A Crowded Space

Teach your Users

And vice versa…

Marketplaces function best when all users know exactly what to expect and how to behave.  Smooth transactions happen when all parties know how to properly conduct business.

This is true in every marketplace I know of - all the way back to the ancient bazaars.   Cultural norms develop that help all marketplace participants understand the appropriate behavior.  Culture develops around how to negotiate or not to negotiate, how to inspect goods, what are appropriate return or refund policies, what currencies are accepted, should the passenger in a ride share sit in the front or the back, is tipping appropriate, how much window shopping or test drives are allowed, etc.  In every type of transaction I can think of - there are behaviors that each person learns throughout their life about how to transact most effectively and safely.  

There is a learning curve for every new buyer and seller in a marketplace.

We don’t often think about how to buy clothes in a retail store - but the expectations are learned over years of shopping.  We all know when we walk into almost any clothing store in the US – we can browse around, someone will probably greet us and ask if we need any help, we can try on any items we wish, we can pay via cash or credit card, we most likely can’t negotiate much, and we are probably able to return any unworn items without too much trouble as long as we save the receipt.  Why do we know all that? Because these are accepted policies that we’ve learned for clothing stores.  From the first time we went shopping with our parents - this is what we were taught.  And most stores are consistent - so the policies of the transactions are now well understood and are second nature for any repeat shopper.

Now consider the first few jobs on a platform such as oDesk. In the beginning,  no users have any idea what to expect, what is appropriate, and how to successfully transact.  Users need to figure it out.  Should I post a fixed price job or a time and materials job? How many candidates will I get? Do I need to follow up? What if I cancel the job? What if I don’t like the work?  All of the answers to these questions need to be answered as marketplaces develop.

If you don’t believe these policies and expectations are important - consider this: for many marketplaces, the liquidity (# of items sold / items posted) for repeat users is nearly double the liquidity for new users.  An experienced buyer on oDesk knows exactly what to do and what they’re looking for.  As a result, they have a high fill ratio (# of hires / # of jobs posted). In contrast, new buyers are frequently overwhelmed, post vague jobs, don’t provide clear requirements and consequently have a much lower fill ratio.  They don’t know how to use the marketplace.  

To make matters worse - if the learning curve for new users is too steep, it will be a fundamental limitation to growth.  If you try to add to many new users into a marketplace in a given month, the liquidity will plummet.  

So the question arises of how do you enable this learning in online marketplaces.  

Here are just a few key tactics (would love comments on successful tactics you’ve used):

* Displaying successful transactions - this is one of the quickest and easiest ways for many marketplaces to teach their users.  And in fact, it’s really just a way for the repeat users to teach the new users.  If I’m going to list something for sale on OfferUp - I can first search for similar items to see what else is listed, what has sold, what is the market price, how are the items described, and maybe pick up some marketing tips from experienced users.

* Reducing variables - every variable in a marketplace is one more thing users need to learn about.  You can make the education job much easier by just reducing the variables or introducing more variables as things progress.  oDesk started w just software development jobs, Uber started w just black cars, etc

* Matching new w repeat users - two brand new users to a marketplace that try to transact are likely to fail.  There’s too much of a learning curve.  But, if you can proactively match new users w highly experienced users - the newbies can learn from the pros.  

* Community forums - these are always a wealth of info for both users and the marketplace company.  People will openly discuss best practices about how to transact safely, how to maximize earnings, how to find the best quality, etc

* Extra QA, Help, and Curation for newbies - I suggest marketplaces treat new and repeat users very differently. You might review every job posting from a new buyer and have customer support respond with helpful tips, but this would be a waste of time and energy with experienced buyers.  

* Context-sensitive help - help content is always sort of the last resort, but it pays to spend time understanding the user journey and providing context-sensitive help at every stage.  

* Clear and well-defined policies - these are what guide your users behavior and help develop the culture of your marketplace.  Craigslist has always taken a stance of caveat emptor (buyer beware).  This leads to certain behaviors like extreme caution around scams and safety.  

So, how do you set the policies for the marketplace?

One important way is to learn from your users.

Your users play a very significant role in teaching you (the marketplace operator) what the right policies and transactional workflow should be.  They set the culture of the marketplace more so than the operator.  The operator’s job is to set the right policies that will help the culture flourish or course-correct if they see the culture developing in a way that’s misaligned with their objectives.  One tool here is to enable open messaging and then watch closely.  See what happens.  See how users interact.  See what additional questions they are frequently having for other users.  This will inform your roadmap and your policies.  

Teach your users… And let them teach you.