Platform Thinking in Business Development: Why Companies Like AirBNB are so Successful

Popular booking application, AirBNB, allows consumers to book reservations and events that are out of town, by providing important information about these venues, which can help its’ users make decisions.  Users can add information in the form of reviews, ratings and photos. AirBNB uses the platform business model.

The platform business model is a scalable business model. It takes advantage of technology to connect people and organizations in order to exchange services and things of value (Parker, 2). Less viable today, is the pipe business model, where stuff is consumed in a linear fashion, like water flowing through a pipe (“Why Business Models Fail..”).

Companies that use the platform business model today are Amazon, YouTube, eBay, Wikipedia, iPhone, Upwork, Twitter, KAYAK, Instagram, AirBNB and Pinterest (Parker, 3).

AirBNB is a company that uses the platform business model approach, and connects to various venues like rental homes out of of the country, and popular reservations, experiences in NY and featured destinations. The platform of AirBNB is a place where consumers can easily access the service that AirBNB has to offer based on the network of connections that the business model enables (Parker, 9).

The “platform” or application of AirBNB has many features of a top-notch platform. The site has a solid, clean user interface in bright, modern colors, simple layout, good color scheme, and an attractive logo. It is simple yet elegant, which gives off vibes of “exploration and connection to external sources.”

AirBNB is a great example of a successful business that started from scratch, but became successful by understanding the importance of platform marketing in order to build customer retention (Parker, 9).
AirBNB

AirBNB

With the platform approach there is a greater user interaction and opportunity for business development. Platform marketing is like the Internet where information congregates rapidly for consumer interaction on social media and forums, Twitter and Facebook. An application that uses platform thinking is YouTube, which has a sleek and simple interface that is poised to host new content, create user engagement, and increase customer retention, by providing opportunities for the music hosted on it’s servers to be shared amongst users, and on Facebook (“Why Business Models Fail..”).

Unlike e-commerce applications online, which use pipe thinking, platform thinking optimizes conversions, analyzing consumer data regularly with modern data-analytics tools (“Why Business Models Fail..”).

These services can grow business as content curators are able to gauge what is popular and interests their consumers, unlike the pipe model that is limited, and only focuses on the products it is selling. Businesses who are interested in long-term growth, and customer engagement should apply platform thinking instead of pipe thinking (“Why Business Models Fail..”).

Meet other digital marketing professionals interested in platform thinking at goElaborate!

 

References

Choudary, Sangeet P. “Why Business Models Fail: Pipes Vs. Platforms.” Wired, https://www.wired.com/insights/2013/10/why-business-models-fail-pipes-us-platforms/. Accessed 10 October 2017.

Parker, Geoffrey G., et al. Platform Revolution: How Networked Markets Are Transforming the Economy And How to Make Them Work For You. W. W. Norton & Company, 2016.

 

 

 

Demographics is Important for Customer Retention

Successfully Marketing While Keeping Demographics in Mind

Marketing to customers of different demographics is simpler than it looks.

Consumer demographics are broken up into different categories: millennials, generation X, baby boomers, and the silent generation, the elderly (“15 Strategies For Marketing..”, 2015).

Understanding these various types of people and their income levels, age and ethnicity is very important to successful marketers today (Mansfield, 2014).

Millennials are a very mobile generation, and work hard to ensure that their peers are up-to-speed with each other. They may be impulsive, but are able to score great business deals when they need to. Generation X is more reserved and hard-working, and prefer to search for products carefully, and work towards applying discounts. The silent generation, who were born between mid-1920s and 1945, don’t tend to spend that much, having a traditional mentality. Besides age, these demographics are divided by gender, income, and ethnicity. Consumers who have more disposable income, or who are rich, are better targets for marketers selling clothing and accessories(“15 Strategies For Marketing..”, 2015). Understanding demographics creates successful outcomes for companies that wish to acquire long-term customers (Nelson, p. 4).

In her book, “The Transformational Consumer,” Tara Nelson talks about transactional marketing versus transformational marketing. MyFitnessPal, the world’s largest digital health company, started with a small tiny orange logo of a “tiny dancer”. It was catchy, cute, and motivational. The tiny dancer grew to a full-fledged app with 45 millions users in over 18 months, without any paid advertising (Nelson,  p. 2).

What?!? How is this possible? 

MyFitnessPal was smart. It didn’t work hard to acquire customers relentlessly like some marketing companies. They won over their consumers by caring about their humanity, and this was extremely influential in winning over transformational consumers, that, well, cared about being “transformational” (Nelson, p. 3).

