Why Operators Can Survive The Uber Onslaught

Martin Romjue
Posted on August 20, 2016

Ben Parr, a Silicon Valley tech writer, venture capitalist and entrepreneur, showed attendees at the LCT Leadership Summit how to keep the strong traits of chauffeured service while adapting new technologies. He is also the author of “Captivology: The Science of Capturing People’s Attention.”

Ben Parr, a Silicon Valley tech writer, venture capitalist and entrepreneur, showed attendees at the LCT Leadership Summit how to keep the strong traits of chauffeured service while adapting new technologies. He is also the author of “Captivology: The Science of Capturing People’s Attention.”

MIAMI BEACH, Fla. --- If the limousine industry could use an evangelist for hope, look no further than a tech writer, investor and expert from Silicon Valley.

Ben Parr, an energetic, quirky voice from the hub that produced imposters Uber and Lyft, told attendees at the LCT Leadership Summit May 23 how they can better serve clients in a disrupted market.

Amid the growth of transportation network companies (TNCs), limousine service has two saving graces, said Parr, the former editor of Mashable, a technology news website, where he wrote articles analyzing thousands of companies.

Strong Suits
Those would be superb service and safety, two areas where TNCs are weak.
“Offering a special one-of-a-kind experience is the most important thing you can do,” said Parr, who also invests in startups through his venture company, DominateFund, and runs a consultancy called the Parr Group.

“Uber and Lyft do not focus on the user experience; they focus on the logistics. You focus on the user experience. People really care about those. And this is an area where even the smallest changes can make people really want it.”

As an example, Parr cited the first class service on Emirates Airlines, which ranks third among airlines for best first class cabin. “That’s just the kind of experience people are willing to pay for, and willing to talk about,” he said. “It’s the little things, such us that extra champagne, or even candy, someone taking your bag, something I may not even be able to think of, that enhances the experience.”

On-demand companies neglect premium service, he said. “This is where the LCT industry can truly excel,” since people are willing to pay more for memorable times. “Connected consumers demand a convenient on-demand experience. It doesn’t necessarily always have to be on-demand, it just has to feel like it’s on-demand. And great experiences trump all.”

Limo services also have the added advantage of mostly using employees instead of independent contractors like the TNCs, Parr said. “They’re not allowed to train them because if you train them, then they would become employees. And so this is where you can excel.”  

Speed And Safety
While the limousine industry would disagree, Uber thinks of itself as a logistics tech company, Parr said. It’s more about improving the details of shipping instead of the straight user experience.

While cost and convenience matter to consumers and typical TNC users, companies and businesses want safety and speed, Parr said. The opportunity for operators lies in being business-to-business (B2B).

“A lot of you are not pitching directly to consumers,” he said. “You are pitching for the business of a movie studio or for the business of major corporations. And their needs are different than business-to-consumer (B2C), which is what Uber and Lyft are.” As a consumer-driven logistics company, Uber is not oriented to B2B, and likely won’t be for a long time, if ever, he said.

“You need to get those executives from point A to point B faster because time equals money,” he said. “And safety is paramount. Your clients want to make sure [their people] get there on time and safe. And safety does actually matter in some cases to consumers.”

Uber and Lyft show their stance on safety by resisting fingerprint background checks, and even pulled out of Austin to make a point when the city passed stricter safety rules, Parr said. “Safety matters more to the businesses you’re pitching.”

How To Mimic TNCs
Despite the pluses of service and safety, limousine services still must co-opt TNCs to compete and survive long term, Parr said. He cited the Airbnb online marketplace for vacation homes as a guide for limo operations to adopt faster reservation-based technology, but not necessarily on demand.

“A lot of you are not going to be on-demand, right?” Parr asked attendees. “People need to book into the future for your businesses. But as long as it mimics [on-demand] experience, it’s just fine. Most Airbnb listings are not on-demand. You request to book and you get a notification in six to 12 hours. In general, most consumers are okay with it as long as the process is simple and they get notifications via text later saying they’re booked.”

