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DIGITAL SOCIETY BLOG

Making sense of our connected world

Have you ever noticed that Airbnb stays tend to resemble each other quite a bit, regardless of whether you are staying in, say, London or Lisbon? If so, this is no coincidence. In this blog post, I describe the strategies and tactics which platforms such as Airbnb use to manage service providers in the sharing economy and create distinctive customer experiences.

But let’s start from the beginning. Sharing economy platforms such as Airbnb and Uber coordinate exchanges between service providers and consumers. The service providers (e.g., Airbnb hosts) control most of the customer experience. Consider Airbnb: From setting up the flat to communicating with you throughout the booking process and giving you local recommendations, a good host is essential to Airbnb’s business model. But compared to traditional employers, platforms have little control over the service the providers offer. There is, for example, no formal training which service providers have to go through. And yet, successful sharing economy platforms such as Airbnb and Uber have managed to create distinctive customer experiences and to differentiate themselves from other brands in the market.

A strangely familiar aesthetic

To take a closer look at this experience, let’s stay with the Airbnb example. If you have stayed in more than one Airbnb in your life, you have probably noticed that Airbnb stays tend to resemble each other quite a bit. First, there is the routine from the warm welcome to the recommendations hosts give for things to do in the area. Then, there are the accommodations themselves. A few years ago, Kyle Chayka coined the term AirSpace for the phenomenon that hip coffee places, restaurants and Airbnb listings increasingly resemble each other around the world. The spread of the Airbnb aesthetic means that you get a strangely similar vibe regardless of whether you are staying in an apartment in Berlin or Buenos Aires. 

Scientific studies support this notion that Airbnb experiences resemble each other. They also show that Airbnb’s leadership has been highly successful in turning the desired customer experience into reality (e.g., Brochado et al., 2017; von Richthofen & Fischer, 2019). Brochado et al. (2017), for example, analyzed large quantities of Airbnb reviews and found evidence of convergence of the customer experience across India, Portugal, and the US. In all three countries, for example, the (friendly) host was referred to as a central aspect of the Airbnb experience. From a marketing perspective, this raises an important question: How did Airbnb manage to shape the Airbnb experience? How did its leaders influence hosts to provide a certain kind of experience to guests, despite the legal and logistical constraints they face in doing so? 

Strategies for managing service providers in the sharing economy

In a recent article, my co-author Florian von Wangenheim and I explored this question in depth. Specifically, we used Airbnb as a context to study more generally how platform leaders can align the services the providers offer with the customer experience they desire to create. Examining multiple sources of archival data, we found that Airbnb uses three distinct strategies to manage hosts, which we refer to as (1) orienting, (2) enabling, and (3) incentivizing and controlling. Each strategy, in turn, corresponds to three distinct tactics. In what follows, I will briefly describe each strategy and tactic in a bit more detail.

1. Orientation

First, Airbnb uses three tactics to provide orientation to hosts, namely, exemplifying, mythologizing, and valorizing. Exemplifying implies that Airbnb illustrates the desired customer experience, for example, in advertisements, social media posts, and press interviews. Mythologizing implies communicating values and norms through stylized stories about the platform’s history. Airbnb’s founders frequently share their story of how they hosted their first guests in San Francisco to communicate the value of hospitality and the norm that hosts should provide guests a local experience. Valorizing involves that Airbnb singles out exemplary service providers. The company even organized award ceremonies that it recorded and uploaded on YouTube.  

2. Enabling

Enabling involves providing resources and support to service providers, by circulating best practices, providing tools, and orchestrating peer-to-peer education. Circulating best practices involves gathering “best practices from both experts and service providers in the platform market and disseminating them through the platform’s communication channels” (von Richthofen & von Wangenheim, 2021, p.770). For example, there are blog posts wherein designers teach hosts to “show personality” and paint their front door in an unexpected color. Moreover, Airbnb orchestrates peer-to-peer education, which involves that the platform encourages and provides the infrastructure needed so that hosts can educate each other. Third, Airbnb equips hosts with several tools which facilitate service provision such as sending them photographers to take high-quality pictures. 

3. Incentivizing and controlling

Incentivizing and controlling means exerting a directing influence over providers, using algorithmic management, peer and formal control. Algorithmic management is a (controversial) practice that involves the use of algorithms to manage remote workforces by tracking and evaluating workers’ performance and automatically implementing decisions (Möhlmann & Zalmanson, 2017). For example, Airbnb measures metrics such as how long hosts take to respond to inquiries and uses these metrics to determine hosts’ ranking in the search results, which in turn determines hosts’ likelihood of receiving bookings. In addition, Airbnb uses peer control mechanisms such as ratings and reviews and increasingly also adopts more formal control practices.  

Summary: Striking a balance between control and more soft ways of influence

Collectively, the aforementioned strategies and tactics enabled Airbnb to shape a distinctive customer experience and to establish itself as a lifestyle brand in the travel sector. What can the leaders of other platforms learn from this? One key insight is that using incentive and control mechanisms alone may be insufficient when it comes to managing service providers in the sharing economy, given that many service providers are part-timers, who are not exclusively motivated by money alone. Adopting overly rigid incentive and control mechanisms, therefore, risks to repel service providers who are primarily motivated by the social benefits of the sharing economy. Instead, platforms should strive to find the right balance between incentivizing and controlling as well as more soft ways of influence, including providing orientation to and enabling service providers. What this balance should precisely look like ultimately depends on the sector. In labor intensive markets such as ride hailing with a large workforce, platforms will likely focus more on incentivizing and controlling service providers. In nascent sectors of the sharing economy such as meal-sharing, in contrast, platforms should initially focus relatively more on providing orientation to and enabling service providers. In both cases, however, platform leaders may benefit from thinking beyond ratings and reviews when it comes to managing service providers in the sharing economy.    


References

Brochado, A., Troilo, M., & Shah, A. (2017, 2017/03/01/). Airbnb customer experience: Evidence of convergence across three countries. Annals of Tourism Research, 63, 210-212.

Möhlmann, M., & Zalmanson, L. (2017). Hands on the wheel: Navigating algorithmic management and Uber drivers’. 38th ICIS Proceedings.

von Richthofen, G., & Fischer, E. (2019). Airbnb and hybridized logics of commerce and hospitality. In Russell W. Belk, G. M. Eckhardt, & F. Bardhi (Eds.), Handbook of the Sharing Economy (pp. 193-207). Edward Elgar Publishing Limited.
von Richthofen, G., & von Wangenheim, F. (2021). Managing service providers in the sharing economy: Insights from Airbnb’s host management. Journal of Business Research, 134, 765-777.

Georg von Richthofen, Dr.

Researcher: Innovation, Entrepreneurship & Society
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