TEI 251: Use Airbnb’s customer experience journey to create an outstanding experience for your products – with Joseph Michelli, PhD

Product managers can build trust and provide “service with heart” Dr. Joseph Michelli joined us a couple years ago in episode 147 to tell us how to create a great customer experience. This is his area of expertise and he has helped many organizations make better customer experiences. He is known by his many books examining the companies that are the best at this, including Mercedes-Benz, Starbucks, Zappos, Ritz-Carlton, and others. Now, his latest book examines one of the new economy unicorns, Airbnb and the book is titled The Airbnb Way. Summary of some concepts discussed for product managers [3:36] What makes Airbnb a successful product? People have been sharing homes for a while, but it was hard to find a network of people to do it. Airbnb understood consumer behavior and identified a need in the marketplace. The hotel chains put themselves in a rut by focusing on keeping all of their rooms the same. Airbnb realized that people wanted to get out of high-traffic areas where hotels traditionally are and experience the local culture. [6:35] How does Airbnb compare to the other brands you’ve worked with? Mercedes was a step in this direction; I looked at how dealers distributed their cars. Airbnb has the same challenges on a much greater scale. Every host represents the brand, but some hosts have never done anything like this before and do not have an entrepreneurial mindset. If a host fails to deliver a positive experience, it decreases the likelihood someone will use Airbnb again. This is the direction that the economy is going in the 21st century. It’s a place to be aware of and maybe position yourself. The main point from the book is that we all rely on other people to help deliver our brand. How do you influence a customer experience when you can’t control it? [9:52] How does Airbnb create a consistent customer experience? There are a lot of things they do in terms of their platform to build trust. You also need to share your vision through the lens of the customers. The more you can talk about the impact of your design based on customer input and the results the customer will see, the better. Airbnb does this well. They talk about what it looks like when you exceed customer expectations when you meet them, and when you fail to meet then. [12:24] How did Airbnb build trust with its users? We tend to overplay the amount of distrust people have in strangers. We hand our credit cards to waitstaff all the time and have been trusting cab drivers forever. For Airbnb, the communication that happens before the booking is essential. If people share too much information or too little about themselves before the booking, it decreases trust. Sharing the right amount of information can spark conversation. Airbnb’s founders also rented their own place and found that people behave fairly well when their reputation is at stake. [18:24] What else did Airbnb’s founders learn from renting their own property? They thought it would be a transactional relationship, but what they started to see was that they became tour guides and friends for their guests. They realized there was more than just a marketplace economy. They also realized there was a lot of anxiety on both sides of the relationship. The first time someone seriously damaged a property, they weren’t prepared to deal with it. After that, they built an insurance process. [23:55] What other shortcomings did Airbnb have? They didn’t do an effective job at getting their reputation system going. Airbnb had many inherent biases in their reputation system. They didn’t account for retaliatory bias. If one party got a bad rating, they would be inclined to do the same to the other. They eventually got to the mutual reveal strategy through iterative change. [26:02] What kind of culture did Airbnb create?