The rise of the sharing economy, a wave of “non-ownership” spurred by services like ride-sharing apps and one-to-one vacation rentals, has been climbing for years – and it certainly has a hold on the millennial generation. Things that used to be considered status symbols, like home ownership and multi-car garages, have gone to the wayside in this minimalist-driven modern society.
What’s causing this shift? In short: technology. Thanks to these glorified mini-computers we anachronistically call “phones,” peer-to-peer business is easier and faster than ever. Still using a travel agent to book your vacation? There’s an app for that. Don’t feel like investing in a new outfit for your black tie event this weekend? There’s an app for that. Got a bake sale in the morning and only one stand-mixer in your kitchen? There’s an app for that. For just about any need (read: want) you may have, there’s a piece of technology within reach allowing the community to be your new source of pseudo-ownership.
The longer answer to what’s causing this sharing economy shift, however, is the desire to live a more sustainable lifestyle in a resource-conscious environment. And the rent-over-own mentality resonates heavily with the generation interested in only spending what’s needed in the particular moment, rather than investing in a depreciating product.
But, what does this shift mean for after-sales service?
Take Clutch, for example. Clutch is a US-based tech company that substitutes owning or leasing a car with a monthly car-sharing subscription instead. Insurance, maintenance, cleaning, taxes and unlimited “flips” are included, so customers can alternate between SUVs for family trips, fun sports cars for date nights, luxury sedans for daily commutes, and more.
On the dealer side, the Clutch software allows dealers and OEMs to offer subscription services efficiently and at scale. At the core of the platform sits a level of intelligence that understands consumer needs and matches them to vehicles, taking both the customer and the dealer experience to a whole new level.
“Anytime I think it would be nice to own a car, I just have to do the math,” says Andrew Price, software developer and founding member of Strong Towns urbanism organization.
The cost of owning a car isn’t just in the initial price tag – the real money is in the maintenance and additions: “I pay $300 for a garage plus $100 for insurance. That’s $400 a month just to keep a car sitting around,” says Price, “and that’s excluding filling the tank every week, paying for parking at my destination, paying tolls, taking it to the mechanic, etc.”
So with a system rooted in keeping those maintenance and supplemental costs at an all-time low for end-customers, Clutch is just one piece of the sharing economy puzzle that’s revolutionizing the after-sales service experience.
Is Sharing Really the Way to Go… for Everyone?
It’s not just consumer products that are experiencing this shift – manufacturers and equipment rental companies are starting be equipped to meet these new demands, as well. Take “Power by the Hour,” for example. This is an agreement that allows a company to lease or rent equipment for a certain number of in-use hours, buying the functionality rather than the actual piece of equipment, meaning rental companies and manufacturers must maximize equipment uptime to also maximize revenue.
And according to Grand View Research, the global construction equipment rental market is expected to reach 84.6 billion USD by 2022 due to increasing construction activities across the globe, as well as rising government investment in emerging economies.
That being said, it’s also an overstatement to say that the ownership market is being completely overtaken by the sharing economy. Take ride-sharing for example: a huge percentage of the U.S. population still has little to no experience with any ride-sharing service at all. A recent study by Technalysis Research actually found that about 57% have never used a ride-sharing service, and another 23% have only used one once or twice, putting ride-share users in the minority.
“There’s no question that ride-sharing services have had an impact on the way that people think about cars, car ownership and transportation in general,” says Bob O’Donnell, Founder and Chief Analyst of Technalysis.
“But as the survey results dramatically illustrate,” O’Donnell admits, “their influence on how, why, or if people actually purchase new cars is likely to be extremely small for some time to come.”
In either case, both challenges and opportunities exist for manufacturers and rental companies in this new sharing economy, and some organizations may need to transform and optimize their after-sales service businesses to become more customer-centric and efficient. For the end-customer, it’s a win-win: little risk is associated with renting, replacement is less complicated, maintenance costs are lower, and there are fewer transportation and servicing requirements.
As for manufacturers – organizations that don’t adopt sharing and rental models could get left in the dust, and those that do so without improving the efficiency of their after-sales service functions will feel the burn, too. The sharing economy can be a significant revenue driver, but companies must adopt the right technologies and business practices to be successful.