I often walk past our bookshelf at home and wonder why I bother keeping our multitude of books. I have no intention of reading them ever again and they simply occupy space. Similarly our exercise bike which is gathering dust in our living room and serves more time as a clothes dryer than its original purpose. And don’t get me started on that spare room which has become a dumping ground for kids toys and memorabilia.
Wouldn’t it be great to swap out one of those old books for a new one? Or maybe borrow an exercise bike instead of buying one? How about renting out that spare room and making some extra cash whilst also meeting travellers from around the world?
Welcome to the world of collaborative consumption.
What is collaborative consumption?
Collaborative consumption describes the shift in consumer values from ownership to access.
The idea of collaborative consumption is not a new one. Throughout human history we have exchanged goods and services with each other all in search of a good deal.
The recent growth in collaborative consumption has been primarily enabled due to the permeation of the Internet, social media and mobile applications in our daily lives. We are now more digitally connected than we have ever been and this is enabling enterprising companies to take advantage of this. Time Magazine even went as far to say as collaborative consumption was one of 10 ideas that will change the world.
These companies are essentially facilitating the purchase process by connecting a customer and a service provider. The beauty of this is that these companies don’t own the requested assets, they simply facilitate the transaction.
There are plenty of companies out there getting involved, here are some of those operating in Australia:
How does this stack up with the Purchase Process theory?
Quite well actually. What I find interesting about these companies is that they still fundamentally comply with the Marketing construct of the Purchase Process.
The Purchase Process (Iacobucci, D 2014)
Let’s look at AirBnB, the highly successful lodging listing service for example:
So you’re keen to stay somewhere, you have a need or a want. Through the AirBnB website you can access hundreds of listings available in all shapes and sizes and to varying budgets. Other ‘traditional’ options such as hotels could still be on your radar until the Purchase phase.
After taking a looking at all options, you decide to go for an AirBnB option. You can then narrow your selection based on key factors such as location, rating and price. In terms of ratings, rather than working to the traditional “star” rating model that hotels use, AirBnB uses its star ratings based on previous customer reviews. For example, a host that has 5 out of 5 stars has been rated highly by his/her customers.
You can even chat to your host before booking to make sure that all of your questions are answered and that you’re comfortable in making the booking, nice!
Once the AirBnB stay is completed, BOTH the host and the guest rate each other which is a point of difference compared to hotels. Wouldn’t it be interesting to get feedback from back from your hotel accommodation provider? I suspect people would take much better care of their hotel rooms if this was the case! AirBnB is built on trust and reputation so getting feedback from both parties is a key item that they rely on to maintain this.
Welcome to AirBnB (AirBnB, 2014)
How does this effect customer relationships?
The parallels between traditional accommodation and AirBnB lodgings do exist. For example, the way an AirBnB host greets you is comparable to the front desk at a hotel. The experience that you have via AirBnB or a hotel is still based on what your original expectations were and if they were met, surpassed or not met will influence your experience. In the case of AirBnB, your experience will have a direct impact on the host’s ratings and how other potential guests perceive them.
What about loyalty and customer relationship management?
This is where things differ between AirBnB and hotels. Most hotel groups have loyalty programs that offer discounts on accommodation, free upgrades, transfers etc. In return, hotel groups can use your information to send you special offers and other marketing material about their services.
AirBnB does not have a loyalty program as such but rather uses “credits” whereby you can invite a friend to AirBnB and both you and your friend get a monetary credit after their next stay. This encourages AirBnB customers to promote the brand.
AirBnB further taps into the “living the local experience” by providing online guidebooks that are put together by hosts themselves, not a travel writer.
Where to next for collaborative consumption?
In essence, anything that you have that can be shared with someone else has the potential to be collaboratively consumed. I’m interested to how it progresses over the next few years and how the broader community take up these services.
Adrian Cassar / adriancassar / ID: 215257131
Iacobucci, D 2014, Marketing Management (MM4), Student Edition, South Western, Cengage Learning, Mason USA.
Bryan Walsh 2011. Today’s Smart Choice: Don’t Own. Share. http://content.time.com/time/specials/packages/article/0%2C28804%2C2059521_2059717_2059710%2C00.html, retrieved 31st July 2016
http://www.fastcoexist.com/3022028/the-sharing-economy-lacks-a-shared-definition#4, retrieved 31st July, 2016
http://www.collaborativeconsumption.com/, retrieved 24th July, 2016
https://www.airbnb.com.au/help/getting-started/how-it-works, retrieved 24th July, 2016
https://chrisriedy.me/collaborative-consumption-in-australia/, retrieved 31st July, 2016