You’ve witnessed Amazon’s seemingly boundless powers as they continue to topple retail powerhouses. Borders, Circuit City, and countless others have become obsolete due to the disruptive nature of Amazon’s business model. However, retail is not the only industry being disrupted. Technology has changed how we shop and the ease with which we purchase. This is causing disruption in multiple areas.
Nearly sixty million new and used cars are sold in the United States every year, and most of these cars are still purchased through the same antiquated sales model that Henry Ford designed to sell his Model Ts. The sales process from going to a dealership to pick out your car, to negotiating with the sales team, to discussing financing options can take hours to complete.
Now, with smartphones, you’re able to browse and select a car online and purchase within fifteen minutes, while you’re doing laundry, making dinner, or even (as our colleague did recently) while rocking a baby to sleep. You might even get a better deal than by buying from a dealership, and you no longer need to set aside an entire day there.
It’s not just car buying that’s changed. The ride sharing economy has completely disrupted the executive limo industry. For $189, a chauffeured executive car from any New York City airport to Manhattan used to be the gold standard, but compare that to an Uber Black car, which now costs $85 for the same trip in a similar type of vehicle. The hyper-informed consumer can now order a black car with the click of a button, where you once had to arrange such a service in advance.
In another radical example of the disruptive power or the sharing economy, Arne Sorenson, CEO of Marriott, mentioned to investors in 2014 that Marriott intended to add 30,000 rooms to their portfolio over the next year. The very next week, Brian Chesky, CEO of Airbnb, countered that statement by announcing on Twitter that not only would they be able to add the same amount of rooms, he said they’d do it in the next two weeks. Leading companies like Marriott and others are learning to move fast to avoid disruption and eliminate the unknowns as the world turns upside down. Here are the essentials:
- Understand Consumer Behavior. Everyone’s talking about consumer insights these days, but that’s just not enough. You need to be able to see what the consumer sees to avoid becoming a victim of disruption. With their mobile devices at their fingertips, their choices are nearly endless. You need virtual real-time access to all the options available to each individual consumer. If you have millions of consumers, that could mean billions of alternatives.
- Listen to what Customers do. Once you have all that data you must segment the consumers to see what they really want. Are they price-sensitive, or perhaps they’re more service or quality-sensitive? Is there a time sensitivity to their purchase? Predictive analytics enables you to embrace the individuality of the consumer and appreciate what motivates them. With today’s technology, you can know in advance the trade-offs your customers will make to assure you have the right product at the right time for the right price.
- Be Agile. Differentiate Yourself. The world has not only turned upside down, it’s likely to do so again. Decision cycles are shorter. Previously, decisions you had to make for pricing and inventory only needed to be made quarterly, or perhaps monthly. These days, those same decisions need to be made weekly, daily, or minute-by-minute. Enhance your brand power in order to differentiate yourself. This will enhance your pricing power.