Ziroom Blog
This blog shall assess Ziroom’s business model and discuss how effective it is and how it operates. Assessing issues within Ziroom shall allow for a new service to be implemented in order to solve any problems uncovered. Using tools such as the business model canvas we can effectively dissect Ziroom while creating an innovative service with the goal of turning a profit while adding value proposition to Zirooms existing model.
“new or considerably changed service concept, client interaction channel, service delivery system or technological concept that individually, but most likely in combination, leads to one or more (re)new(ed) service functions that are new to the firm and do change the service/good offered on the market and do require structurally new technological, human or organizational capabilities of the service organization.” Van Ark et al. (2003)
Zirooms main service is to offer China’s growing middle class the ability to rent out their properties in a low involvement and stress free-way. These so called ‘lazy landlords’ use Ziroom to offer a high quality, standardised rental service for China’s huge millennial population. Ziroom offer such a high quality service by providing their tenants with six key sub-services being, housekeepers, home designers, furnishing directors, service engineers, telephone customer services and lastly cleaners.
Beginning to explore these services further, the first being Ziroom’s home designers and furnishing directors who dictate the décor in Zirooms properties, with the aim of style yet standardisation. Zirooms aim is it ensure that the flats their tenants live in are the best yet fairly priced on the market. The directors travel the world living in rented properties in order to experience the rental market worldwide and bring their new found innovations and findings back to China. Customer orientation is in many aspects Zirooms soul responsibility and goal. Since the tenants are paying a premium for the service they receive, Ziroom need to offer the best and most suitable furnishing for young professionals, Ziroom need to constantly innovate and improve their standards. ‘The best customer-centric companies not only put their customers first – they design products and services to meet the customers’ needs, and create seamless experiences across the board.’ (Gilliland,2019)
The next service Ziroom offer is a ‘housekeeping’ one. Ziroom offers every resident a housekeeper in order to have the most ‘clean,safe and tasteful’ (yu & Mao 2015) apartments in China. Ziroom have a control centre where residents can contact the company directly and then have their issues dealt with when a member of staff is available. The control centre coordinate the day to day actions of the housekeeper, for a large part of the customer experience with Ziroom the housekeeper will be the only employee the tenants see, this makes their feedback vital. Co- creation is an essential part of zirooms experience thus making housekeepers more than just housekeepers but actually the eyes and ears of Ziroom. “transparent process of value creation in ongoing, productive collaboration with, and supported by all relevant parties, with end-users playing a central role” (Jansen and Pieters, 2017, p. 15).
A vastly important service Ziroom offer is their telephone customer service team. Ziroomers can contact the control panel with any issues they have. As the voice of the company it’s vastly important that the staff at the control centre are highly trained and motivated and maintain good customer relations with the tenants. ‘CRM or customer-relationship management should start with identifying ‘pain points’ in the customer cycle, finding solutions to these issues has a large impact on customer satisfaction, loyalty and superior financial rewards and a competitive advantage’ (Dyche, 2001).
Ziroom has assigned a professional housekeeper for each room and users can call the service hotline directly (yu & Mao 2015). Maintaining 20,000 suites is a huge part of Zirooms’ service, contracted cleaners are a key partner for Ziroom. Having clean, tidy and maintained flats is almost an encapsulation of Zirooms entire business model, showing the chic and sharp quality the company offers their tenants. Doing housework ‘doesn’t fit’ into the tenants fast paced busy professional lives. Having less to do at home allows for a happier less stressful environment for the people living in Ziroom properties.
The importance of the cleaners to Zirooms cannot be understated, the cleanliness adds a huge amount of ‘value added’. Services such as having a housekeeper or a cleaner allows for the customers to have a perception of being valued and having a premium experience. Adding services increases brand satisfaction and overall brand loyalty. Investing in new innovative indirect benefits should allow Ziroom to maintain their current position as the number rental brand in China.
Offering service engineers for all ziroomers is part of the package, however as an outsourced company maintaining the standards set by ziroom is more difficult as external methods and techniques which may not adhere to Zirooms high standards. Having all staff on bikes also positively effects the companies’ carbon footprint and makes for Ziroom to appear more environmentally sound while also offering a practical mode of transport in a time when China is critisied for having a hugely adverse effect on the environment.
The Issue
Millennials make up the vast majority of the tenants in Zirooms meaning that the shopping habits of these people are unique and innovative by nature for example 56% of millennials buy a product online after seeing it in-store where as generation X’ers only equate to 41% (eMarketer, 2019) this stat would highlight a change in buying habits.
After assessing Ziroom’s current position and practice, while also looking at customer statements there are clearly several shortcomings with Zirooms service. The cleaners are severely overworked and overstretched with 1 cleaner per 500 Ziroomers (Yu & Mao,2009). Across the company, there are implied benchmarked standards but no cross training is done,on the customer service side. The support line not being 24 hours is also a weakness. However in terms of a value added service the idea I have decided to use is a home grocery delivery service called Zdelivery, via an app which Ziroom already have in operation, throughout the case study the fact that the residents were busy young professionals and didn’t have time to look after their own property was stated throughout. Ziroom also run a loyalty programme for tenants which could allow for future development and opportunities linking the grocery delivery service by either awarding tenants with free delivery.
