Customer needs drive digital offering

yellow taxis in trafficIn a previous article, So you think digital doesn’t apply to your business?, I discussed how sectors based on consumable products are very unlikely to be disrupted by alternative offerings that are enabled by technology. However, such industries could be disrupted by technology-enabled add-on products and services that offer customers more rewarding and engaging experiences.

The same argument applies to consumable services that provide some kind of physical benefit or utility at the point of consumption or delivery. The customer still needs the physical service but that service could be requested and arranged in an alternative way, and it could include technology-enabled add-ons that enhance the customer experience before, during and after the service has been delivered.

Two of the most well known digital disruptors, Uber and Airbnb, have done exactly this – they have used technology to create entirely new business models for taxis and accommodation, respectively, but without fundamentally changing the core service received by the customer. In Uber’s case the customer still pays for a vehicle to transport them from one location to another, while Airbnb customers still get a room, apartment, house, villa, etc to rent for as long as they need.

Uber and Airbnb have looked beyond the core customer need (which at the most basic level cannot change) and identified a range of additional, or adjacent, needs that can be met using technology. Indeed, in some ways the core customer need is not of interest to Uber and Airbnb as neither actually delivers the end service. Both companies are in effect providing a technology-enabled marketplace that matches buyers and sellers, and provides both parties with a better experience in the process.

So, In Uber’s case, the ability to request a taxi without knowing your exact address (achieved via GPS on your smartphone), electronic payments that can be easily split between passengers and the ability to provide feedback on your driver have all been added to the basic service of transporting the customer between locations. Underpinning this service is a system that matches available drivers to customers (again using GPS) and calculates dynamic journey prices based on a range of factors, including current levels of demand.

Whilst Uber and Airbnb provide good case studies for digital offerings that are driven by customer needs, they are to some extent extreme cases. There are numerous ways in which companies that provide physical products or services can create digital enhancements and an improved customer experience without creating a whole new marketplace.

In Any business can be a digital business I described how a launderette in Australia had added digital services to its core product to meet additional customer needs and enhance the customer experience. And to further demonstrate this point I recently downloaded my local taxi company’s booking app. Now, it may not be the most visually appealing of apps and it does not provide the full range of services provided by Uber but it works well and, most importantly given my preference for using a local company when I am in my home town, it meets a number of my needs that the alternative method of requesting a taxi by phone cannot meet:

  • Easier to book a taxi in places where making a call is difficult (on a train, in a bar or restaurant, etc);
  • Instant confirmation of the journey details so that I can see they have been recorded correctly;
  • Provides a guide price;
  • Enables me to store favourite locations and previous journeys making future bookings quicker;
  • Allows tracking the progress of my booking including when the vehicle is on its way; and
  • Provides text alerts including details of the vehicle allocated to my request.

So, whilst my local taxi company’s app cannot match the full range of features and services provided by Uber, it does a very good job of meeting my needs in the context of the service I want – a local taxi service. And that is all it needs to do. In my home town I do not need GPS to tell me my location and splitting the bill between passengers is not something I have to do often (although electronic payments would be a good addition at some stage in the future!).

The key point though is that this local taxi firm has identified a range of needs in addition to the core service of transporting customers and has used these needs to drive its digital offering. The result is a customer experience that is much better than its (local) competitors and which is likely to help it to maintain and possibly even grow its business whilst the sector in which it operates is under pressure from technology-enabled competitors.

If your organisation wants to improve its senior team’s awareness and understanding of digital, develop a vision and strategy for its digital transformation, or reinvent its business model for digital then please contact me or visit my website, axin.co.uk.

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