WHAT IS YOUR REACTION OR REFLECTIO TO THE FOLLOWING CASE ?
Global Feature
Developing Loyal Customers at Airbnb
Airbnb relies on the internet to connect guests with hosts.
In less than a decade, Airbnb has become a major player in the global hospitality arena. It began in 2007 when roommates Brian Chesky and Joe Gebbia could not afford the rent for their loft in San Francisco. They made their living room into a bed and breakfast, accommodating three guests on air mattresses and providing them breakfast; thus the company was originally called “Airbed & Breakfast.” They eventually shortened the name to “Airbnb” and now serve two types of customers, hosts and guests, by being an intermediary that provides an online database of personal properties to rent. Airbnb hosts are customers who list properties—which can be single rooms, a suite of rooms, apartments, houseboats, or entire houses—on the Airbnb website with the intent of renting them. The listing is free and hosts decide how much to charge per night, per week, or per month. Travelers (or guests) are customers who search the Airbnb database of available properties to rent by entering details about when and where they would like to travel, considering such issues as location, room type (e.g., private room or shared room), price, size, amenities, and host language.
From Airbnb’s humble beginnings the company has developed an incredible global presence. Consider the following facts: as of 2016, Airbnb had more than 60 million users, 640,000 hosts, and 2 million listings, averaged 500,000 stays per night, and was active in 57,000 cities in nearly 200 countries. Airbnb’s revenue for 2015 was $900 million and as of 2016 it was valued at $25 billion; this valuation is more than the InterContinental Hotels Group or Hyatt Hotels, making Airbnb the world’s largest hospitality brand.
CREATING RELATIONSHIPS WITH CUSTOMERS
A key part of Airbnb’s global success has been its ability to develop strong relationships with its customers. To cultivate relationships with hosts and guests from so many different countries, Airbnb ensures that all parties have a sense of trust for how things operate. Hosts must agree to ensure their home is clean and that they are there on time to welcome guests and hand over the keys. In turn, guests must agree to keep the house secure and tidy, and Airbnb agrees to facilitate the whole process and act as an intermediary or source of compensation if anything goes wrong. Before being able to make (or accept) a reservation through Airbnb, each customer (whether a host, a guest, or both) must create a thorough (online) profile to cultivate a sense of accountability. Airbnb encourages customers to upload profile photos that clearly show their faces, and to write detailed descriptions that reveal themselves on a personal level. Additionally, customers can create their own Airbnb symbols, and upload a 30-second profile video to further illustrate who they are to the Airbnb community.
To further develop relationships with its customers, Airbnb includes what it calls “Verified ID” as a safety measure as part of its platform, mandating that customers verify their identity through government documents (such as a passport or driver’s license), social accounts (such as Facebook or LinkedIn), and contact information before they can host or stay with another guest. Airbnb also assigns each reservation a “trust score,” based on the reservation’s details, payment, reviews, and the communication between guest and host. Airbnb uses such capabilities in developing customers’ trust and confidence in its service.
FACILITATING SOCIAL BONDS AMONG CUSTOMERS
Airbnb attributes part of its success to understanding well that people want to deal with humans. Customers can access Airbnb’s services from their laptop, tablet, or mobile phone, and many feel they are instantly connected with people they can trust. To develop strong social relationships among its customers (i.e., between hosts and guests), Airbnb cultivates interpersonal connections through Airbnb groups, promotes communication between hosts and guests, provides post-reservation reviews, and hosts in-person events. This, along with the other safety precautions mentioned earlier, encourages users to not only trust each other, but to trust in Airbnb’s brand as a whole.
CULTIVATING LOYALTY
Airbnb does not offer a traditional rewards program for hosts or guests that hotel chains often do. Instead it focuses on building loyalty with hosts by:
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Identifying “Superhosts.” Just like PowerSellers on eBay or Google’s Trusted Stores, hosts who continually provide a great experience for guests are rewarded with stellar reviews and subsequently become part of the Airbnb Superhost program.
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Providing Perks. Those who reach Superhost status receive several perks, including a badge they can put on their listings, priority support, and travel coupons. Their places are also profiled in visible spots such as “Airbnb Picks,” appear high in property listings, and are featured in the company’s quarterly magazine, Pineapple.
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Creating Local Groups. Airbnb has created platform for hosts to form local groups that get together and learn from each other. One event entitled “Airbnb Open” brought 1,500 hosts together face-to-face so that Airbnb could share future plans and product news with them.
When it comes to cultivating loyalty with guests, Airbnb periodically sends out inspirational emails and it allows customers to create wish lists of where they would like to go on future trips. It has seen such efforts change people’s behavior and actually get them to travel more.
FOCUSING ON THE CORE SERVICE OFFERING
Airbnb believes responsiveness is important to their customers and therefore provides 24/7 coverage in 12 languages around the world, making it highly accessible when customers need assistance. It encourages hosts to respond quickly and has a system through which guests can rate hosts on their responsiveness. To help create great experience for customers, Airbnb has a team that monitors social media to ensure customer service issues are dealt with quickly.
To facilitate good rental experiences, Airbnb encourages each customer (both hosts and guests) to write a review for the other immediately after each stay. This review system creates sort of quality control to hold both hosts and guests accountable. Reviews not only provide insights into hosts and guests, they also provide “insider tips” about where to visit, have dinner, or experience things that only “locals” would know about. Airbnb feels that hosts can help guests, particularly international ones, get a view into their lives and how they live—creating a more memorable experience.
In the “sharing” economy people are increasingly trusting direct connections with other people (who are often strangers to each other); however, they tend to rely on the intermediary (i.e., Airbnb) when peer trust fails. For that reason, and to provide additional confidence in their services, Airbnb has a $1 million guarantee to protect their hosts. That is, Airbnb guarantees that every booking on its platform is covered by its “Host Guarantee,” which states that Airbnb will reimburse hosts for damage to their property up to $1 million—at no cost to them. Nothing is more important to Airbnb than engendering the trust of its customers. Indeed, convincing hosts to entrust complete strangers with their most valuable possessions (their homes and belongings) is the greatest obstacle in the Airbnb business model.
A SERVICE BASED ON TRUST
Airbnb sees itself as more than just a service; it believes it created a global community built on trust—and that each transaction is an experience, not merely a purchase. Airbnb has been able to compete in the hospitality industry and develop a loyal customer base internationally because it acts as the safety net that people can trust, which then gives them the confidence to host strangers or sleep in others’ homes.
Sources: Katerina Jeng, “Trust in the Sharing Economy: 3 Lessons to Learn From Airbnb,” https://brandfolder.com/blog/shared-story-3/building-trust/; Brett Lyons, “Customer Loyalty: Lessons from Airbnb,” http://www.tlsasalestraining.com/content/customer-loyalty-lessons-airbnb; Rachel Botsman, “Where Does Loyalty Lie in the Collaborative Economy,” http://rachelbotsman.com/work/where-does-loyalty-in-lie-in-the-collaborative-economy/.
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