While the sharing of resources among individuals is not new, the last five years have seen an explosion in collective sharing thanks to the Internet.
From AirBnb and Uber to Car2Go and Rover, the new sharing economy business model gives consumers access to unused goods and services. From power tools to dog sitting to a ride to the airport, the sharing economy is revolutionizing how to acquire and use goods and services.
For those who share, the sharing economy provides a moderate income boost, helping users earn money from unused assets, like a car or parking space that would otherwise sit unused. For those who use these services, they’re able to take advantage of a higher quality of items or services than they would otherwise afford.
But booking that apartment rental or accepting a ride from a stranger comes with a risk: what if the person on the other end of the deal turns out to be crazy or downright dangerous? Are the risks of sharing with strangers online (who may or may not have been sufficiently vetted and reviewed) worth the benefits?
It all boils down to one thing: building trust.
Building customer trust is always important in the business world, but in the sharing economy, “trust is the beginning, middle and end of the story” says Entrepreneur staff writer Catherine Clifford, and I certainly agree.
Whether you’re sharing an apartment, car, boat, parking space or pet, a startup that fails to build trust won’t get off the ground, period.
Recently, I sat down with Harrison Woods, the Managing Director for YourParkingSpace, to learn how Woods navigated the tricky world of online trust building.
YourParkingSpace connects individuals who have unused parking spaces in prime locations (e.g., downtown or near an airport) with individuals who are seeking short-term or long-term parking solutions.
While the risk factor may not be as great as getting in a car with a stranger or staying in a stranger’s home, trust still plays an important role in facilitating the business.
As a startup owner, you’ve likely received a lot of entrepreneurial startup advice on what to do and what not to do. Woods’s real-world experience is one more piece of excellent advice to take to heart: the most effective techniques for building trust in the new sharing economy.
Build Trust with Providers and Users
Sharing economy businesses like AirBnb and Lyft face a unique challenge: unlike collaborative consumption companies like Car2Go or Netflix that actually own the physical resources being shared, AirBnb and Lyft built their business model off sharing community resources. Consequently, they face a double challenge from day one: building trust with providers and building trust with users.
“Understanding the unique needs and concerns of providers and users is absolutely essential to an effective trust-building strategy,” says Woods. “For a car sharing company, the provider may worry about picking up an unruly or dangerous customer, or having someone that’s drunk be sick in the back seat. For the user, their primary concern is likely to be for physical safety followed by a driver’s ability to get around a busy, congested city in the most efficient way possible.”
At YourParkingSpace, Woods says the company conducted extensive customer experience research to fully understand hesitations or concerns customers had before using leasing or renting out a parking space. “We knew the idea was great, but we struggled to build a large supply of available spaces initially. Providers had concerns like, ‘What if the owner never comes back for the car?’ and ‘Is it legal to let my space?’ Customer research was key to understanding these concerns and fully addressing them.”
Offer Free Trials to Incentivize Participation and Testimonials
In the world of collaborative consumption, testimonials are the golden key to building a successful business. Have enough positive testimonials from satisfied customers, and more people will be willing to take a leap of faith and try the product or service, too. But building momentum can be a challenge for new startups. Woods’s solution? Free trials.
“As soon as a customer signs up or completes their first space rental, we send them a unique code they can use to refer other customers,” says Woods. “We encourage them to share with friends and family. When referrals come from a colleague, rather than a stranger, there’s an initial willingness to extend trust that might not happen with strangers.”
Bring the Community Together
One thing Woods is considering in the future? Hosting local community events that are invite-only for providers and consumers.
“Actually meeting other users face-to-face can be a powerful experience,” said Woods. “As we look forward to 2016, facilitating community ‘get to know you events’ is definitely another trust building strategy we will be considering.”
Building trust is never easy, especially when two strangers are exchanging goods or services without ever meeting first — and your business needs to facilitate a positive experience for everyone involved. One more tip for growing trust: think locally. Invite users to connect their accounts via Facebook or Twitter, and then show how they are connected to potential providers. Discovering a mutual friend or co-worker makes the service provider feel a lot less like a stranger and much more like a trust-worthy acquaintance.
Handshake Photo via Shutterstock