When Money Doesn’t Buy Happiness, But On-Demand Services Can
An experiment published by Time analyzed the satisfaction level of 60 adult participants who were asked by researchers to spend $40 on a time-saving service and a material item separately. This report discovered those who invested in time-saving, on-demand services were happier and more satisfied with their purchase.
The concept is simple: we all have ruminating thoughts connected to nagging to-do items, some of which fill us with dread, which leads to avoidance, which leads to more dread. However, if we can use money as a tool to not only eliminate those tasks but have them done by a professional who is better at the said task, our schedules open up to do more activities we enjoy, such as getting outdoors or spending time with family.
The concept of "buying time" has never been as accepted as it is today, and it’s not just for the wealthy. The authors of the paper clarified that “people from across the income spectrum benefited from buying time.” Data from The National Technology Readiness Survey shows that 46 percent of on-demand consumers have an annual household income of less than $50,000, and only 22 percent have an annual household income of $100,000 or more.
So to capitalize on the DIFM (do-it-for-me) economy of the future, businesses must solve a problem or meet a need. Simply because you own a closet full of clothes doesn't mean you will automatically use an on-demand dry cleaning service. There has to be a more significant value proposition in play, one that connects with people.
On-demand companies that are succeeding in the space today do not operate like the original on-demand companies. There are a few fundamental changes today’s evolved on-demand companies have done successfully:
- changed their back-end operations;
- enhanced their corporate cultures;
- gone back to basics of how to run a quality company;
- put the customer first; and
- bet on the 10-plus year trends.
When Jeff Bezos started Amazon.com, he told shareholders they were going to think on 10 year-plus trends. Instead of focusing on competitors or flavor of the week startups, Bezos defined long-term customer trends likely to last at least a decade. For example, low prices, free shipping and a large selection. Do you see customers ever not looking for all of the above?
The same mentality must apply to on-demand services. Companies must aim to make customers happier by eliminating tasks that an expert can do better than them. The most prominent influences I’ve seen to executing a successful on-demand business are as follows:
Customers hate it when a service has friction, primarily when working with on-demand services. Resistance comes in many forms, and you know it when you feel it. For example, when the customer has to go out of their way for YOU vs. the opposite. What if we have to call you three times to schedule an appointment? What if getting the keys for your car is complicated or contacting you at work is disruptive? The long-term goal should always be getting customer friction to zero.
Competitive pricing make sense for product-based businesses, but what about services? In general, service businesses have a significant labor component. On-demand companies must always be looking for new tools, techniques and innovations to save the technician’s time. For example, if a car wash technician can save 15 minutes per vehicle, not only is that time saved for customers, but it allows for lower overhead costs and the ability to pass that on to the customer in the form of lower prices.
Service That Exceeds Expectations and Delights
This seems obvious, but rarely are expectations exceeded in on-demand businesses. I suggest starting with the customer experience first, working backward to figure out the unit economics, pricing, etc. For example, one significant area of feedback for me when starting Spiffy was that customers didn’t like the complexity. We were asking them if they wanted synthetic or non-synthetic oil, 10W-40 or another option, and their preferred brand. Responses often included: “I just want my oil changed.” With that feedback, we started with the customer and worked back. We decided to keep pricing simple with no upcharges and used the manufacturer’s highly recommended synthetic oil.
As on-demand services aim to reduce friction, maintain competitive pricing through smart economics, and exceed customer expectations, the demand for “buying time” will only increase. And with this newfound oasis of opportunity, we will see the on-demand startups that execute creatively and efficiently tap into a customer service market like never before.
Scot Wingo is the CEO and founder of Spiffy, an on-demand mobile car wash service.
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About Scot Wingo
Scot Wingo is a four-time serial entrepreneur and industry thought leader in the e-commerce and on-demand economy realms. Scot has appeared on CNBC, The Today Show and contributed his expertise to the WSJ, New York Times, Washington Post, Bloomberg, AP, Reuters and many other publications. Scot previously founded Stingray Software, which was sold to Rogue Wave Software, AuctionRover, that sold to Goto/Overture and ChannelAdvisor, which went public (NYSE:ECOM) in 2013.