Revolutionary Measures

Marketing in the rental economy

When I was growing up it was common to rent a TV – they were expensive items and not everyone could afford to pay for one up front. But as prices dropped renting became the preserve of students and then seemed to disappear.

However the whole idea of a rental economy is back, just rebranded to on-demand. Take TVs again – given the price of a high end one, and the speed at which new innovations are coming through, renting provides the flexibility to always have access to the latest model without spending thousands. Why amass a collection of CDs when you can essentially rent them via Spotify or other streaming services? Looking at transport, many cars are now bought on credit deals that essentially mean you are paying a monthly rental to the manufacturer – and that’s before you look at the likes of Uber and Lyft. There are even websites in the US that let you rent high end furniture for your house or office.

512px-For-rent-sign

Speaking as a hoarder that wants to have that physical CD or book and to know they are mine (even if they then sit on the shelf after being digitised or read), I see limits to the rental economy. But I know I’m increasingly in a minority and a combination of the flexibility of on-demand and the fact that major purchases such as cars and TVs are often outside the budgets of many people mean rental is here to stay.

So what does this mean for marketing? I think there are three main things to focus on:

1.Need to keep customers loyal
Brands know that customers are now more demanding and less loyal than in the past. But the on-demand economy means that rather than simply switching supermarket or type of toothpaste they can equally change every brand that they deal with. Therefore you need to continually focus on keeping customers satisfied and consequently loyal – otherwise they will simply head to the competition.

2.Use the data to innovate
Digitisation means that brands in the on-demand economy have an enormous amount of data about their customers. Whether that is Uber knowing where you have taken cabs or Netflix having a record of what you watched, this information is all available. Rightly customers are wary about what brands do with this data, but surveys show that if it is used to improve the service and products they receive in ways that benefit them, it makes them more loyal to a company or service. So analyse this big data and use it to innovate and differentiate against competitors.

3.Brand is key
There are many factors that affect why consumers choose particular brands, including price and the choice of products that they offer. However in the on-demand economy, where the majority of interactions are digital, brand is a key part of the decision. For a start if they’ve not heard of your company they aren’t going to consider buying from you – and more importantly still if your brand gains a poor reputation sales will suffer. Uber is the perfect example of this – well-publicised scandals at the company led many users to switch to rivals, hitting its market share and revenues. Such is the pace of the on-demand economy that pretty much every company has a rival, often selling similar services at similar prices, meaning that building and safeguarding your brand is crucial to long-term success.

Digitisation is radically changing how we buy and consume products and services, with many moving away from outright ownership to a rental model. Brands must change how they focus their marketing efforts if they want to win, and more importantly retain, customers – or they risk being left behind by on-demand competitors.

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August 23, 2017 Posted by | Marketing, Social Media | , , , , , , , | 1 Comment