Customer value proposition for the “e-booking alert” app
Application of the value proposition canvas here might help in understanding the value that “e-booking alert” app offers to its consumers. The value proposition canvas deals with two basic aspects, namely, customer profile and the value map (Osterwalder et al. 2014).
Customer profile
The customer profile involves identification of customers, recognising customer pains and ranking them according to their severity and urgency.
Target customer
This app would target two different sets of markets, namely the population of the United Arab Emirates (UAE) that opt for the airline services and the airline companies that avail such services. The app attempts to ease the transactions between the airline companies and their customers in terms of passenger allocation in flights to avoid any potential hazard raised due to overbooking. Therefore, both the airline companies and their customers might be the end users of its services.
Customer pains
Airlines, to avoid revenue loss often overbook the flight. They book more passengers that they can accommodate in their aircraft to avoid the potential loss from cancellation or no-shows. However, during the real-time operation, the ratio between no-show or cancellation and seat availability in the flight fluctuates creating the problem regarding passenger allocation. For instance, if the number of booked passengers arrived on time exceeds the number of seats available in flights, then the airline would have to refuse its services to some of the customers. This has the potential to generate customer dissatisfaction. Moreover, due to the lack of proper system airline companies often manage such issue inadequately.
Customers, on the other hand, are also deprived of efficient services in such cases. Due to lack of information, prioritising the needs of customers becomes impossible for the airlines, which affects the service that customers received. Here while for the airlines, consumer dissatisfaction is the principal issue, which accompanies loss of revenue for the consumers, lack of proper information on flight status is a major issue.
Value map
The values that a product or a service are expected to generate for consumers are categorised into two different segments, pain relievers and gain creators.
Pain relievers
“E-booking alert” app proposes a location based service that would estimate the probable time of arrival of the customers based on which information the airlines might decide if the customer would be able to board the flight on time. Such information would allow the airline to allocate the seat to other overbooked passengers limiting their revenue loss. For the consumers of airline services in UAE, the app would avail information on flight status that would ease the anxiety of reaching in time or giving up flight seats in time to opt for refunds. This would also lessen consumer’s loss in case of missing the flight as the app would provide the consumer’s a chance to voluntarily give up their seats based on urgency of their travel requirements.
Gain creators
The app might help the airlines in improving their service quality by calculating the passenger processing time, availing arrival time of customers at the check-in counter, assessing the consumer trends based on density of booking and differentiating between involuntary and voluntary customers. The app would also sell tickets to customers in different categories and rates, offer deals in case of delayed departure of flights and provide upgrades to overbook passengers of the economy class enhancing the overall experience and potentially the loyalty of customers.
Value curve
From the value curve presented above both the strengths of the venture and its weaknesses are visible. While due to its innovative model that aims to use location based data of the customers of airline companies in UAE, to predict their arrival time the proposed app would have an upper hand in using information to maximise consumer comfort and information accuracy this model currently lacks complementary assets. Moreover, the app would be availed only through cloud. While this enhances online accessibility of the app, it lacks the physical, tangible presence in the market.
The value of the innovative uniqueness of this app might be better explained through the blue ocean strategy. Chandrakala and Devaru (2013) identified the consumer market in two different segments the blue ocean and the red ocean. The red ocean represents the product or the industry that exists in the market and is widely accepted and practised (Kim and Mauborgne 2014). For instance, several flight-booking apps are available in the aviation market of UAE that compete with each other with similar features. However, a business venture unlocks the blue ocean when it enters the market with an innovative feature that avails it a competitive advantage. The consumer real-time location tracking system that the “e-booking alert” app offers to the market, gives it access to the symbolic “blue ocean.” However, the complementary assets need to be developed for sustaining the competitive advantage.
Appropriate Key Performance Indicator (KPI) Determination
Revenue flow
As has been mentioned in the previous report as well, the software would be availed in the market targeting revenue generation. Therefore, revenue must be a key indicator of the performance of the business venture. Due to the ever-present status of internet, software services have become highly accessible which triggered the software as a service (SaaS) business modes, success of which highly depend on the sustainable base of subscribers and the revenue generated from them (Holzer et al. 2013). Therefore the flow of revenue is to be observed carefully to identify the reaction of the UAE aviation market towards “e-booking alert” app and the changes that might be needed for improving its market performance.
