“Uber, the world’s biggest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening…”
Indeed, the new economy is trust.
How did trust, the building block of human behaviour, become fundamental in the world of modern business? In the 21st century society we have commoditized trust – in essence, transforming it into a currency. Say hello to the share economy, a marketplace where your reputation precedes you in the form of feedback, reviews, ratings and followers. Technology is enabling trust between strangers in new ways like never seen before opening an untapped world of opportunity.
In a climate of trust, people are becoming much more motivated, creative and productive. So how do successful sharing economy companies such as eBay and Airbnb operate and establish trust within their respected communities?
Firstly, lets touch on the aspects of trust developed by eBay:
- eBay relies on a feedback system which allows sellers to grow their reputation based on satisfied buyers.
- Word of mouth to a global audience of potential clients via the internet at next to nothing costs.
- Empirical data indicates that, more than half the transactions received buyer feedback, most of which was positive. Ultimately, this fosters positivity and authenticity into the broader community.
- Most importantly, this process prevented sellers from foul play, as it could result in negative feedback and would consequently be detrimental to their reputation.
Whereas Airbnb uses spare space as a niche to establish a share economy dependent on trust.
- Airbnb has benefited immensely from the rise of social media platforms, which reinforced its identity to its audience, encompassing trust in the community.
- Honest reviews are indicated by their simultaneous reviews to each other after a trip has been completed. Ultimately, this eliminates the opportunity to be affected by bias.
- In fact, as 90% of Airbnb reviews are submitted within two weeks of travel, they have decreased review submission period to 14 days. Essentially, this means that all feedback is up-to-date.
Essentially, both eBay and Airbnb’s business models are built on trust which is hugely responsible for producing future sales.
Global thought leader, Rachel Botsman shares her expertise in the area of trust. Botsman refers to technology as an innovation which enables us to take a trust leap – trust is what drives change. Companies including Uber and BlaBlaCar track user behaviour through numerous data points and assigns ranks to its members using a proprietary algorithm.
In Botsman’s 2012 Ted Talk, she revealed that in combination with trust, reputation is one of the greatest assets for commercial platforms. A staggering number of people refer to the internet for insights into a variety of experiences – and more importantly the experience that you can provide.
When companies gain trust, customers will pay more, spread word of mouth and remain loyal to your services. A study conducted of 453 buyer-supplier relationships between automakers dealing in Japan, South Korea, and the United States demonstrated empirical evidence of the economic value of trust. In essence, the research found that the automakers’ transaction costs were five times higher with the least trusted supplier than with the most trusted supplier. There you have it! Trust is an invaluable asset to commercial platforms in the age of digital media.
New media technologies have reformed trust as an imperative currency of the new economy. Ultimately, technology acts as a leverage for the sharing economy. The future of this industry thrives on how well businesses are able to demonstrate the value of this currency of trust for the wider community.