“Creating a world where anyone can belong.” – What led to this brand’s success in the travel industry? [Tuesdays: Return Driven Strategy]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Have you read the book, “Driven”?
Co-authored by Professor Joel Litman and Dr. Mark L. Frigo, the book is about Return Driven Strategy (RDS), a pyramid-shaped framework that has 11 tenets and 3 foundations.
We encourage you to read about RDS during your spare time. This framework offers lots of insights that will help you succeed in your business endeavors!
Today, let’s focus on a business case study as seen in the lens of RDS’ Tenet 5: Innovate Offerings.
Continue reading to know how this company became a billion-dollar brand through various experiential marketing strategies.
Return Driven Strategy
In a past “Return Driven Strategy” article, we highlighted an important insight about innovating a business offering: Small failures and experimentation are necessary to achieve success and effective innovation in the long run.
According to Professor Joel Litman and Dr. Mark L. Frigo, firms don’t always have to make BIG bets to succeed. What’s more important is they are able to see what works and what doesn’t, and continually look for ways to fulfill customers’ unmet needs.
The bottom line?
Experimentation is a key aspect of return-driven innovation! Oftentimes, these trials lay the foundations for learning and help firms become high-return businesses.
Today, let’s talk about a business whose success story consists of a series of trials, errors, and multiple growth hack experiments.
Any idea on what this company is?
Airbnb is a San Francisco-based company operating an online marketplace for short-term homestays and experiences. Founded in 2008, the company acts as a broker and charges a commission from each accommodation booking.
In case you don’t know, Airbnb is a shortened version of its original name, AirBedandBreakfast.com. It was formed with the idea of putting an air mattress in a living room and turning it into a bed-and-breakfast space for renters.
Since its inception, Airbnb has played a significant role in popularizing the concept of experiential travel. Its platform allows customers to book unique accommodations and local experiences that are often unavailable through traditional channels.
One way Airbnb promotes experiential travel is by offering a wide variety of unique properties, such as treehouses, yurts, and even lighthouses. These places allow travelers to have a more personal and authentic experience, rather than simply staying in a generic hotel.
The company also offers a range of local experiences that are curated and led by local hosts. These include activities such as cooking classes, city tours, and outdoor adventures, giving travelers opportunities to immerse themselves in local culture and gain a deeper understanding of the destination they are visiting.
Airbnb’s Series of Trials, Errors, and Multiple Growth Hack Experiments in the Context of Return Driven Strategy (RDS)
RDS’ Tenet 5 talks about innovating offerings. Here, Professor Litman and Dr. Frigo explain that TRUE innovation stems from creativity and experimentation. It is not limited to firms in the advertising, design, or scientific industries.
Regardless of industry, businesses must understand that effective innovation always involves experimentation, whether that experiment results in success or failure.
This is because by conducting trials and testing, firms are able to identify the strategies that work well for their brand and those that do not.
Let’s apply that in Airbnb’s case…
Throughout its history, the company has had its fair share of experiments. Below are some examples:
- In the early days of the company, its founders struggled to attract hosts to the platform. So, they decided to take matters into their own hands and created a number of listings to populate the site. They even took photos of local houses to make the platform appear more active to online users.
- Another experiment the company did was to build a Craigslist integration that allowed users to post their Airbnb listings on the advertising company’s website. This allowed Airbnb to reach a larger audience and also helped with the company’s early traction.
- In 2010, Airbnb faced a problem of low occupancy rates. Because of that, the company came up with the idea of offering discounts to users who referred friends to the platform. This referral program helped boost occupancy rates.
- In 2012, Airbnb had a problem with hosts canceling bookings at the last minute. To address this concern, the company created a new booking system that required hosts to commit to a reservation once it was made. This system helped reduce the number of last-minute cancellations.
These are just a few examples of the many experiments and iterations Airbnb has gone through as it evolved into the billion-dollar company it is today. One of the key lessons you can get from this case study?
Airbnb’s willingness to experiment—try new things AND adapt to changing circumstances—significantly contributed to its success!
According to Professor Litman and Dr. Frigo in the book, “Driven,” there are always opportunities for new offerings that fulfill customers’ unmet needs. However, firms should always remember that innovation is NOT done simply for its own sake or for the sake of internal processes.
In fact, return-driven firms consider all aspects of a potential or existing offering and what it does for customers. This means truly successful businesses innovate anything that affects consumers’ mental perception of an offering.
One of the ways to do that?
In Airbnb’s case, conducting various experiments allowed the company to identify what captures its target market’s attention and lay the foundations for effective experiential marketing.
This is evident in the way the company revolutionizes travel and provides one-of-a-kind experiences to travelers all over the world.
We hope you learned great business insights from today’s topic!
Always remember that experimentation is an option in development. By being creative and innovative in your business strategies and offerings, you will:
- Effectively fulfill your target market’s unmet needs
- Open opportunities for growth in your business
- Deliver high-quality offerings
… all while generating high revenues for your firm.
So, what are you waiting for?
Plan your next effective marketing strategy now with RDS’ Tenet 5 in mind, then book your way to your and your customers’ best experience ever!
Stay tuned for next week’s article!
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Tuesdays: Return Driven Strategy”
In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that the goal of every long-term successful business strategy should incorporate the combined necessity of “making the world a better place” and “getting wealthy.”
That is why they created Return Driven Strategy and Career Driven Strategy―frameworks that were built to help leaders and professionals plan and evaluate businesses so they can also help others achieve their organizational goals and career goals.
The frameworks describe the plans and actions that drive returns for anyone in an organization such as independent contractors, marketers, brand managers, communicators, and other people in any field. These actions lead to the creation of wealth and value for customers, employees, shareholders, and the society.
Every Tuesday, we’ll highlight case studies, business strategies, tips, and insights related to Return Driven Strategy and Career Driven Strategy.
In planning, building, or managing brands and businesses, these strategies, case studies, and guidelines will help you choose what specific actions to take and when to take them.
Hope you found this week’s insights interesting and helpful.
Stay tuned for next Tuesday’s “Return Driven Strategy!”
Head of Marketing
Valens Dynamic Marketing Capabilities
Powered by Valens Research