Humanity?!? In Marketing??

This is partially because people get sick of being treated like a business transaction, and getting hassled by “tit-for-tat”, stressed-out marketers trying to reach marketing goals by buying their consumers every week, day in and out, like a bad, endless arts and crafts project (Nelson, p. 4)

Marketers finally understood that consumers were smart, instead of trying to buy them out. A picture of our victim (the average consumer) below.

demographics

Continue reading Demographics is Important for Customer Retention

Consumerism Driving Customer Retention

Years before it was the world’s biggest online retailer of books, Amazon.com was “an idea floating through the New York City offices of one of the most unusual firms on Wall Street: D.E. Shaw & Co.” (Stone, 17). Jeff Bezos, entrepreneur and David E. Shaw, financial analyst, with backgrounds heavy in computer science, were able to predict the vision of Amazon.com. At this time, the Internet had just taken off and thousands of households were just discovering it’s beauty. Financial professionals & analytics, were able to determine that “The Everything Store,” as Amazon is referred to now, would be a household name in the turn of the century. The world watched as the preliminary tools of the first computer scientists evolved into complicated applications like Amazon, that were able to make consumerism quick and easy.

consumerism

Amazon took off in Seattle after “Bezos’ parents invested $100,000, in Amazon.” (Stone, 33). On 1995, much of the preliminary work in stocking Amazon’s “shelves” was done by ordinary people. (Stone, 38). In the basement, in Seattle, many supporters packed many boxes of “esoteric” items, well into the night. Setting up Amazon took a lot of dirty work, but soon, Amazon.com plunged into the Internet, like a new animal that was reborn into the wilderness. (Stone, 43). There was an air of excitement post release. Everyone at the new company worked super hard to keep Amazon afloat. (Stone, 49). Jeff Bezos’ and David Shaw’s internet startup became 150 employees. Bezos was a great leader. Customers flocked to the site over the 1999 holidays after Amazon made national headlines. Amazon’s story was a story of supply and demand. It was a story of understanding consumerism (Stone, 94).

During that year, Amazon worked hard to keep up with holiday orders, and Bezos pulling crazy antics to fulfill out-of-stock orders, like raiding toy stores in third-world countries. Employees made sacrifices to work at distribution centers across the country. (Stone, 95). Amazon was “frugal to the bone”. The bombing of the twin towers didn’t phase Amazon, but pushed it further on it’s trek. (Stone, 127).

Amazon pushed onward like a marathoner, with its operations. In the next decade, Amazon expanded for several reasons: supply and demand, free-shipping and next-day shipping, and Amazon Prime, which paralleled Netflix,  Amazon was one major example in technology’s history, of how a new internet startup was able to retain customers. Amazon was there for it’s customers in the times that they most needed it, it worked endlessly to stay alive often at the cost’s of it’s workers.

5 Ways to Increase Customer Retention, which Can Be Summerized from “The Everything Store,” by Brad Stone.

  1. Understand Your Customer, Understand The Market, Understand How Consumerism Works

2. Be at the Right Place at the Right Time

3. Always Make Sure Your Shelves are Stocked During the Holiday

4. Perservere

5. Be a Leader, but be Fair to Your Employees

Amazon is a story of a tech company that took advantage of the Internet “bubble” in 95’ and ran with the idea of e-commerce on the web. It exploited the lower-class in America showering the world with a glittery picture of Internet startup fame, and the people who put there blood into making it a reality today were the lower-class in America.

Today Amazon boasts it gives individuals a “great opportunity to work at Amazon,” to no wit’s end.

The tech company struggled with financial hardship in it’s early years, but is now successful because of Jeff Bezos’s business spirit, and his uncanny ability to fulfill holiday orders in any way possible. Shaw and Bezos, working together, were able to see the vision of Amazon.com as financially possible, and achievable with the uproar of the Internet and the average household computer, especially after the turn of the century.

Decades later and overwhelmed with stock, Amazon and it’s employees are growing weary. Because of the high consumer demand, huge Amazon warehouses have opened. The leadership and skill of Amazon’s leaders is evident by it’s net capital today, and customers are greedily flocking to the site.

consumerism, consumerism, consumerism…

But when does mass consumerism end?

Are we really in the midst of a spiritual awakening, or will America paint it’s own dreary picture in the next decade, grey like Seattle, where Amazon’s journey began?

 

References

Brad Stone. The Everything Store. Hachette Book Group, 2014.