To succeed in the B2B sharing economy, businesses need to understand what drives customers who are willing to use crowdsourced and automated services
LiquidSpace specialises in renting out spare office space in existing businesses by the hour, the month or longer. Users can hire space via the company’s app and be sitting in a business’s boardroom within minutes. They can add their own office space to the inventory too.
It’s just one example of how the collaborative – or sharing – economy is expanding into the B2B arena from the B2C sector, where names such as Uber, Airbnb and TaskRabbit have made the “sharing economy” part of common parlance.
Andrew Reid is founder and president of Vancouver-based customer intelligence platform Vision Critical, publisher of research report Sharing is the New Buying: How to Win in the Collaborative Economy. He describes the collaborative economy as “an economic movement where common technologies enable people to get the goods and services they need from each other, peer to peer, instead of buying from established corporations.”
In the B2B arena there is, he says, a lot of spare inventory available for businesses to use, particularly when it comes to low-level tasks, and you can crowdsource it through a growing number of platforms such as LiquidSpace.
The automation factor
The one factor that collaborative economy companies have in common is the use of automation to crowdsource services. As users become more comfortable with automation, we’re likely to see even more of it.
The professional services sector, and law in particular, is already leading the way on this. Shakelaw.com provides customers with automatically generated, legally binding documents; ideal for a mid-sized business that needs standard contracts drawn up.
Vision Critical itself has married automation and technology-enablement with the science behind market research and made its software available to its customers via an online platform. The company’s customers use the platform to talk directly to thousands of their own customers on an ongoing basis and get feedback on everything from new products to upcoming marketing campaigns. This customer intelligence lets brands confidently make million- or even billion- dollar business decisions.
“We realised that some elements of what professional consultants do are not highly skilled or unique,” says Reid. “Anything that can be commoditised, democratised or templated will be, and any business that does not believes that is going to lose.”
But why the rush to automate? Aside from the convenience it offers customers, Reid points to three reasons. First, the internet and sharing-economy technologies have made consumers more comfortable with the do-it-yourself approach. We now confidently bypass travel agents to book our holidays directly with airlines and hotels. That attitude, and expectation, is starting to seep into the business world.
Second, bringing a new, long-term supplier on board is time-consuming. Once the long, drawn-out contract negotiations are over, you have to educate them about your business. Dipping into sharing or automated services as and when you need them makes you faster and more flexible as a business.
Third, sharing and automated services are cheaper, allowing mid-sized firms in particular to save their limited resources for higher-value activities.
In light of this new customer mind-set, adopting technology is key to achieving business growth, says Robert Samuel, a partner at Grant Thornton Australia. “We are working with many mid-size businesses in Australia who are demonstrating agility to grow by embracing disruption through investing in the right systems to cope with change,” he adds.
In Australia, technology adoption has become even more imperative since Malcolm Turnbull was sworn in as Prime Minister earlier this month. In his first statement after being sworn in he urged people to embrace disruption, stating: “The disruption that we see driven by technology, the change is our friend if we are agile and smart enough to take advantage of it.”
Sharing economy risks
Despite the growing popularity of digitally disruptive companies, using them is not without risks. Perhaps the biggest is how businesses can guarantee the security and privacy of their own customers and employees when they are crowdsourcing suppliers. That becomes an even bigger risk when you take into account the myriad regulations companies must comply with when it comes to issues such as data protection.
“I think this problem will solve itself,” says Reid. “I think we will find ways for people to get that seal of trust.” He cites the review model used in the B2C sharing economy as one that would work in the B2B sector too.
Car-sharing company Lyft, for example, has built in several mechanisms to ensure car owners can trust the customers they’re picking up. Users must link their Lyft accounts to their Facebook profiles so that car owners know what the customer looks like and something about them ahead of time. Accounts have to be registered with a credit card so payment is always guaranteed. Lastly, previous service providers rate customers, which means behave badly and you’ll be barred from participating in the future.
That works both ways for most sharing economy services. Customers can also rate service providers – those peer reviews effectively force providers to self-regulate, as a handful of bad reviews could mean the end of your business.
Drawing the line
Another way to mitigate risk is to be careful about what you choose to crowdsource and automate, both as a user and as a platform provider.
“There are always going to be major events that can make or break a company. That’s why we’ll never lose the value of professional consultants who bring historical knowledge and long-term experience to the table,” says Reid. “It’s likely that a business wouldn’t use the collaborative economy if it had a million dollar deal on the line but if it was a startup with 10 employees and it needed to write a standard employment contract, of course it would.”
So while collaborative economy suppliers should never outsource their high-value activity, everything else is open for consideration. Reid goes so far as to say that companies should even consider cannabalising themselves by automating their own low-value activity. He explains: “Think about that bottom 20 per cent of low-value jobs: empower the consumer by commoditising them. Do that and your customers will reward you with their business for the higher-value services you offer.”
Technology adoption is therefore not only integral to business growth, but also changes the way customers transact with you and is therefore much more than a technology project – it’s a transformation of the entire business. “It’s imperative to lay the foundations correctly so that the technology systems support the business and its changing needs in different market conditions,” says Samuel.
Automating that bottom 20 per cent of tasks is not as difficult as you might think. Reid says that companies need to start experimenting by dipping their toe in the water. They certainly don’t need to worry about inventing new technology. Uber is simply the sum of a Google Maps interface, PayPal, custom code, good design and some clever marketing. Its success lies in delivering a great experience for its customers.
Reid warns: “Sharing and automated services are not a fad; they’re not going away. Everyone’s challenge and opportunity is to think about how they can meet the unmet needs of their customers in as creative a way as possible. You don’t need to develop new technology – the technology already exists. Sharing economy services that do well are those that put customer needs and the customer experience at the forefront of their offering.”
For the leaders of dynamic businesses, the message is clear: your clients and customers want – indeed, they even expect – the flexibility offered by modern methods of product and service delivery. And they are willing to sacrifice some security for lower costs and increased customisation. But there is a limit. Efforts to automate should not be all about bottom-line growth. You need to put the consumer at the heart of any decision or they will take their business to someone who will.