Unless you’ve been living under a rock recently, you know that Uber is a taxi service start-up that connects drivers with folks who need a ride. As a business, Uber connects riders and drivers (just as a taxi service does) and they collect a 20% fee on top of what is paid to the driver. As of December 2014, the company is worth $41 billion. Here is the Wall Street Journal article with the details on the financials. When examining Uber, I find some interesting lessons for service contractors. The key takeaway is:
How does a simple change in customer service practices lead to such a massive breakthrough in shareholder value?
Uber has effectively changed one thing in the customer experience associated with a taxi ride – they have dramatically improved customer service by providing rich information to the customer throughout the service cycle. Uber has done this by eliminating the aggravating service uncertainties and the unknowns that are inherent in hiring a taxi. There’s no need for the customer to jump up and down on the curb to hail a cab or berate a dispatcher who has no better information than the customer on the real whereabouts of the driver and a likely pickup time. The Uber customer simply touches the application on their smartphone, chooses the driver/car with the best value for their needs (arrival time, type of car, price), and then collaborates with the driver from pickup planning through to drop-off and billing. The ride is essentially the same, but everything about the customer service experience is different. Thus, in exchange for amazing customer service and 20% above what is paid to the driver, Uber has built a company worth $41 billion.
Think about the parallels with the service contracting space. Great service contractors will tell you that a premium price is achieved through great customer service. Any contractor trying to run the business simply as a markup on skilled technician labor is ultimately going to fail. Yet most service contractors have a customer service approach that resembles that of a taxi company. The customer is only engaged via phone calls and a paper receipt at the end of the “taxi ride.” How valuable is that customer experience? Not very. How much more valuable might a service contracting company be if it were to adopt an Uber style approach to customer service? Much more.
Here are the lessons from Uber on building a premium brand through great customer service:
1) Engage the customer online throughout the service process: Customers do not want to speak to your dispatcher about status. Also, it is inefficient and likely prone to errors. Show them what is happening online – the driver, the arrival, the problem, the fix, the fees.
2) Images are more powerful than text: Show the customer, don’t tell them. Uber shows the car en route to the customer. Give the customer photos and images of what is happening with the equipment being serviced. Humans learn from stories and images.
3) Make it easy for them to engage your company: Uber does this by being ever present as an application on the phone. You can also do it by being easy to find online, by being in their inbox with regular correspondence about your recent service delivery, by providing service history online, and by allowing them to initiate service online.
Service contracting is definitely different than a taxi service, but the customer service experience has certain parallels. New Internet services are coming on the market everyday attempting to “Uberize” the service contracting business. Because the dynamics of service contracting are more complex than a taxi ride, it is unclear if these emergent Internet brands will gain the momentum of Uber. What is certain, however, is that great brands stem from great customer service. There’s little doubt that service contractors can dramatically improve the value of their business by embracing many of the elements of customer service that make Uber worth $41 billion. What steps are you taking to create a premium service contracting brand by engaging your customers online and pulling them into the service process?