Cost-price ratio
Unlike revenue, profit marks the financial feasibility of a business venture. If the revenue generated through the sales and service fails to redeem the cost then sustenance of the business venture, in the long run might be impossible (Sprenger, Mettler and Winter 2017). Therefore, the difference between the cost and sales price is a major indicator of the success of the venture. For instance, ensuring that the cost for the development of the software, which includes expenses on software, hardware, human resource and marketing for each unit is lower than its price, and that a profit margin is acquired through the sales is essential of success of the venture.
Renewal of subscription
Customer satisfaction and retention is another key determinant of performance. Dempsey and Kelliher (2018) identified that in case of Software as a Service (SaaS), where the service is acquired in exchange for a term based payment, customer churn is a significant issue. The percentage of customers that discontinue their purchase is a significant indicator of the effectiveness of the services of such software. Two of the major reasons for the customer churn, are downfall in the service quality and increased availability of similar services at lower price. In both the cases studying the consumer churn rate, contemplating on its potential reason and solving the issue is essential for the sustenance of the company in the market. Especially in case of “e-booking alert” app where the competitive advantage of the venture depends on the innovation, studying the churn rate is important to ensure revenue generation.
Continual effective innovation
Location based services offered based on the data acquired from airline companies of UAE is the unique feature of “e-booking alert” app. However, presence of the software in the market would trigger imitation from the competitors. Therefore, to maintain the competitive advantage, new and innovative features would have to be added regularly. In such case, success of the software largely depends on the acceptance of the innovation in target market. Therefore, effectiveness of such innovations is a major marker of the relevance and hence performance of the app.
Employee satisfaction
Finally, factors like employee turnover rate, response of employees to an open position and participation of the employees in innovation and decision-making processes is an indicator of the employee satisfaction level. As identified by Parmenter (2015), employee satisfaction results in enhanced productivity, which, ultimately, is the key determinant of a business organisation in any market. Software as a service (SaaS) providers are no exception to it.
Possible Talent Management Challenges and their Probable Solutions
Lack of relevant skills
The recruitment process lacking the evaluative measures for the skill identification is a major issue that hampers the organisational performance. On the other hand, with the rapid advancement of technology, skills also need regular updates, absence of which might make an employee irrelevant for the organisation. Finally, promotion or transfer of the employees from one department to the other might also raise the issue of skill inadequacy (Nisar et al. 2017).
Employee turnover
High demand for skilled human resource in employee market and inadequate leadership practices are few of the most important triggers of employee turnover (Hom et al. 2017). As “e-booking alert” app concerns with software development and app management it needs to hire highly skilled software developers, who are highly valued in employment market. Therefore, loss of such employees due to inadequate compensation packages or poor leadership practices might be harmful to its business in long run.
Security of intellectual property
Employee turnover entails compromised security of the intellectual property of a business organisation. Therefore, the business organisation cannot entrust all its employees with its trade secrets and intellectual properties. However, absence of adequate information might also lead to limited usability of workforce. Absence of a well-planned communication system therefore might restrict opportunity of utilising the talent of organisational staffs exhaustively.
Potential solutions to the identified challenges
Training and orientation process
While orientation after recruitment might help the newly recruited employees to align their existing skills with the organisational requirements, the existing employees also need regular training for retaining the relevance of their knowledge and skills. As the business venture dwells in the software as a service (SaaS) segment regular updating of the skills of its human resources through training would also be needed to ensure development of features relevant to the contemporary market. Finally, issue of employee retention might also be addressed through the training as employees often leave business corporations due to the perceived absence of scope for growth. Training would avail the employees a chance for personal skill development ensuring their satisfaction.
Inspiring employees through transformational leadership
It is noteworthy that while applying the transactional leadership the management could address the issue of inadequate pay, application of transformational leadership would be useful in generating loyalty in the workforce. Kossek et al. (2018) identified that transformational leadership generates a sense of association among the workforce with the company. Thus, it helps the business organisation to utilise the skills of its human resource in better way due to the acceptance that such leadership methods generate in the employees in contributing to the overall development of the company. It might also be helpful in resolving the potential threat to intellectual property, caused by employee turnover.
