by Sam Madden8/17/2017
Sam is a cofounder of PocketSuite (YC W16).
We still hear it all the time: “I’m building the Uber for X.”
That idea – an app that lets consumers get a specific service when they need it, while giving service professionals (“pros”) immediate work – makes complete sense. It worked great for local transportation services, so why could it not be applicable across all types of industries? Anyone should be able to get any service they want efficiently, and the supplier of said services should be able to collect payment for rendering said services.
The problem, however, seems to occur in the execution of this idea. That is to say, technologists have been trying to use the Uber product as the exact roadmap to disrupt the entire service economy. We see this happen in an ever-increasing number of industries, from tutoring to dog walking to home cleaning to lawncare and more. But something is amiss, since we are also seeing an increasingly growing number of “Uber for X” failures.
The reason for this high failure rate is most founders underestimate the intricacies and nuances of the specific service industries they are trying to uberize. Where the service type lies on the skill vs. on-demand scale (visual included herein) must determine the founder’s product roadmap in order to maximize value for both consumers and pros. And maximizing value means providing max convenience for the client and max utilization rates for the pro.
When you boil it all down, there really are just 2 core attributes that need to be evaluated before building an Uber-like product for the consumer:
1) Skill: How skilled does the pro need to be to perform the services requested by the client?
2) Schedule: When (and how often) do the services need to be rendered for the client?
Some services are considered “specialized”, others are considered “commoditized”. The closer the service is to a commodity, the smaller the range in service quality consumers will experience.
Take local transportation (i.e., taxis) as the perfect example.
The skill it takes to drive a passenger from point A to point B is not that demanding. Driving is something that practically everyone over the age of 18 knows how to do (i.e., a service commodity), and as a result the cost per mile driven does not vary depending on which pro is doing the driving.
And due to the commoditized nature of the skill, the consumer request for said services can be done in “1 tap”. The specification of the service is simple: I am located here and I want to go there. Even simpler, the Uber app takes it to another level of convenience – since GPS already knows where you are, you simply need to type in where you need to go. Ergo: simple service, simple request.
Additionally (sticking with taxis again here), there is little need for the consumer to find the “right” pro to drive them on Uber. Uber has a rating system, yes, however the use-case is more to stave off outliers (i.e., insane people). Consumers are not that concerned if this next ride is going to be “up to par” with their previous ride. This limits the need to search and discover pros, and also limits the need for repeat rides with the same pro.
However, if you need to get your garage door fixed (for example), that service request is a bit more complex. The scope of that service is more than just “1 tap”. Is the damage to the garage a dent or is something inoperable? When/how did the problem start? How big of a garage are we talking here? Automatic or manual roll-up? You need a skilled professional to help with the specifics of the work needed, and you need a structured way to communicate the problem.
Or how about your aggressive dog needing training? The spectrum of who can train your pup can vary tremendously. The cost of this type of skilled service can range considerably depending on the qualification, experience and accreditation of the trainer. As a result, the consumer wants to hand-pick either one or multiple professionals who seem to be the “right” person for the job.
The deeper the skillset required to perform a service, the less likely the traditional Uber model will work within said service industry. The framework of the technology needs to be able to take into account the customization of any service or project needed, the upfront understanding if the pro is right for the job, and the flexibility of communicating the intricacies of any service request.
There is a notion of immediacy when one says the word “on-demand”.
In reality, the meaning of on-demand is not necessarily “now”, but “when I want it”.
In the taxi business, instant service (i.e., the “now”) is fundamental to the service itself. It is rare that one plans their day around transportation – typically it is the opposite. Transportation service is needed immediately when requested, and is typically something that occurs in short spurts multiple times a day (think not just taxi, but bus, subway, etc.). Uber’s “tap a button for service” execution is instrumental in reaching this goal.
However, if a consumer needs someone like a tutor or life coach or therapist, for example, then that is not something (or someone) they necessarily need within the next 2-4 minutes. Not only that, but service sessions do not just last a few minutes – they can be hours in length.
Due to the lead time and longer-duration service needs, a lot of scheduling logistics can take place behind the scenes – that means scheduling conflicts, re-scheduling needs, last minute cancellations, no-shows, etc. To boot, for many skilled trades, the services rendered are not just a one-time thing – there can be standing appointments once a week, or a continual re-occurrence of sporadic bookings. The “one-and-done” model is out the window.
