The Homejoy Meltdown: A Cautionary Tale for On-Demand Companies

June 14, 2016



The on-demand sector is growing rapidly, but not every company using this model has popped like Uber and Airbnb. Unfortunately, some aren’t able to cross over to long-term viability. These cautionary tales remind would-be entrepreneurs in this sector that success will depend on more than a user-friendly digital presence and savvy marketing.

A noteworthy and widely publicized example of an on-demand enterprise that shut down was the home-cleaning service Homejoy. Looking at what led to its collapse offers two vital lessons for other on-demand platforms.

A brief history of Homejoy

Founded in 2012, Homejoy applied the on-demand business model to take a bite out of the home-cleaning marketplace estimated to be worth up to $400 billion. The platform connected an external workforce of cleaners with consumers who wanted their homes polished and scrubbed. Time-strapped consumers desperately desire housecleaning services, so Homejoy enabled consumers to immediately schedule a cleaning with a click, which seemed like a godsend.

The concept soon attracted lots of venture capital too — some $40 million from illustrious names like Google Ventures and PayPal co-founder Max Levchin.

But after three years in operation, Homejoy shuttered. Much has been written about why, citing poor customer and contractor retention. Heavy discounting and competition were highlighted as contributing factors as well.

It also appears that Homejoy had a weak and ineffectual onboarding and training process. Without those pillars to support it, Homejoy ultimately struggled to deliver on its brand promise of a timely, efficient and first-rate cleaning service.

Related reading: Why the On-Demand Economy Treats Provider Training As Mission Critical

Lesson #1: The importance of onboarding an external workforce

In retrospect, one first mistake Homejoy made was thinking anyone could hop on the platform and become a house cleaner. While consumers may be less picky when it comes to summoning a car ride or ordering food, they’re much more stringent when the contractor enters their home to clean what are personal items.

Homejoy neglected a thorough vetting of contractors at the onset, leaving it with an external workforce perhaps unable to perform the basics of housecleaning. Disappointed customers soon abandoned the platform. With fewer assignments and less cash, even the better cleaners left Homejoy.

In its haste to get cleaners into the field, Homejoy may have rushed the onboarding process. While contractors want to start earning as quickly as possible, an on-demand enterprise must also ensure it is partnering with providers who can serve as good brand ambassadors.

The lesson for other sharing economy enterprises is clear: A thorough yet easy to navigate onboarding process captures the best contractors. During the onboarding and application phases, ask relevant questions of the would-be provider to uncover whether the person possesses the basic skills for the job.

Lesson #2: Uphold brand values with training

After cleaners were onboarded, Homejoy reportedly provided contractors with only cursory training. With little to no instruction, contractors floundered on the job.

In hindsight, assuming a provider already knows how to clean a house was risky. The company should have been more proactive and instituted a thorough and ongoing training initiative to outline its cleaning standards to contractors.

Related reading: How Sharing Economy Companies Are Embedding Provider Training Into Their Platforms

A systematic learning program integrated with the Homejoy platform would have enabled contractors to tap into learning when and wherever it was needed, either during their off hours, or while on the job if they required instructions on a specific task. Having a person within an on-demand organization overseeing the actual, on-the-ground operations provides insights into what those contractors encounter on a daily basis, which, in turn, forms the basis of the instruction.

Training encompasses more than task-specific instruction. Contractors must grasp the on-demand company’s core brand values and how those values are expressed between the contractor and consumer. A thorough training program outlines those principles. It provides the guidelines by which the contractor interacts with the consumer and performs the agreed-upon duties.

Despite all the technological bells and whistles, the success of any on-demand platform grows from providing a consistent service to the consumer. A comprehensive training program integrated within the on-demand platform and easily accessed by external contractors ensures brand promises are upheld.

As the Homejoy examples shows, contractor training must be implemented as a core function of the on-demand platform.



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