact that consumers typically aren’t worried about which sharing economy company they do business with, as long as it provides for their needs. However, this typically pertains only to individual occasions. For example, when its 5°F outside, most customers won’t care whether they get a ride via Uber or via Lyft; they simply need to get out of the cold. From a more overarching standpoint, the modern consumer is becoming increasingly conscientious about the companies they do business with. Today’s customer will typically opt to give their money to the company whose values align with their own. Now, while actively fighting for a specific cause can help paint companies in a positive light, it’s often enough to simply operate on a platform of authenticity, integrity, and fairness.
When this doesn’t happen, however, major backlash can occur. Case(s) in point, Uber recently faced a huge amount of poor publicity stemming from a number of political and social missteps, while Airbnb faced similar troubles after accusations of racial profiling among hosts emerged.
(Note: While neither of these instances ended up having major effects on Uber and Airbnb in the long run, the potential for disaster was certainly there.)
The takeaway here is that, assuming their initial needs are met by a given service, today’s consumers aim to do business with organizations whose worldview align with their own. Again, this doesn’t mean businesses need to proactively fight for a given cause, but they absolutely do need to be transparent and responsive to the ethical, moral, and social issues of today.
Be Reputable and Responsible
The nature of how the sharing economy companies typically do business is pretty hands-off. Essentially, after a contracted worker has been vetted, it’s up to them to live up to the expectations of the company they’re working for. For example, Uber drivers need to ensure their car remains clean and comfortable for their customers – the company doesn’t do this for them. Despite the presence of the “human” variable within the equation, the company is still ultimately responsible for the overall quality of service provided. Even in cases in which the independent contractor is clearly at fault (e.g., a host leaving their guest room a mess for their Airbnb customer), the company needs to take responsibility for providing a poor experience.
The first order of business for companies is to be as stringent as possible when vetting independent contractors. This will minimize the chances of customers reaching out later on with complaints about their service providers – saving the company tons of time, energy, and money in the long run. Additionally, as many sharing economy companies do, it’s important to provide customers with the ability to rate and rank individual service providers. More importantly, though, companies need to actually analyze, assess, and address these ratings. Not only will this help companies weed out sub-par contractors, but it will also allow them to pinpoint specific issues that need to be addressed across the board.
Overall, the main thing to keep in mind is that the company is always responsible for the customer’s satisfaction. While the customer may chalk up a single poor experience to the fault of the provider, the blame for consistently poor service will ultimately land on the company as a whole.
Partnership Loyalty Programs
As is probably evident from the examples we’ve used thus far, one of the main groups of people who benefit from the sharing economy are travelers (as they often need one-off services while visiting unfamiliar places).
Because of this, many of the biggest names within the sharing economy have partnered with airlines and hotel services to create integrated rewards programs that promote loyalty to both partner companies.
A few examples:
- Uber customers can earn Starpoints for each mile they travel, which can be redeemed for perks at any Starwood hotel or resort
- Lyft partners with both Delta and JetBlue, enabling customers to collect SkyMiles (from Delta) and TrueBlue points (JetBlue)
- Airbnb also partners with Delta, offering one SkyMile for every $1 customers spend with the hospitality service
Partnership loyalty programs can act as a key differentiator for new customers that have yet to “pick a side.” For example, loyal JetBlue customers would almost certainly rather do business with Lyft than with Uber, as they will ultimately reap rewards for doing so.
Conclusion
While the way in which sharing companies operate differs from the typical company-customer relationship, the fundamentals of retention and loyalty remain the same. Above all else, sharing economy companies need to ensure their customers feel valued – and are being provided with value – at all times. As it is within all other industries, as long as sharing economy companies keep their customers happy, they’ll have no reason to leave.