Analysis

On-Demand Apps – An Alternative Take On The Popular Business Model

Scott Belsky is a name you’ve probably never heard of before but he is a visionary who has been one of the early investors at Uber and Pinterest. He also founded ‘Behance’ which was sold for a reported $150 million to Adobe, all-the-while making his employees millionaires. Not a bad resume at all. Recently he shared his insights with Business Insider about how the on-demand business model is restrictive to specific industries and what he believes is the alternative. We’ll cover the details in this article, also looking at how he has implemented this strategy in his new app called ‘Prefer’.

On-Demand Services: Why One Size Doesn’t Fit All

No doubt about it, on-demand services like Uber and Food Panda seem to be very popular and have spurred a vast amount of ‘copy-cat’ business models in other industries. Belsky however, believes that this model works only when it doesn’t matter who services the request. He suggests that this model is a best-fit for delivery and driving only, and doesn’t work as well in other industries.

On ‘relationship-based’ services e.g. fitness instructors, make up artists, tutors and so on — Belsky believes there is ‘value’ in finding and using someone who you can trust and stick with. Looking at the problem Belsky highlights, ‘you don’t need 10,000 hairstylists’ based on geolocation and ratings from people you don’t know. Ideally, all that is required is one good recommendation from a friend whom you trust — in effect word of mouth marketing. This insight has led to Belsky launching his app ‘Prefer’ last month.

Prefer App

Prefer (currently available in the US only) uses recommendations from friends and friends of friends from your social network to help you choose and book a professional. The app doesn’t seem to limit the industries the professionals can be from.

According to his research, Belsky found service professionals were displeased with the old model of business and believed that technology didn’t provide a suitable solution. The current offerings were: an online market place, on-demand services or commission agents, all of which didn’t work. The agents took as much as thirty per cent, whilst the other services removed the ‘personal’ feel because of the ratings-oriented concept. For someone like a tutor, the ‘personality’ element is crucial.

Whilst working on the project, Belsky also shares some surprises. The company had assumed that pain-free payments and simple booking procedure would be the crowd-pleasers. However, contrary to their assumptions, the fact that customers could recommend the services to their friends was the clear winner. And this is what the app’s focal point has become.

Prefer uploads the phone address book assuming that both your friend’s and your service-provider’s numbers will be stored. Using the data, Prefer builds a network of who uses whom. You can also add testimonials, and for privacy you can hide certain numbers too. By using the app to book providers, the users will help grow the business through more recommendations. The app has its own booking and payments system with a fee of between 3 per cent to 5 per cent plus a small convenience fee.

Final Thoughts

Belsky has an interesting view-point on how the on-demand model doesn’t work with all services or industries. The alternative provided seems a good one — ‘word of mouth marketing’ remains a powerful technique and this app helps service-providers market within social networks. Time will tell how successful Belsky’s vision is, but chances are you will be hearing a lot more about this app.

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