Showaround: Disrupting the Industry of City Tours

February 13, 2017 tessazander Leave a comment

City tours are a great way to discover new places. However, often the tours only visit the touristic places and can feel somewhat generic. To be able to experience the more authentic feeling of a city, local guides are a perfect solution. Though, finding these locals may be a hurdle and therefore Showaround is here to help you out!

“There’s is no reason to be just a mere tourist anymore, not when locals can show you an edgier, more beautiful and more authentic version of their city.” – Showaround

What is Showaround?

Showaround is a platform which connects local guides with tourists in 198 countries and 7202 cities. Showaround was launched in June 2015 by Linas Sablosvskis and currently 75744 guides are signed up.

Locals have a profile with their interests, spoken languages, hourly rate, reviews and feedback from tourists. As a tourist, you are able to find guides based on the city you are visiting. Another option for tourists is to ‘create a trip’, on which locals are able to respond with an offer.

When the guide has accepted the offer, the tourist pays Showaround and you can message your guide via the platform’s messaging system, to tailor the tour. The money will only be transferred to the guides, when there are no complaints. Also, they provide a money-back guarantee to the tourists.

How does the business model work?

Showaround is able to make revenue from these tours, by imposing an 18% commission on each tour, paid by the guides. This 18% covers the costs they incur, which include support, platform management services and promotion.

The cross-side network effects are important in this business model, since the value to a tourist depends on the number of guides and vice versa (Granados et al., 2008). This is beneficial for Showaround, since they also have two competitors who offer similar services with less guides, Tours by Locals and Shiroube. Furthermore, this network effect raises barriers to entry, because of the users that have no incentive to leave (Granados et al., 2008).

Efficiency criteria

One of the problems, which can be found in any ‘gig’ model, is that the guides are not employed directly by Showaround. This excludes them from employment rights, such as right to a minimum wage, breaks and restricted working time and a pension scheme (McIlroy, 2016). Until the law is able to catch up, Showaround should consider who is working for them and how they are treated.

However, it is clear that there is joint profitability for both consumers and Showaround. Tourists are able to experience the city in a tailored and authentic manner, for little costs and are able to choose from many guides. Locals are able to flexibly make some extra money, share their passion and make new international friends. On the other hand, the firm does not require any assets, except for the platform, and therefore incurs little costs.

Showaround might be your solution to experience a new city in an authentic way!

References

Granados, N. F., Kauffman, R. J., & King, B. (2008). How has electronic travel distribution been transformed? A test of the theory of newly vulnerable markets. Journal of Management Information Systems, 25(2), 73-96.

McIlroy, E. (2016, March 18) Comment: ‘Gig economy’ – stretching blurred lines of employment to the limit. Retrieved from <http://www.dailyrecord.co.uk/business/business-opinion/comment-gig-economy-stretching-blurred-7578540#0XA5wrgGAYSgODIr.97>.

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Creating customer loyalty through service customization

February 13, 2017 lucnooren93 1 Comment

Many firms see service customization as a powerful tool, but this application is not well understood yet. The paper (Coelho & Henseler, 2012) developed a model of customer relationship outcomes of service customization and the efficacy of service customization. The main idea about differentiation is to identify profitable market segments and to design products and services that satisfy that segment. Now, the more popular form of differentiation among firms is that of customization; firm’s offering tailored to meet the heterogeneous customers’ needs, aims at satisfying as many needs as possible for each individual customer and an answer to the shifting nature of customer demand for greater variety, more features, and higher quality in products as well as services. Developments in computing power have offered these possibilities and companies will keep investing in these technologies because of the strong need for information.

The methodology used in this paper are two large-scale studies in different service industries based on the European Customer Satisfaction Index framework and applied PLS path modeling to test this model. Customization is a big plus for firms because it increases their service quality, customer satisfaction and with that customer loyalty toward a service provider. It investigates the simultaneous effects of service customization on customer loyalty and other relationships variables and offers new insights relatively to the nature and size of customization effects. The paper found that this customization has both direct and mediated effects on customer loyalty. These findings and service customization is a great instrument for relationship marketing which depends on customer satisfaction and customer trust. Service providers can use this paper’s findings and thus, service customization as an effective instrument for achieving not only higher customer satisfaction, but also higher customer loyalty. Service customization is most effective for companies that have deficits in satisfying their customers, while at the same time their customer relationships are characterized by a high level of trust and could help managers to decide upon resource allocation to enhance customer loyalty.

A business example can be found in the banking industry. By introducing non-banking products or services, banks can cater to customer lifestyles and needs. For example, ‘’banks have begun to offer insurance on items such as mobile phones, travel insurance, identity theft protection and premier event access’’ (zafin.com). Banks can explore lifestyle bundles with Internet services in association with a, for example, home loan. By allowing customers to customize their experiences through various channels, and by allowing banks to offer suitable products and services based on customer data, a bank could create customer stickiness and retention.

Business Case

Create Your Own LEGO Sets!

February 13, 2017 372877kv Leave a comment

An industry in which you might not expect to see active consumer participation is the Toy Industry. However, there is a company which uses open innovation to gather new, original, and creative ideas, namely the LEGO Group. You might know LEGO from playing with it when you were a little kid, or from the pain you might have had if you once stepped on a LEGO brick.

As you might know, LEGO also has some adult fans. It is not a surprise that some adults still find LEGO amazing, because one can build whatever he or she wants. LEGO managers became more aware of innovations by these adult fans (Antorini et al., 2012). Therefore, the managers realized that some of these ideas could be interesting to the target market as well (Antorini et al., 2012). The LEGO Group also learned from a hacking experience that the engagement of fans could contribute to the coolness of the LEGO brand (Hatch and Schultz, 2010). This was the beginning of what is now called ‘LEGO Ideas’.

Continue reading Create Your Own LEGO Sets! →