Uber and Spotify this morning announced a new feature that will allow Uber customers to listen to their playlists while riding in Uber cars.
At first blush, it may sound like a media stunt conveniently timed to Spotify’s need for some non-Taylor Swift news. But I feel a hint of something much more important and exciting going on. Could it be that ride-sharing companies are going to turn out to be the platform that delivers us customization in the real world?
I’ve long believed that the most exciting and important technologies of today will allow us to customize the real world. Just as companies like Google and Facebook are customizing the digital world through tailoring ads, articles and video, someone will apply the same identity and preference targeting to the physical world simply because it provides a better experience.
In the future, when you walk into a restaurant, someone will greet you by name and predict what you want to order. Your card will be on file and charged automatically when you walk out. You may think these features sound annoying now, but I strongly believe that consumers will come to expect this customization when it proves more efficient and delivers good experiences.
But deploying customized services in the real world is a far tougher problem than deploying customized marketing or content recommendations in the digital world.
For starters, you have to deploy on-premise technology and processes. Think about how hard it would be for Starbucks to implement technology for their baristas to know customers, greet them by name and offer their usual order. Since it is hard to do at scale, it seems likely that the revolution will mostly start with small mom-and-pops that already treat some people as regulars, not with the big brands.
But relying on small businesses comes with its own set of challenges, namely making it economically worthwhile given a small base of customers who will want to use it initially. Square and others have tried some of this order customization in the past, but the products haven’t taken off.
This, incidentally, is related to why the largest tech companies like Apple, Google or Facebook haven’t entered the space. It isn’t a mass enough service. We’re still in the early-adopter phase and there are seemingly higher leverage things for them to be working on.
On-Demand Customers
So, who is going to lead the charge with the early adopters? The company would need to make it ROI positive for small businesses at a small scale.
Enter ride-sharing. There’s no risk of alienating customers. You don’t want it? Don’t use it. And drivers and consumers already have the existing infrastructure, namely their phones.
The possibilities could expand far beyond music. For example, Uber could add my name to a restaurant waitlist while I am en route in a car. If I have a reservation at a restaurant, Uber could let the business know my ETA and clear my table and start making my favorite drink. Uber could even make recommendations on where to go based on preferences I give it.
It’s hard to imagine consumers objecting to such options as long as they work well. And Uber has enough scale for at least some restaurants to make it worthwhile to work with them today. I don’t know the numbers, but I bet more people show up in Ubers to many restaurants than use OpenTable.
There’s money to be made, too, for both the businesses and Uber.
Think of Uber not just as a transportation service, but as a method for delivering customers to businesses. Marketers control the top of the funnel by building awareness around restaurants or services. Uber controls far lower down in the funnel, delivering the actual people.
A partnership with Uber would be something businesses would pay for if it delivered them more, higher paying customers.
It might be worth it for Uber even if they don’t. Customization and creating a premium experience are the only ways the business will be able to generate margin in the long-run and avoid becoming yet another airline—big, important, and unprofitable.
The engineering and business investment of becoming a gatekeeper to the physical world are clearly worth it in the long run.