Conclusion:
The success of an innovative business venture lies in the ability to look beyond the mere product or a few preliminary aspects of production and marketing. It depends on the capacity to identify the aspects of the offerings of such ventures that would appeal to the market, namely, the value proposition. It also depends on the observation of marker responses to its offerings through some key indicators of its performances and anticipation of potential challenges to offer solutions to them. A software as a service (SaaS) provider like “e-booking alert” app would have to maintain its advantage in the market through constant innovation for which it needs a dedicated team of software developers and end level staffs along with management employees that would maintain and add to its unique proposition.
A business venture requires careful consideration of the factors that would avail a competitive advantage to its products or services and the indicators of its performance in the market. identification of such factors and utilising them for its sustenance in the market is crucial to ensure success o the venture. This particular study assesses the value proposition, key performance indicators and talent management challenges that “e-booking alert” app might face in the aviation market of United Arab Emirates (UAE). It also suggests potential solutions to the identified challenges.
Reference:
Chandrakala, V.G. and Devaru, S.D.B., 2013, ‘Blue ocean strategy and bottom of the pyramid marketing’, International Journal of Management Research and Reviews, vol. 3, no. 7, pp. 3080-3086
Dempsey, D. and Kelliher, F., 2018, ‘Recurring Revenue Model Through a Cloud Computing Channel’, In Industry Trends in Cloud Computing, Palgrave Macmillan, Cham, London, pp. 111-128
Holzer, A., Govaerts, S., Ondrus, J., Vozniuk, A., Rigaud, D., Garbinato, B. and Gillet, D., 2013, ‘Speakup–a mobile app facilitating audience interaction’, International Conference on Web-Based Learning, vol. 68167, no. 1, pp. 11-20
Hom, P.W., Lee, T.W., Shaw, J.D. and Hausknecht, J.P., 2017, ‘One hundred years of employee turnover theory and research’, Journal of Applied Psychology, vol. 102, no. 3, p.530-545
Kim, W.C. and Mauborgne, R.A., 2014, Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant, expanded edn, Harvard business review Press, Watertown, Massachusetts, viewed 15 Aaugust 2018, <https://books.google.co.in/books?hl=en&lr=&id=gwypBQAAQBAJ&oi=fnd&pg=PR4&dq=Kim,+W.C.+and+Mauborgne,+R.A.,+(2014).+Blue+ocean+strategy,+expanded+edition:+How+to+create+uncontested+market+space+and+make+the+competition+irrelevant,&ots=bO5eGT987v&sig=o2IDXNfBfJnnBW1iGJUUIQ8KxXY#v=onepage&q&f=false>
Kossek, E.E., Petty, R.J., Bodner, T.E., Perrigino, M.B., Hammer, L.B., Yragui, N.L. and Michel, J.S., 2018, ‘Lasting Impression: Transformational Leadership and Family Supportive Supervision as Resources for Well-Being and Performance’, Occupational Health Science, vol. 2, no. 1, pp.1-24
Nisar, Q.A., Uzair, M., Razzaq, W. and Sarfraz, M., 2017, ‘Impact of HR Practices on Employee loyalty and commitment: Mediating role of Job satisfaction’, International Journal of Management Excellence, vol. 9, no. 2, pp.1067-107
Osterwalder, A., Pigneur, Y., Bernarda, G. and Smith, A., 2014, ‘Value proposition design: How to create products and services customers want’, Journal of Business Models, vol. 3, no.1, pp.81-92
Parmenter, D., 2015, Key performance indicators: developing, implementing, and using winning KPIs. 2nd edn, John Wiley & Sons, New Jersey
Sprenger, M., Mettler, T. and Winter, R., 2017, ‘A viability theory for digital businesses: Exploring the evolutionary changes of revenue mechanisms to support managerial decisions’, Information Systems Frontiers, vol. 19, no. 4, pp.899-922
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