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Mind the Product

Innovation

Sunday Rewind: Show your true innovative colours by Julia Shalet

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How behavioral economics can improve product strategy

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Jase Clamp is a product consultant on a mission to see an Australian company in the top five global market cap companies. He believes the key to this is good product management. He serves on the Mind The Product team as Asia-Pacific Co-ordinator for ProductTank as well as consulting with startups on their product strategy and process.

Director

Jase Clamp

What do you get when you have a room full of marketplace product leaders from areas as diverse as pet care, heavy machinery, content creators and consumer goods comparisons? A ProductTank! In July 2020 <a href="https://www.mindtheproduct.com/producttank/">ProductTank Brisbane</a> focused on double sided marketplaces and we were fortunate to have so many diverse perspectives on the topic in the same room.
It&#8217;s hard enough to build one business but building a marketplace is twice as hard because it’s like you’re building two companies simultaneously. You encounter issues such as the chicken and egg scenario of which side to build out first as well as needing to harmoniously balance the needs of both parties.
Our event host was <a href="https://www.canstar.com.au">Canstar</a>, a marketplace of financial and consumer product comparisons. <a href="https://www.linkedin.com/in/patricedodd/">Patrice Dodd</a>, who looks after the B2B side of the Canstar marketplace explained that in simple terms, a double sided marketplace is a proprietary platform that connects buyers and sellers.
Canstar calls the buyer persona consumers &#8211; the problem they’re solving for them is to save them time and money in evaluating products. Sellers are referred to as clients who Canstar helps acquire customers cost effectively.
<blockquote>What is broken and how is the platform fixing it?</blockquote>
<a href="http://canstar.com.au">C</a><a href="http://canstar.com.au">anstar gold</a> looks after financial products such as loans, credit cards and insurance using a pool of impartial analysts while <a href="http://canstarblue.com.au">Canstar blue</a> compares everything at home using consumer panels and surveys.
The original product “Cannex”, founded in 1992 was a paper of comparison rates and interest rates of home loans that was distributed via fax to brands. Brand recognition and the five star rating system was a key factor of the growth into the digital marketplace of today.
<a href="https://www.linkedin.com/in/lauren-jane/">Lauren Jane</a> who looks after the B2C side of Canstar shared inspiration from Simon Rothman of Greylock VC and an early pioneer at eBay. The number one thing Simon recommends looking at in marketplaces is “what is broken and how is the platform fixing it?” On the consumer side Canstar seeks to consolidate information in one place to save the consumer running all over the internet to make comparisons.
Canstar started by building the supply side of the market first with the aggregation of large amounts of data on financial products which the supplier’s themselves used for benchmarking and trusted ratings. The consumer marketplace was then launched from this.
<img decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2020/08/95e150e6-c974-423b-9f41-4d020f89153d_pasted20image200.jpg" alt="" />
From a product team structure standpoint, some key factors that have enabled them to effectively advocate for the end user have been:
<ul>
<li><a href="https://medium.com/@mvwi/story-writing-with-gherkin-and-cucumber-1878124c284c">Gherkin story writing</a></li>
<li>A consistent incident reporting processes</li>
<li>A growing conversion rate optimisation team using listening tools to inform work</li>
<li>Design thinking workshops and design sprints</li>
</ul>
<h2>Exploring Three Different Types of Marketplace</h2>
We extended the discussion with a panel chaired by one of our Brisbane organisers, <a href="https://www.linkedin.com/in/louflynn/">Louise Flynn</a> consisting of three product leaders from different types of marketplaces:
<ul>
<li><a href="https://www.linkedin.com/in/debmorrison/">Deb Morrison</a>, CEO <a href="https://www.petcloud.com.au">PetCloud</a> &#8211; a national australian pet care services marketplace of traveling pet owners and police checked, insured home-based pet carers 🐕</li>
<li><a href="https://www.linkedin.com/in/scottthomas23/">Scott Thomas</a>, Co-Founder <a href="https://www.creativelysquared.com/">Creatively Squared</a> &#8211; that enables global brands to access quality cost effective digital content from a community of content creators 📸</li>
<li><a href="https://www.linkedin.com/in/matthew-peters-74469447/">Matthew Peters</a>, Co-Founder/ COO <a href="https://www.iseekplant.com.au/">iSeekplant.com.au</a> &#8211; Australia’s largest online construction marketplace for heavy machinery 🚧</li>
</ul>
<figure style="width: 1600px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" src="https://www.mindtheproduct.com/wp-content/uploads/2020/08/dd1908bb-d70a-430e-b7e9-7f8164d4c03b_pasted20image200.jpg" alt="The leaders of several double-sided marketplace products joined us at ProductTank Brisbane" width="1600" height="697" /><figcaption class="wp-caption-text">The leaders of several double-sided marketplace products joined us at ProductTank Brisbane</figcaption></figure>
<h3>How did understanding the transaction you are replacing help you build your marketplace?</h3>
🐕 For Deb, understanding of the problem they were solving came from her personal experience of having to travel for work and living in a new area &#8211; she didn’t have access to family, friends and neighbours for pet sitting and the experience with kennels wasn’t positive. She learned more about the customers by talking to many other pet owners (e.g. at dog parks) about the problems they might be having with pet care while traveling. They’ve been able to take something that was a “cottage industry” run via flyers and gumtree to a commercial endeavour with consistent high standards and procedures that brings comfort to pet owners considering how much they care for their “fur babies.”
