SMBs Go 'On Demand' : Which Verticals Can Replicate The Uber Model?

April 11, 2016 Peter Krasilovsky

WIth the emergence of services like Uber, we're looking at entirely new "on demand" models for acquiring SMB customers.   These are more  about "get it now" -- not about the "search and find" directory-like models that have driven traditional SMB marketing channels.

You have taken an Uber ride?  The "Uberification" model is now being extended to other SMB verticals, such as home services (Porch), lodging (AirBnB), food ordering (GrubHub) and emergency car repair (   Customers generally enter their need on a mobile app, review the rating of a service provider, see an estimate and make an order or schedule an appointment.   The key here:  the use of the smart phone as a hub.  

The impact of the on demand model has already altered the traditional marketing "pyramid" -- which begins with awareness at the top, consideration in the middle and purchases at the end.  In many cases, customers are not only  buying into the on demand models, they are willing to pay a premium for the convenience and quality.    Research by Porch has found that 55% would pay more for a superior, on demand  experience.

Initial efforts in some categories such as urban parking have been troubled.  Not every SMB category is ideally suited to go through an on demand “Uberfication.” In general, loyalty-based SMBs aren’t likely to revert to such a commodity model.  But other categories are likely to see a healthy percentage of their future orders coming from on demand.

Sometimes, what we’ll see is a blend of on demand and traditional models.   HomeAdvisor, which provides referrals to several potential businesses in exchange for lead fees, for instance, has launched an "Instant Booking" service to complement its other offerings.

The company says that Instant Booking is ideal for “lower consideration” jobs that don’t require a lot of strategy and planning. Its internal research shows that homeowners using the services are twice as satisfied. Moreover, the Instant Booking referrals from the company are more likely to lead to closed jobs.  Customers accept 80% of all referrals.

Will everybody use it?  No.  Home Advisor only expects to see 16% of its business go Instant Booking.   While some portion of the remaining 84% may ultimately use Instant Booking,  they evidently want to talk to a professional before they hire them.



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