The scheduling element intertwines with skill when the consumer finds a highly skilled pro they trust and respect. The return on investment for a consumer of finding another pro who is as skilled and as easy to deal with logistically from the one they already have is extremely low – thus increasing the need for consumers to reschedule the pros they know and love. And for most professions, a consumer-pro relationship can last a lifetime.
The technology framework being built must not assume that ‘instant’ and ‘new’ are the default behaviors when it comes to a client booking a pro. In most cases, the platform must foster not only the recurring relationship between two parties, but also support deeper logistics when it comes to planning the rendering of the services.
A visual of various service trades can be seen below, as to where they lie on the skill vs. urgency scale:
Every pro wants the same thing: to make more money.
The most direct route to achieving that goal is to maximize utilization rates. That means ensuring that the pro’s calendar is filled up as much as possible with the highest margin customers.
It is important to note that for pros who are true entrepreneurs and want to build businesses, max utilization must be economical. If not, then pros end up being part of the on demand / sharing economy with time spent on work and income earned not being sustainable. I believe there is a fundamental difference between an entrepreneur and a full- or part-time on-demand participant.
So for pros delivering more skilled services, optimizing max utilization boils down simply to conversion and retention of customers.
The focus here must be on transparency (for the pro) of (a) the service request, and (b) their customer.
Pros need quick and easy access to the details of the service request coming in from the client. This feeds into not only how quickly the pro can respond, but more importantly the substance of their response. The response could require follow-up questions, a quote, a duration estimate, an intro call request, etc. That initial response is (in many cases) the first impression the pro can give to the consumer. This is hugely important when the pro is attempting to communicate the competency of their skillset, which ultimately leads into getting the consumer to convert to a paying client.
The response of the pro also depends not just on the job, but on the customer. If a new customer reaches out for a service request, then will they be given a lower rate to increase the likelihood of conversion? If a returning customer, will they be fit in at an earlier slot on the calendar to keep them happy? If it is a notoriously frugal or slow paying customer, does the pro bypass the request in the hopes of finding a higher quality client to fill up the time slot?
But for commoditized services, the focus on conversion is not meaningfully relevant. Whatever taxi shows up in front of a consumer waiting for a ride, chances are they are getting in. There is no sales pitch needed or convincing required. No other taxi driver would be able to do a meaningfully better job driving someone across town, and customer pricing will not change based on the driver profile.
With conversion being the first step in getting that calendar filled for skilled pros, knowing the service and customer type is crucial in optimizing their conversion funnel. The pro-side framework must have quick access to details on the request and the customer history, in order to fully deliver conversion value.
Technology cannot necessarily miraculously make the pro more skilled at their job, but it can certainly help with the overall customer experience the pro provides their client.
Retention is important because with increased retention comes more visibility for the pro as to measuring their calendar utilization rates. This helps them more easily manage how much conversion improvement they need to focus on when it comes to new clients.
A lot of this ties into the “schedule” component discussed above which is all-important for the client. The scheduling element is also helpful for pros to stay organized in their own right. This then leads to a seamless and pleasant experience to their customers – and the happier clients are, the higher the likelihood they will return as repeat customers. The work needs to be done right of course, but if scheduling hiccups, forgotten appointments, missed message replies, incorrect billing, etc. get in the way of the actual service being delivered, then that can cause churn. And for most skilled industries where repeat clients make up 50% of their annual sales, high churn can put a pro out of business.
Empowering pros with technology to directly communicate, seamlessly schedule, and properly bill customers, will drive retention rates and small business success.
Before you go ahead and start building the next “Uber for X” product, make sure you have thought through some basic variables.
On the consumer side, think through what type of service industry you are trying to disrupt and where said industry falls on the skill vs. urgency graph (see the chart). This will steer you to focus on maximizing client convenience the right way.
As for the pro side, think through customer conversion vs. retention needs, and identify what balance would need to be optimized for the highest and most economical utilization rates.
At the end of the day, if the more time you focus on building to optimize the client-pro relationship, the higher chance of your platform’s success.
Sam is a cofounder of PocketSuite (YC W16).