🚧 For Matt, the problem was about trying to secure heavy machinery for projects around Australia. The customer would be flying in from some other city, used to using providers in their own city and local providers may be tied up and the types of machinery they have available is always changing. They were replacing folders of business cards and a few larger brands surfacing through Google. For example the ability to have access to a searchable database where you can specify you need a 30 ton excavator with a rock breaker along and an operator in a certain place / time is very powerful. They were replacing a lot of effort and phone calls.
📸 For Scott, they realised that millions of people with mobile phones could replace costly commissioned photographers in meeting brand’s unending demand for fresh sharable content.
<h3>What role has educating contacts on both sides of your marketplace played in your evolution?</h3>
🚧 With iSeekPlant, a big chunk of their audience is actually not highly computer literate so they would go around the country, take photos of equipment with the suppliers, show them how to log in on the phone. That is part of the sales process which is followed by a customer success team with online chat or alerts to reach out and call customers or providers. Simplicity has been important for them &#8211; very clear registration funnels and backend navigation was important for their constituents.   
📸 For Creatively Squared, three quarters of their content creators have never worked for a brand before so they don’t know the value of what they can provide and on the brand side they may be used to 50 page powerpoint briefs and working with agencies through extensive processes. So we play the role of coach in the middle to move away from long winded briefs to short and sharp instructions for normal people. Their early MVP was a typeform and a square space site with Zapier and Airtable but it still looked innovative compared to agencies and with a simple monthly subscription
🐕 PetCloud had to balance compliance with conversion rate optimisation. They created an online course with the help of the RSPCA and also implemented a concierge throughout the booking flow. In their situation there are many different types and sizes of pets that need all types of different care.
<h3>What’s different in B2B when you’ve got two businesses on either side of the platform?</h3>
📸 Scott Thomas didn’t feel there were many good examples of B2B marketplaces to learn from. With B2B you may be looking at dozens of customers not thousands so there seems to be less point looking at analytics where you fuss over the colour of a button. While the users of these B2B platforms are familiar with marketplaces in their personal life, they’re still getting used to interacting with them in business which impacts things like payments and invoicing.
🚧 Matt Peters shared that you might look at the way things are being done in the real world today and there are those concepts for a broker that “clip the ticket” for every transaction which is not the direction they’ve taken. There are a lot of complexities in the transaction such as duration, stand down rates, who is paying for fuel, what’s happening for maintenance, mobilisation, drop off gate, weed/seed certification, safety compliance &#8211; they don’t get involved in all the complexities but they do connect the parties and verify that an arrangement has taken place.
Another nuance they are very aware of is that people’s livelihoods are at stake, so publicly exposing project information could lead to a lot of counterbidding which might ultimately do more harm than good. In order to power their search, one of the areas they’ve needed to invest in technology is integration with telematics which provides GPS location of the equipment itself however they’ve worked hard to make sure this information can’t be reverse engineered to get intel on projects that could be leveraged outside their model.
<h3>What metrics do you use to gauge success?</h3>
🐕 Deb mentioned that for marketplaces, the more real time and granular the data can be, the better. They are always looking at their CAC (cost of acquiring customers), the annual revenue run rate, LTV (live time value of customer), as well as repeat and occurring booking which are an event they consider very important. To get a grasp on this, they use PowerBI because it helps them get that granularity such as down to the postcode level across Australia and cross reference with the many services they offer.
📸 Scott shared that with Creatively Squared they are keenly focused on the time between brief creation and locking in who will work on the project. So for example if they quickly need someone to shoot food in vietnam &#8211; people don’t care if there are 10 million people in the market place if they can’t get their results quickly. On the customer side it’s net revenue retention, focusing on increase of spend.
<h3>For anyone looking to launch a marketplace, what’s a key resource or advice you’d give them?</h3>
🐕 Deb encouraged people to check out Andrew Chen’s blogs from Andresen Horowitz and also that unless you have your analytics and tracking for funnels setup, it can be like building in the dark so “get intimate with your numbers.”
📸 Scott said he’d found value in the content produced by VC Point Nine Capital out of Berlin regarding B2B marketplaces. Specifically if you focus on one customer and screw the other one, all the value you’re trying to build in the marketplace will go out the window. Even with the AirBnBs or Uber’s of the world you’ll see if they start focusing too much on one side, you’ll start seeing the revolt. They look to find the balance between both sides.
🚧 Matt reminded everyone that this is a long game and building a quality marketplace can take 10 or more years. It’s a people game where relationships are important. They also look carefully at other marketplaces and consider what mechanisms they could apply to what they’re doing.
<h2>Final Summary</h2>
For me, the top three takeaways for this valuable event on double sided marketplaces were:
<ul>
<li>Know what customers care about so for Creatively Squared this meant knowing people care about speed not quantity and for iSeekPlant people care about commercial privacy.</li>
<li>Know your numbers by having a strong understanding of your funnel and key metrics.</li>
<li>Be innovative by looking for off the shelf tech that you can employ to quickly validate solutions (such as zapier and a spreadsheet)</li>
</ul>

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Jase Clamp