To aid convenience, Parr recommends using chat bots that handle instant messaging and texting with clients. Bots are like the text versions of automated call systems with options.

“These are chat boxes that interact back and forth automatically using artificial intelligence,” Parr said. “The bot would be able to say, ‘Hey, what time do you need to book for? Let me check that. We have availability. You’re booked. You’re all good.’”

Bots are the next frontier in consumer connectivity likely to draw investment in start-ups that can design bots for businesses, Parr said.

Client Character Traits
The trend toward on-demand and constant connection stretches well beyond the younger Millennials, Parr said. “The connected consumer is the new consumer. It’s ones who are expecting a different set of things than the people from 2005.”

These consumers expect access to services and products from anywhere on any device, whether smartphone, tablet, laptop or desktop. They want simple, direct communication sans phone calls. “The user experience, therefore, must mimic already trained user behaviors.”

With millions of TNC drivers and riders, the on-demand economy is here to stay, Parr said. “They’re expecting convenience. They’re expecting speed. So, if I can press the button, it’s magical. They built their products for these connected consumers.”

A social media poll Parr posted shows such consumers rank convenience over safety. Most people don’t have unsafe experiences, so it’s not a big worry. “One of the biggest reasons why you see this is because when it’s not happening to you as an individual, you don’t worry about it happening at all. I’ve never been mugged in an Uber, so I’m not going to have that problem. I’m not worried about safety. This is part of the reason why you see that kind of result.”

Parr cited three defining behaviors of on-demand consumers: They’d rather text than talk; they prefer instant gratification; and they need to be recognized. That last point can clinch a sale, or a reservation.

“I call it the validation society,” Parr said. “We’ve ventured into an era for better or for worse where we gain more self-confidence or lose self-confidence based on the amount of likes, shares, retweets, and validation we get from social media. We are now trained to post a picture to announce our engagement, and to roll in the likes, and feel happy that everyone cares that we’re getting married, or that we’ve got a new dog, that our thoughts matter. It’s part of this new kind of cycle that has happened.”

These “accidental narcissists” like to share their experiences. “That’s what the connected generation is sharing and what it’s looking for. And if you can harness that, you have great power.”

SIDEBAR: Bubble Trouble For TNCs?
In Silicon Valley, investment in venture capital backed companies has dropped from 2,000 companies in Q3 2015 to 1,742 in Q4 2015, said tech writer and expert Ben Parr. The number has dropped further in 1Q 2016. This has led to a classic major bubble versus minor correction debate, and whether it could drag down Uber and Lyft.

A few high-profile companies have left the scene or seen low growth, such as Theranos, an $11 billion company that offered instant blood tests, Parr said. The company learned its blood tests were flawed with invalid results and had to cancel two years’ worth of tests, as reported in May. “It’s the story of a Silicon Valley company that received a lot of hype and a lot of growth, and ending up crumbling upon itself because it couldn’t deliver on the promise it had made,” Parr said.

Similarly, Zenefits, an administrative software firm that helps client companies manage health insurance and payroll, fell in value due to a chaotic company culture and internal fraud, according to CNN.

“There is a consensus about a slowdown and a correction happening in Silicon Valley,” Parr said. “How long it happens, exactly how bad it’s going to be, no one knows. There’s simply not enough data because this downtrend has only just begun. Whether or not we bounce back, or whether it takes all the companies down with it is simply unknown.”

Venture capital firms are raising more money, but they’re hoarding and holding it as they wait and see what happens with the markets, Parr said. Those companies raising funds are doing so at flat valuations or ones slightly down.

Uber and Lyft raised their valuations earlier this year, he said. Uber does not need to raise a new round for at least another year. It may do an IPO next year. “That would be a big event in Silicon Valley. Will Uber’s idea go up or will it go down?”

Related Topics: apps, building your clientele, customer service, keynote speakers, LCT Summit, mobile technology, staying competitive, vehicle apps, VIP service

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