What is an Application-Based Service?
An Application-Based Service provides service primarily through an application. They may also function through a website or have limited operations online, such as account management, configuration, or reporting. The difference between an application-based service business and an online business is subtle but important.
An online business promotes its services, and guests visit the website to transact business. In an Application-Based Service Business, a customer must install the application, and a service provider must adopt the application to provide services ordered. The mobile application serves as a mediator between the service provider and the customer.
Dependency on Two-Sided Adoption
Without the customer, there is no demand, and without the service provider, there is no fulfillment. The value of the application-based service is the quality, dependability, and functionality of the application. However, without both parties adopting the app, you have an application that does nothing. Rideshare and Food Delivery businesses are leading examples of application-based services.
Let’s take Grubhub as an example. You need customers to download the application, drivers to deliver the food, and restaurants to share their menus and accept the Grubhub orders. Then there are Uber and Lyft, which need customers requesting rides and drivers to pick them up. So how do you get everybody to adopt on both sides to stand up the service? You need an A2B2C strategy.
Application to Business, Business to Consumer (A2B2C)
To be successful, you must bring the app to the business providing the service. Then you must support the service providers with customers. A classic example is the rideshare company Uber. The founders of Uber were two guys who earned investment capital from selling their respective startups. They went to a technology expo in Paris, needed to call a cab because it was the middle of winter, and couldn’t find one. Thus, the idea for creating a timeshare limo service with ordering via an app was born.
Obtaining a bunch of random drivers would not have been their best option. So, they began by hiring only professional drivers with new, black cars to appeal to customers. They launched it in major cities during hours that the demand for a cab was high, but the supply was low. This method was hugely successful. As more customers in a pinch downloaded the app, the job market for drivers grew. However, they first had to support the service with drivers.
Airbnb took a similar approach. They needed to begin with an inventory of appealing homes. They reached out to people with places listed on Craigslist. Owners agreed to list to make their homes easier to find.
To appeal to customers, they had professional photographers take warm, inviting photos of those homes. The strategy worked. According to Teixeira, who did a case study on them, “that’s why you get the supply side first – if you get the right suppliers, the customers will experience their high-quality service and then do the marketing for you.” But having the inviting application for it all to happen is equally necessary.
A2B and B2C go hand in hand. To have a successful application-based service, what you provide must be of high quality, causing the B2C component to pull through by word of mouth.