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Puppies! And other secrets to Uber's success

Uber has made the days of standing on busy street corners, sometimes in lousy weather, to hail a cab nearly obsolete. Hitching a ride and staying dry is as simple as opening your phone, tapping the app and waiting a few short minutes for your car to arrive.

The global ride-hailing app thrives on a simple, business model that has earned it a $62.5 billion valuation and operations in 68 countries worldwide. There's no contest that they've been able to remove many of the barriers to customer adoption.


Puppies
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The company's simple mobile platform, effortless user experience, and on-demand service has completely transformed the staid taxi industry and created a pro-consumer guest service that millions of people have enjoyed. With a wave of service-on-demand start-ups following it and with Uber's own ventures into UberEats and UberRush, this global start-up is showing a path to disruption in every consumer vertical.

Start-ups getting their feet wet in the hospitality, travel, delivery and other service industries can learn a lot about how to improve their operations and build a strong customer base from the early days of Uber.

Here are the key takeaways from the Uber business model that start-ups can learn from and implement into their own business.

1) Employ a referral program. Despite living in a world where we spend more time buried in our smartphones than face-to-face with each other, word-of-mouth marketing is still a very impactful way to reach potential customers.

In the advent of social media, where everyone wants to share what they're doing, with who, where and when, word-of-mouth goes beyond just our few friends, and to a bevy of Internet followers.

An incentivized word-of-mouth referral program that rewards both parties for using the service is the best way to get people in the proverbial door.

Uber's growth in the early days had a lot to do with incentivized referrals. People who referred their friends to Uber would be compensated, and the new user would receive compensation for trying the service, ultimately bringing more users to the platform. Why not go as far as offering your users a referral fee for themselves and their friends every time they use your service?

2) The personal touch. Before you get into your Uber, you know the name of your driver, there's a picture, and you can clearly see their ratings. It puts the rider at ease and creates a more personal ride/experience. Any time you can make your users feel like you know them (without encroaching on their privacy) is powerful.

It can be the difference between a customer forgetting about you the minute their transaction is over or that same person becoming a customer for life.

3) Seamless dispatch/on-demand service. The attention span of the average person is eight seconds, shorter than the notoriously unfocused goldfish. We want what we want, and it has to be instant. This is the problem that Uber solved with finding a car. Granted, you won't get a car to you in less than eight seconds, but the company's ability to get you a car (on average) in six minutes or less, is why people keep coming back to the app. Surge pricing or not.

That's the most important thing that a start-up in the services industry needs to do is find a way to deliver service on-demand — quickly and more efficiently than their competitors. Whether it's investing in the infrastructure, technology, mobile, etc., finding a way to satiate people's desire for instant gratification is the best way to build a booming business.


4) Reputation economy. Uber's model and many other marketplace start-ups are very unique in that they're not serving just one base of customers. Ensuring each party is having a good experience with each other, as well as the company overall is tricky territory. Regardless of whether you're a marketplace start-up or offering services directly to your customers, building a strong reputation and trust between your company and the customer is critical.

In the service industry, in particular, the best way to ensure reputation and trust is through an actionable rating system. Uber does this by allowing its drivers and riders to rate the overall experience. That way, Uber can weed out the abusive, bad drivers and/or passengers. Ratings helps people trust that they'll get a quality experience, and in the service industry, the most important thing is your reputation.


5) Innovation by experimentation. Uber is constantly testing new markets and new verticals from puppies on demand to meal-delivery, experimenting is a huge part of their overall business strategy.

Entrepreneurs spend a lot of time trying to anticipate what the consumer wants and how to solve their problem. But in reality, we're often surprised by what sticks. Innovation, success and exponential company growth comes from experimentation.

Commentary by Justin Effron, co-founder& CEO of hotel operations management platform Alice. Follow him on Twitter @JNEffron.

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