In a phrase, the Local On-Demand Economy (LODE) is “the uberfication of local services”, according to local media research experts BIA/Kelsey. What does this mean?
With an Uber app installed on your mobile phone, you don’t have to search Google or an online directory to find a cab company that services your area and then call them to arrange a ride. You simply set up your Uber app and then tap a button on your phone screen. You pre-pay a set price, and you allow Uber to select your driver and take care of all the details.
Using this same on-demand model, Amazon recently launched Amazon Home Services. This means choosing from over 700 services like babysitters to handymen to plumbers, contractors, lawn services, piano teachers, etc. Rather than searching on Google or Angie’s List or online directories, consumers can hire a service provider and let Amazon handle the details.
According to BIA/Kelsey, “All of Amazon’s “hand picked” pros that hope to work with Amazon must undergo background checks, which will cost $50 (plus $40 per employee); have appropriate licenses, and carry insurance. All listings will also feature Yelp reviews as well. Pros will pay Amazon 20 percent for services that cost $1,000 or less, and 15 percent above that amount, as well as monthly subscription fees — although those fees are waived through June 2015. The 20 percent fees are comprised of 15 percent service platform fees, and 5 percent transaction fees. The fees and requirements are fairly standard in the industry.”
Amazon isn’t the only online giant who wants to become the middleman between your business and your customers. Google is adding a “buy” button to their search ads, and is becoming increasingly more aggressive about showing information in their search results designed to keep you from clicking on websites. They are clearly gearing up to compete with Amazon in the online marketplace for goods and services.
What does this have to do with your small business?
Most service-based businesses will find that an effective plan for getting (and keeping, and up-selling) customers is a combination of traditional marketing tactics plus some level of participation in the on-demand model. Integrating CRM (Customer Relationship Management) into the business management tools gives the business owner control over appointments, pricing and the entire customer relationship. For repeat customers and word-of-mouth referrals, CRM can’t be replaced by on-demand.
As with any successful marketing strategy, it pays to go where your target audience is. Millennial customers (born between 1980 and 2000) will skew highly mobile and they will use Uber-type on-demand apps. Generation X (born between 1965 to 1980) and Baby Boomers (born between 1946 and 1964) are also moving away from desktop computer searches, shopping and research to mobile searching, but they still research and find their own service providers as opposed to turning over control to a middleman. And Boomers still control 70% of the disposable income in the U.S. Knowing your target demographic helps you know what kind of marketing mix you need.
For more information about LODE and small business marketing, check out the BIA/Kelsey Local Media Watch blog.