Share of Life™

Building A Business Model That Is Unique For You

Written by
Sebastian Jespersen
Building A Business Model That Is Unique For You

Vertic has clients based on five continents, and I spend a lot of time in airplanes, airports and hotels. Like many business travelers, I tend to stay in the same hotels, trip after trip. But a recent experience made me stop and think about why technology-driven business models such as Expedia are mastering customer entanglement, when travelers are actually sharing in-person travel experiences with hotels.

We exchange data with travel booking websites like Expedia up until we travel. Yet, we share more valuable data and personal preferences during our stay at the hotel. But the hotel industry – too busy competing with the likes of Expedia – hasn’t realized the value of the data they uniquely have access to, nor have they figured out how to leverage it to build meaningful customer experience and entanglement.  

Data-Driven vs. Process-Driven

Several weeks ago, at a hotel near our office in Copenhagen, where I stay many times throughout the year, I ran into a problem. I complained to the hotel staff, and the issue got escalated through several employees up to the manager. He wrote me an apologetic note and sent a few drink coupons for my troubles, but I wasn’t satisfied with the response. I felt that each employee I’d spoken to had hidden behind the process – “we understand you’re frustrated, but rules are rules” – to avoid actually addressing my concerns.

Then Expedia, the platform that handles all of our company’s travel arrangements, reached out. They called the hotel to discuss the episode and explained that they would do anything they could to make my travel less of a hassle. Expedia decided to refund a night at the hotel and included an additional coupon in my name. I truly felt that they had my back and valued our “partnership.”

Even though I have valued customer status with both companies, my interactions with the two couldn’t have been more different in tone and style. It made me realize that my loyalty to the hotel wasn’t mutual. But more importantly, I saw that the hotel is not leveraging my data that they have in hand. If the hotel staff had looked into the data I have been sharing with them for years, they would have seen based on my previous behavior that I would be staying with them in the coming months, I enjoy a light dinner most nights I spend there and I always have breakfast at 7 a.m. A customer experience based on data would have enabled the hotel to intelligently react to the incident in a way that would have been mutually rewarding for them and me.  

On the other hand, Expedia’s data-driven model let them entangle with me. They know my habits and preferences inside and out, they make my travel easy and seamless, and they have my back if things go sideways. If Expedia recommended a competitor hotel to me, I would probably stay there without a second thought.

Though the hotel has much more behavioral data on me, and could provide me with an experience that Expedia could never match, they are not leveraging it.  

Building Entanglement Through Data

1. Identify your strength.

What’s your company’s strength? What’s the one thing that no one else knows about your customers? That is your strength and foundation for your business model. The hotel was competing with Expedia, suggesting I book directly with them to avoid any future issues, not realizing their own strength.

Expedia has a technology-enabled business model, enabling them to master the booking experience. Instead of competing with a technology-based model, hotels should follow their own data-driven model. The hotel has data on my stay that Expedia never will; my favorite meals, wake-up schedule and room preferences. Data on my experience at the hotel is their strength, a unique differentiator from Expedia and similar technology companies.

2. Use your strength to entangle.

Brands that successfully entangle with customers understand their unique strengths and use them to retain and grow customer relationships. They use their deep understanding of customers to make their lives easier and more fulfilling.

Expedia can use its knowledge of my travel habits to guide me toward airlines or hotels that better suit my needs, regardless of the loyalty programs I belong to. Similarly, Amazon is so entangled with their customers that it can influence their buying behavior by simply recommending specific products.

Your brand must go above and beyond to achieve and maintain this level of entanglement. If there is a problem, solve it quickly and proactively. Show customers that there is no separation between their interests and your own. Achieve zero degrees of separation with your customers.

3. Differentiate your customer experience.

Entanglement should feel effortless for your customers. They don’t have to think about what they need because it’s already there.  

Why would I, as the hotel suggested, book directly with them? Expedia has developed a business model that makes it incredibly easy for me to book all of my travel in one place – airline tickets, rental car, hotel room. They know everything about me and suggest arrangements that suit me perfectly, with almost no difference in price. It makes no sense to book on three separate websites, when Expedia’s business model already checks all the boxes on my wish list. Why isn’t the hotel trying to entangle with me while I’m there, instead of trying to break my entanglement with Expedia?

What the hotel could have done is to use the data they have about me to respond to the incident, simply offering me something personalized that shows our intimate relationship and something that they knew that I would value.

Don’t make the mistake of copying another company’s business model, or try to break your customers' entanglement with “competitors.” Instead, identify your own strengths, leverage the data you have in place and build a business model that will differentiate your customer experience from others. Once you do that, you will entangle with customers, and your business relationships will grow.

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Sebastian Jespersen

CEO

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