Every day, new businesses are launched in the sharing economy ecosystem. According to Benita Matofska’s report, 7,500 sharing economy platforms were reported in 2015. This trend is not going to slow down and economic thinkers are predicting that by 2030 we will be more likely to rent things than owning them. In fact, consumers’ behavior is shifting and businesses should adapt accordingly.
Thus, the major concern for entrepreneurs is to know how they can grow their sharing economy business successfully. We listed 6 tips that need to be taken into account when running a company in the sharing economy.
1. Guarantee transparency and safety
There is nothing more important than guaranteeing a complete transparency of a business’s actions, especially when it comes to the sharing economy. Likewise, businesses have to be clear about what they are doing with consumers’ data, and ensure its safety. According to a study realized by Harvard Business Review, 97% of people were concerned about the misuse of their data by businesses and the government.
“The more trusted a brand is, the more willing consumers are to share their data.” Harvard Business Review
As a consequence, if your business is transparent and trustworthy, users will be more inclined to share their information.
2. Grow your network
Growing your business also means growing your network. In order to build your reputation and connect with people, participating in conferences, conventions and local events are one of the best ways to develop your influence. It is also the opportunity to find new leads, establish partnerships and discuss with potential investors.
In addition, a study showed that “95% of people say that face-to-face meetings are essential for long-term business relationships.”
Networking is also done through social media platforms. Therefore, you should invest some time in channels like LinkedIn, Facebook and Instagram, in order to establish new connections. Entering social communities is an excellent method to learn about your industry and its participants.
3. Reach potential investors
Sometimes, businesses need a little help to launch their service, expand to a new market or implement a major update. Many successful businesses made their debuts thanks to crowdfunding, which had an estimated volume of $34 billion in 2015. With a volume of $25 billion, peer-to-peer lending represents the most popular form of crowdfunding.
On the other hand, you can finance your company thanks to Angel Investing or Venture Capitalism. Whereas Business Angels are individuals worth at least $1 million, who are investing generally below $1 million into startups, Venture Capital is issued by firms and companies. Venture Capitalists are also willing to invest more in a company as they are gathering funds from different actors. However, the type of investment depends on the needs of the business.
4. Implement non-scalable actions
If your business has just been launched on the market, you might already have a settled marketing strategy. Some actions – like advertising campaigns – to grow your business will require a certain budget. However, large-scale marketing isn’t always the answer, especially when you just started and you don’t want to spend a large amount of money on advertising.
In fact, it is better to target a few people who will be interested in your business and share the same opinion. By reaching these people and talking to them, you will be able to build a community that will believe in your business. These particular people can become promoters of your brand, which is a big advantage, as consumers are “90% more likely to trust and buy from a brand recommended by a friend.”
5. Adapt your strategy continuously
Consumers’ behavior is always evolving and adapting to new changes in our society. As this Mastercard’s infographic shows, the sharing economy will be the subject to a major evolution in the future.
Thus, it is important for platforms to be up to date with the latest changes in their sector, and implement them into their strategy at marketing and decisional levels. For instance, the arrival of the touchscreen on the mobile phone market is a change that Blackberry chose to avoid and led the brand to a great loss of market shares. In this constant race for innovation, the next big disruption in the digital age might be the blockchain technology and businesses should keep an eye on it…
6. Build a trusted community of users
Trust is the most important parameter in the sharing economy. Without trust, there cannot be any exchange of goods or services between peers. However, a sharing economy business should pay attention to reviews and rating systems as they tend to develop at a fast pace, innovating the trust mechanisms within peer-to-peer sectors. As the sharing economy is growing, businesses are facing more challenges as well. For example, a major issue for many platforms is breaking the inactivity cycle of their users. Accordingly, new users who don’t have ratings and reviews are disadvantaged compared to early-adopters, who have plenty of reviews. New services find it difficult to attract users when no one wants to use a platform that doesn’t have any participant ratings and reviews. Also, newer and potentially superior platforms lose out to already-popular services because users don’t want to lose the benefits of their hard-earned reputation. The sharing space is maturing and disrupting the current way of building trust. At deemly, we are working on solving these issues by allowing users to collect their reputation from other platforms into one score that they can take it with them to several platforms (new or already established).
Learn more about our software solutions and break down trust barriers for your users.