The sharing economy, or collaborative consumption, has quickly overtaken many business sectors. Most people have, or know someone who has, tried Airbnb, Uber, Etsy or another share-based business. To be successful in the sharing economy, your brand must be efficient, trustworthy, innovative and community-centric.
These principles aren’t just indicative of successful share-based businesses; they also play an important part of any successful entrepreneur.
Always strive for better efficiencies.
The most obvious example of the sharing economy using increased efficiencies to dominate a market is Uber. Uber entered the commuting sector in 2009 and focused on improving the inefficiencies that existed with taxi cabs.
Taxis have a limited inventory of cabs, so Uber developed a way for any qualified person to sign up as an Uber driver, aiming to eliminate inventory deficits. Uber also created an intuitive and data-based pricing model to solve issues with outdated taxi fare estimates. Uber continues to use technology to make it easier to pay, hail a ride and increase the overall user experience. By focusing on being more efficient, Uber has built one of the most recognizable brands in the transportation industry.
While you might not be running a disruptive business like Uber, you can still look for inefficiencies in your business or industry. One common problem with a lot of entrepreneurs is an inefficient use of technology. There is a technological solution for almost every day-to-day operation. However, many entrepreneurs struggle to invest in technology because they fear the upfront cost. Keep in mind, spending a few thousand dollars on a new technology to increase your total output or cut down your lead time can save you much more money over the life of your company.
If you operate a brick-and-mortar store or office, you can increase employee efficiency by improving the workplace environment. Work can be exhausting mentally and physically, so simple tweaks like rearranging the office for improved air-flow can make your employees more productive and improve their health and satisfaction.
Trust is key.
For the sharing economy to work, trust must be established between the buyer and seller. This can be extremely difficult because most sharing-based businesses simply facilitate the transaction and do not control the inventory or seller.
Take Airbnb for example. They have a network of rental properties throughout the world that are all controlled by individual homeowners or renters. This no-inventory model serves as a marketplace for managing all elements of the transaction between supplier and purchaser. To accomplish this, Airbnb must establish trust in the platform that will also be transferred to each supplier.
Fortunately, most entrepreneurs manage their product or service directly and don’t have to transfer trust from their brand to individual suppliers. This makes it easier for you to build and maintain a trusting relationship with your customers. The first step to building trust is to understand your customers. Spend time collecting information about your current clientele so you can mold your communication to speak directly to that consumer profile. You can also improve trust with customers through marketing and advertising. If you’re bootstrapped, there are several affordable ways to use digital marketing to increase consumer trust.
Trust isn’t just administered from business to customer, you must also work to develop trust with your employees. Great entrepreneurs are leaders in the workplace. They are willing to get their hands dirty and coach their team. A title or job description isn’t enough to warrant trust from your employees; you must earn it through hard work.
Don’t be afraid to innovate.
Innovation is an important characteristic of successful companies in the sharing economy, but it is also a critical part of traditional businesses. In fact, many companies use innovation as the framework for their brand identity — think Apple.
Not all innovation requires a brand new idea. In fact, you can use resources and knowledge from other industries to innovate within your sector.
For instance, Ofo is a Chinese bike-sharing startup trying to innovate the way people commute in big cities. By using a mobile app, consumers can locate, unlock and ride available bikes anytime. The business model isn’t much different from Airbnb or Uber, and using bikes to commute in the city isn’t unique. However, its ease, affordability and convenience make this idea noteworthy.
Innovation keeps your company relevant in an increasingly competitive global marketplace. You’d be hard-pressed to find many successful companies that don’t innovate. Even local restaurants are working on new recipes for their menu.
As an entrepreneur, you must not be afraid to try and fail. Look for blue oceans with minimal competition that you can enter and control. Think of solutions to relevant problems in your industry, look at your product from different vantage points, and think outside the box to find opportunities to grow your product. Innovation requires versatility and risk. Don’t be afraid of it.
Build an active community.
If there is one element you take away from successful businesses in the sharing economy, a thriving community should be it. The share-based business model is built around dissemination and scalability, which isn’t possible without an active community. They created a platform and marketplace that is designed to recruit, vet, satisfy and retain a community of suppliers and buyers. They are successful at community development because they use due diligence, a communication feedback loop, marketing and data-based strategic decisions.
As an entrepreneur, you should focus on building an active and stable community of customers and leads. Obsess over customer satisfaction and retention. It’s estimated that acquiring new customers can cost upwards of five times that of retaining an existing customer. Customer retention will increase the customer lifetime value, which will result in more revenue and increased business.
One of the easiest ways for entrepreneurs to build a community is through active engagement online. Use platforms such as Twitter, Facebook, Instagram or Snapchat to grow and interact with your community. Remember, the communication shouldn’t be one direction. Encourage questions and handle customer issues when they arise. If you can convince customers to invest themselves into your brand, you’ll develop an active and thriving community.
Trust can help you get users into the door; an active community is what keeps them coming back.
The sharing economy is a thriving ecosystem that affects us as entrepreneurs and customers. The most successful sharing-based businesses have focused a lot of their efforts on improving efficiencies, building trust, growing their community and innovating. These four basic principles should be at the top of your priorities list as an entrepreneur.