How To Measure Success and Grow Your Marketplace
Hi Entrepreneur! Congratulations on the launch of your marketplace website. They say ‘Well Begun is half done’. But the big question is what about the other half?
How do we grow the marketplace business?
Let’s understand how to grow a marketplace business and what metrics does one need to keep in mind while in the growth phase.
Growth In Marketplace
Most entrepreneurs are not able to quantify the time your growth phase should take. Let me try putting a fair number to that question. It took Airbnb 4 YEARS to take off.
I am going to try and keep this discussion short as this phase is more than self-exploration more than anything.
There are just 3 broad steps for growing your marketplace:
1) Choosing The Right Growth Platform
It is very important to choose the right growth platform as your business grows. You can keep changing them as per requirements. The important steps in choosing the right platform are:
1) Brainstorm on the various available platforms
2)Choose one that fits the current requirement the best
3) Implement and test the efficacy of the platform
4) Optimize it as you move on.
Some of the most used growth platforms are:
- Search Engine Optimization
- Search Engine Marketing
- Promotions, Freebies, Giveaways
- Viral Marketing
- Content Marketing
- Social Media Engagement
- Paid Advertising
- Email Marketing
- Strategic Alliances
- Cross-industry expansions
For a more beautiful understanding of how to use various growth channels to your advantage, I would recommend watching some Neil Patel videos
2) Focus On Your Vision
Once customers start coming in, it is easy to lose focus of your initial marketplace vision. Keep following your early adopters and critics closely. Understand what makes your marketplace work for them and what can be improved. Keep making those changes while keeping in mind the reason for starting it in the first place. Slowly you should get a grasp of consumer behavior and should be able to grow your business.
If your business does not grow as expected in the first year, you should revisit the market and model of your marketplace. But as mentioned many times already, not all marketplace businesses have the same growth curve and you need to be patient with your marketplace. Every marketplace is unique in terms of the solution that they provide. You need to safeguard the uniqueness of your marketplace business.
3) Create A Business Ecosystem
Customers stay with businesses which provide a unique experience. If you do not give the customer a reason to leave your platform, they will not leave. Hence, it is very important to create the ecosystem as your business grows.
For Example: If you created just an order management platform using Yelo as your initial product, you could grow with an integration with Tookan as your delivery management solution. This will make your customers realize that you are an end-to-end solution provider. Flipkart and Amazon have their own branded delivery solutions.
Measure Your Marketplace Success
Every marketplace has a vision of success, even ones that run for non-profit. You may have different versions for success. Hence, it becomes important that you keep a track of the growth of your marketplace.
Here we discuss a few general metrics that most online websites use:
1) Usage Metrics
Usage metrics are indicators of the flow of customers on your website. Most online businesses track the following 4 metrics in order to assess the user activity on their website.
- Active Users: Calculated Monthly or Bi-Monthly, active users give you an idea of the number of users still performing transactions on your marketplace. The number of users does not grow business, the number of transactions do.
- New Users: This metric is especially useful when you run a promotion for customer acquisition. Organic growth in this means that people are talking about your marketplace
- Time Spent: If a customer spends a lot of time on your marketplace per session, it means either he/she is shopping a lot or unable to find what they are looking for. Hence it is important to monitor the time spent on your website
- Bounce Rate: If a customer is dissatisfied with any component of your website, he/she will leave the website, This is called Bounce Rate. A High Bounce rate without goal conversion means dissatisfied customers. You could run a retargeting on such customers.
These usage metrics can also be used as a benchmark for competitive analysis, Sellers could be attracted on to your website using these metrics.
2) Marketplace Business Metrics
Business metrics are important to justify your ROI from the marketplace. The following 3 metrics are what you should be measuring in the growth phase.
- Gross Merchandise Value: In the initial phases of growth, it is important to measure the value and not the volume of your sales. The volume may not be an apt metric for measurement of success as promotions and offers may show higher volume but lower value.
- Customer Acquisition Cost: This is the cost of acquiring each customer on your website. For calculating this, you calculate the total amount spent on marketing per new user on your website.
- Repeat Customers: Repeat customers are the best. Thye not only give valuable insights on reasons for visiting on your website but also act as evangelists.
Another important business metric is the Supply-Demand Ratio. It is the number of sellers on your platforms vs the number of users. It is important to maintain a healthy ratio so that both sets of customers are kept satisfied.
3) Customer Satisfaction Metrics
Okay, there is an insane number of metrics you could use for this and various tools to measure it. Customer satisfaction can be calculated at every level using tools like Richter Scale. Amazon asks your of your satisfaction level after you place the order, interact with a customer agent and when you receive the delivery. They track your responses and understand your behavior and what delights you.
- Net Promoter Score: NPS is a trusted anchor to measure your customer experience. It can be used to assess the marketplace customer relationships. It serves as a better alternative to traditional customer satisfaction tools and is proven to be correlated with revenue growth.
Wrapping It Up
Marketplaces take more time than traditional online businesses to grow. When you feel you are ready to grow, try different growth channels, focus on your vision and develop an eco-system in your marketplace.
Keep tracking the growth on your marketplace using usage, business, and customer satisfaction metrics and optimize your marketplace business based on results.
Finally, all I wish to recommend all you entrepreneurs out there
“It takes an ambitious heart to see a dream,
But it takes a strong mind to make it come true”