The Solution
The new delivery service fits in with the current organisation well, a slick fast, no fuss delivery for young people without time to shop around. The Current application can support a link for a partnership with a grocery delivery service. Although Grocery delivery services’ aren’t necessarily a new innovation, China is a relatively emerging market for the service. For example Alibaba launched a new retail store called Hema, an online grocery delivery service; which if you live within a 3km distance of one of the 65 stores around China you can receive a delivery within 30 minutes. (Laubsher, 2019).
Using a New Service Blueprint which I have created to examine the change in the employee and customer journey’s after the implementation of the new delivery feature. The blueprint highlights the problem areas for the tenants and then for wastage and lack of cleanliness around Ziroom facilities. The most obvious issue is tenants having time to physically go grocery shopping. Another issue is wastage and rubbish by cutting down on impulse buys. Adding a partnership and free delivery for Hema. Z-delivery in conjunction with Hema offers the first of its kind in China, a slick easy to use grocery delivery service exclusively for Ziroomers who simply cannot afford the time to shop weekly due to their other obligations.
The ease of introducing a simple link within the already existing application and website for Ziroomers is a no brainer in terms of low-cost, low effort innovation. A simple link straight through to Hema will allow for ease of access and with the backing of an already highly trusted Chinese brand such as AliBaba the clean image Ziroom portrays will remain unscathed. Already 95% (Yu & Mao) of Ziroomers choose to pay their rent online so moving to online transactions from cash transactions for groceries’ fits the current business model well along with the way Millennials like to do business. 80% of all transactions made in big cities are now via card and not cash. (NEWS BBVA, 2019)
Pricing structure
The profitability within the service innovation lies with a referral basis from the retailer to ziroom, for example ziroom could take a small %2 fee from the retailer for example, or just a set fee. Currently the tenants who shop in the traditional way are doing so as a pareto cost (Ng, 2007) which means that they are losing valuable time when shopping , something for the tenants to consider when pricing up the added cost of having food delivered to the door. If the tenant is either at work or can’t be in the flat for whatever reason the house keeper can sit in and collect the shopping on their behalf for optimum efficiency.
“Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” (Brown, T, 2012) The lay out of the app/website must of course be easy to follow and be android friendly as Huawei and Xiaomi as well as various other phone manufacturers are very popular in China. If the app is too complex Ziroomers may avoid using it and turn to a competitor instead. An element of co-design must take place between Ziroom and Hema as well as the tenants of Ziroom, creating the app to their spec is important to reach optimum usage, Ziroom already boasts a Feature-rich website: booking, room visiting, contract signing, payment, repair appointment and other aspects involving renting (yu & Mao, 2009)
As previously discussed there is potential for the delivery service to turn a profit via either taking a small percentage of what the consumers spend or by charging Hema a small fee per sale. As well as a small profit the reputational gain from such a successful partnership can benefit both companies as well as act as a free marketing tool. Both of Zirooms main competitors ‘Mofang apartments and Danke apartments don’t offer similar services offering another competitor advantage.
Conclusion
Overall this blog has highlighted a number of deficiencies within Ziroom while also noting several opportunities to increase profitability. Through the implementation of ZDelivery, Ziroom are able to offer a unique service for millennials and tenants who are too busy to shop for groceries. Although a simple innovation the added value makes Ziroom a more attractive rental company for the young professionals of China and adds to the clean officiant image that the company portrays.
References
Gilliland, N. and Gilliland, N. (2019). Five examples of customer-centric companies – Econsultancy. [online] Econsultancy. Available at: https://econsultancy.com/examples-customer-centric-companies/
Pieters, Maarten; Jansen, Stefanie (2017). The 7 Principles of Complete Co-creation. Amsterdam: BIS Publishers. p. 15. ISBN 978 90 6369 473 9.
Dyché, Jill. The CRM Handbook: A Business Guide to Customer Relationship Management. Addison-Wesley Professional, 2001.
Laubsher, H. (2019). A Visit To Hema In Beijing Changed My View Of Grocery Shopping. [online] Forbes.com. Available at: https://www.forbes.com/sites/hendriklaubscher/2018/10/10/a-visit-to-hema-in-beijing-changed-my-view-of-grocery-shopping/
eMarketer. (2019). Millennials Browse In-Store, but Buy Online. [online] Available at: https://www.emarketer.com/content/millennials-browse-in-store-but-buy-online
NEWS BBVA. (2019). Millennials in the big cities use less and less cash. [online] Available at: https://www.bbva.com/en/millennials-in-the-big-cities-use-less-and-less-cash
Ng, I., 2007. Pricing and Revenue Management of Services: A Strategic Approach under the Advances in Management and Business Studies series, Abingdon, Oxon: Routledge, Taylor & Francis.
Brown, T. (2019). Design Thinking: A Method for Creative Problem Solving. [online] IDEO U. Available at: https://www.ideou.com/pages/design-thinking
B.van Ark et al.,(2003)”Services Innovation,Performance and Policy: A Review” June, 2003, Research Series No6, The Hague
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