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

Moving back to a medieval economy?

Map of medieval Rome depicting the Colosseum.

Map of medieval Rome depicting the Colosseum. (Photo credit: Wikipedia)

My very first blog post, four and a half years ago, talked about how social media had parallels with how people worked in medieval times. Essentially as a worker you attracted business through personal recommendation – do a good job and you’d get more work. Do a bad job for the Lord of the Manor, and you could well be clapped in irons. The industrial age changed all that, with companies mass producing goods or services and the personal link disappearing from many professions. No-one knew if you’d done a good job in your cubicle –the chance to express your individuality was simply not there in a lot of sectors.

In the same way that social media is changing how we interact with companies and how they market to us, the internet is also changing how we work. As a recent piece in The Economist pointed out, we’re increasingly becoming a freelance-based economy, with skilled workers now available on tap to complete specific tasks, with no need to employ them full time. Figures from the Freelancers Union claim that 1 in 3 members of the American workforce do some freelance work.

The internet and smartphone apps mean a business can now find someone to do everything from research a new product to provide legal advice or consulting. Many routine tasks, even in knowledge-based businesses, can either be outsourced or digitised, so why go to the trouble and expense of employing someone to do it? And for those businesses that worry about quality, the platforms that deliver these people will have vetted them and you can read reviews from previous customers.

This is going back to the medieval model – with skilled artisans and craftspeople available to work directly for their end customers, rather than toiling in a factory or office for a regular salary. On the plus side, it delivers freedom and flexibility to those with the right skills. On the other hand, the vast majority of the medieval working population were itinerant labourers, turning up where there might be a job and hoping they’d get picked. Essentially, not much different to a modern zero hours contract, which is the flipside of the freelance economy.

There’s also multiple other challenges to address, both for freelancers themselves and the wider country. I know that as a freelance it is up to me to market myself, provide for my own retirement, sort out my work financial affairs and keep my skills up to date. If I don’t work, through illness or holiday, I don’t get paid. All of these are things that previously my employer would have provided for me as part of the contract between us. For me, that’s not too much of an issue, but for others (thinking again of zero hours contracts), what happens when they reach retirement age without private pension provision? The state will need to provide, where previously an employer did. Education will have to teach people to think in new ways, so that they can pick up skills throughout their working life, rather than training them to do the same thing for their whole career.

The other challenge is that the freelance economy needs corporate businesses in order to survive. Firstly, it is where it recruits many of its members, who’ve got their training within a large organisation and then decided to strike out on their own. Working for a large company not only provides a positive endorsement of quality on a CV but also gives access to an ecosystem of potential assignments within the company and its peers.

Secondly, freelances need larger companies (and those that work for them) as a market. Whether it is selling to organisations that have a specific skills gap or providing on-demand services to the salaried (in the US you can get everything from food, to taxis (Uber) and home cleaning at the touch of a smartphone screen).

Take away this infrastructure and you remove the market and the skills – in fact, essentially moving back to the medieval model. The main difference is now, with the internet, you don’t just have access to your village carpenter, but potentially millions of them all over the world. Like any change there will be winners and losers, but it is important to look at the negatives as well as the benefits before we fully embrace the on-demand world.

January 14, 2015 Posted by | Creative, Marketing, Social Media, Uncategorized | , , , , , , , , | 1 Comment