Wondering how to capitalize on the trend of on-demand services by creating your own? This post outlines the most important steps you must take in order to be successful.
Need to run an errand in a pinch? There’s probably an on-demand app that can help you out.
From parking your car during rush hour to shipping your packages during the holidays, on-demand services perform tasks that you only thought you were stuck with.
These apps have proliferated and seem to have found much success so far, typically catering to young urbanites with more money than time — or patience — to spare.
On-demand services can be considered a subset or a derivative of traditional delivery and sharing services. The success of Uber in creating a market for technology-enabled, on-demand transportation has encouraged entrepreneurs to look to other, often humdrum, daily tasks that tech-savvy users would be happy to offload.
Successful On-Demand Services Have These Characteristics:
1. The price points for the level of convenience promised are extremely attractive.
Successful on-demand services sit in a sweet spot where they charge more than the cheapest option, which is often free, but less than the dominant suppliers in the marketplace.
The relative affordability of on-demand services also puts things that once seemed luxurious within reach, creating an additional delight factor for users.
For example, Washio, an on-demand laundry and dry cleaning startup that picks up your dirty clothes and returns them clean and folded, provides a service that most associate with fancy hotel stays.
2. Technology is integral to providing transparency and a seamless customer experience.
On-demand services need reliable, world-class technology to facilitate timely scheduling or ordering. Technology also makes it easy for users to access price information, customer reviews, and communicate with employees before and during the service.
As Washio CEO Jordan Metzner explained in an interview with Bloomberg Business, “The amount of technology that happens in real time for your clothes to get picked up and delivered back to you in 24 hours is really immense.”
One company that uses technology in a unique and customer-oriented way is Wag!, a startup that provides certified dog walkers on demand.
The Wag! app allows users to track their dog’s walk in real-time (and contact the dog walker if need be). While this feature is not crucial to Wag!’s core offering, it demonstrates that the startup understands how much users care for and miss their pets.
3. Flexibility will need to be a cornerstone of your business.
Needless to say, the most defining characteristic of on-demand services is that they are only there when users need them. Many successful on-demand services thrive because they offer flexibility in markets that traditionally require a commitment from the user.
For instance, instead of having to interview, hire, and establish a long-term relationship with a provider, users can push a button to get help immediately without any obligation to use the service again. TaskRabbit exemplifies this principle, providing shoppers, cleaners, and administrative Taskers who only show up when needed.
In an interview with USA Today, TaskRabbit CEO Leah Busque said that 60% of jobs are posted for the same day due to the rise of mobile and that “it’s a really exciting time to be in this space and to be able to deliver these connections in real time.”
For inspiration on how to create the next big on-demand service, founders should consider these questions:
What do people do often?
On-demand services do not offer a groundbreaking or radically different product; instead, most offer a better way to do something that people need to do anyway.
This approach is smart because it does not require creating a new market. Everyone wants to be more efficient in their daily tasks so they can focus on things that truly matter to them.
For inspiration, look at the things you do on a day-to-day basis. In what areas can a little bit of technology and organization save a lot of headache?
What markets have been stagnant for years?
On-demand services are successful because they disrupt markets that haven’t seen innovation for years, such as laundry, home cleaning, and parking.
Entrepreneurs who are typically drawn to grand ideas may miss opportunities in markets that seem tedious. These markets are often scattered and lack transparency in pricing and standards. Being able to provide even a small improvement can revolutionize the industry.
Can you build momentum with digital marketing?
Since on-demand services are so reliant on technology, mastering digital marketing will be crucial to gaining new customers.
Many on-demand services offer generous promotions and discounts when first launching. They can benefit greatly from referral programs that reward existing customers for sharing the service with their friends and new customers – or employees – for joining.
Digital marketing also gives startups the chance to display their personalities.
Lyft’s pink mustache became a defining aspect of its initial branding and positioned the company as fun, a little weird, and distinctly non-corporate.
Airbnb used digital marketing to achieve a sense of intimacy through short travel videos and local city guides that appeal to travelers and locals alike.
How attractive is the idea to investors?
Most entrepreneurs dream of landing venture capital to fund their ideas, but attracting investment can be especially important for on-demand services in order to build the upfront technology.
Attracting the attention of a big VC or a celebrity investor also helps the company to gain a lot of buzz before the product is ready to hit the market (although it’s worth noting that early press might not always be a good thing).
Is there an opportunity to build for the enterprise?
When thinking about ideas for a B2C market, it could be helpful to think about what services would translate easily into a B2B environment.
While this isn’t a mandatory thought exercise, many startups have become successful by focusing on the enterprise, even if they started with B2C, as long as the need is real in both environments. Enterprise brings in bigger accounts and provides unparalleled opportunity to scale up.
Concluding Thoughts
Building on-demand services requires creativity, a passion for technology, and a love for efficiency.
Successful on-demand services make people’s lives easier, are loved by users, and can widen employment opportunities in a stagnant industry. And by creating the Uber of a new market, founders can reap enormous rewards and add tremendous value to their local economies.
