Who is a threat to your business?

Igor PauletičSales

Right now Volkswagen must deal with the consequences of the recently discovered scandal while the automotive world keeps moving on. The future of mobility is most definitely electric. I am sure most new cars will be electric sooner than in 10 years. I also believe that we’ll have driverless cars sooner than in 10 years – in Europe as well. But I do have doubts about whether we will continue to buy new cars. Everything seems to be leading towards buying transportation services. Maybe even ordering a certain brand and model if we feel attached to it. This particular car could also drive someone else when I don’t need it. Uber drivers may be replaced by self-driving electric cars owned by the manufacturers (or financial firms that are connected to manufacturers). This is a different way of solving the problem that cars have been solving for so many years.

Frictionless Future

The success of this new economy of sharing is not based solely on its business model that simplifies the business presentation for IT literate individuals and on the “amateurization” of the service industry. The fact that the services of this new economy remove obstacles users (consumers or a business customers) were facing before they appeared is even more significant. Services such as Uber, AirBnB, Booking.com or Opentable do not solve problems that were unsolvable before, but they do solve them in a way that is (much) more user-friendly.

Success comes from solving a well-known problem in a (much) more user friendly way. Click To Tweet

I cannot imagine having to find a hotel in the yellow pages when I recently visited Boston and New York. Booking.com made it quite a lot easier. It is the fastest and most simple way to find, book and pay for a suitable room. Even easier than making arrangements through a travel agency.

Uber is also nothing more than a standard taxi service. It just removes a lot of obstacles for the user. Do you have the phone number of the taxi service in Vienna? Do you know the current location and arrival time of the taxi your ordered? Do you know who will drive you and the satisfaction rate of their passengers? Do you know how much (approximately) you will need to pay for the fare before you order it? Do you have any idea how much time it takes to get you there? How would you know that the taxi driver is taking the optimal route and not the scenic route only to charge you extra? Do you know how you will pay for the services rendered? …

Thinking about all these reasons led me to the conclusion that Uber does not even need to be cheaper than taxis. The service is more user-friendly, just because a simple phone application removes all the problems of the classical approach to the service. All the new economy services that we discussed above have the same advantage. They remove obstacles for using traditional services. This is their key innovative component and it wouldn’t be possible without connected customers.

Who owns the customer?

The digitalization of society (internet connection of users and mobile devices) enabled important advances in connecting providers to their customers. Recently some providers didn’t have any contact with the users, yet their devices or services can now easily establish direct communication with end users. What’s more, the providers can establish a direct technical connection using devices that their customers use.

Internet of Things (IoT) improves aftersales support for customers, and enables providers to acquire additional information about them. But the simple fact is that the IoT takes control over the customer, not the device itself. I cannot imagine my next car without thinking that it will be able to establish an online connection with its manufacturer (like my mobile phone today) and encourage me to service it on time, change the tires, buy a new car,… The simple fact is that communication with customers is currently left to salespeople, yet the manufacturer most probably won’t even need them in the future. Tesla had this in mind from the very beginning.

It's high time for direct customer communication. There'll soon be no more need for intermediates. Click To Tweet

Direct communication will first come from all the electronic device manufacturers while service providers without their own devices will focus on mobile devices and wearables to monitor our buying habits (do not forget about geolocation – it can be an important context for communication). These devices will become a crucial channel for communicating with consumers.

Soon, there will be no more place for intermediates. If your business is based solely on being an intermediate between manufacturers (providers) and customers and it does not bring any added value, start thinking about a new business model sooner rather than later.

Can your company die as well?

Without a doubt. Company mortality has risen significantly. Research shows that 50 years ago the lifespan of Fortune 500 companies was 75 years, yet it was 15 years at the turn of the century, and only 7 today. It may seem unbelievable, but even such giants as Google are at risk in today’s markets. Even Uber, which we used as a reference example of the new economy, has competitors who try to take over their business. They might be able to offer more benefits to customers in an even more user-friendly manner.

You need to offer more in a different, customer-friendly manner. Click To Tweet

Such a radical reduction in company lifespans can only mean one thing – the fight for customers and market survival requires greater intensity of development and innovation. If we take into consideration that our competitors are a threat, because they came up with a better way to solve customers’ problems and archived better communication, the answer to our company’s focus seams quite clear. Start with the little things. There must be an easier way to set up a doctor’s appointment than calling them on the phone. You can order a hamburger from your car while driving to pick it up. Maybe you could even reserve a free parking space in the town center using your phone, which can in turn save you time and money. Any such user experience improvement can provide a competitive advantage and an opportunity to connect with the customer. Only one-on-one communication with connected customers increases the chances for the survival of your business.

 

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Ps. If you already thought about removing obstacles for your services and you already focus on your customers, but you cannot transfer this idea to practice, or you are just figuring out that you need to transform your business, but you don’t know where to start, I would like to invite you for a chat. We can help you in both cases.

 

 

About the Author

Igor Pauletič

Founder and CEO of FrodX, who uses his rich experience to assist customers to transfer the latest technological, operational, and social trends into their business operations. He mostly focuses on new product development, omnichannel sales architectures, and go-to-market strategies. As a team member, he fills the role of the idea generator and constantly challenges the status quo and established decision making patterns.