November 16, 2018
The State (and Future) of Digital Marketplaces Webinar
Today, there’s a marketplace for virtually anything you can think of. Transportation, home services, dating, shopping, and a variety of other products and services. Given the fact that there are so many properties on the web, one of the biggest concerns marketplace operators have is finding ways to stand out from and stay ahead of the competition.
This is where extreme personalization comes into play—an intelligent way to communicate with your buyers and sellers. Rather than blindly sending the same canned messages such as “Hello [First Name], we’re currently running a sale on [Product Category]” to everyone, extreme personalization makes it possible to treat buyers and sellers as unique entities/individuals. For example, rather than sending sales alerts in large batches, extreme personalization makes it possible for marketplace operators to send individual emails and/or push notifications to buyers and sellers when they’re most likely to be opened.
While marketers face plenty of challenges, keeping a marketplace operating smoothly shouldn’t be one of them. Below are 4 of the most common challenges marketplace operators face, and the ways extreme personalization helps to overcome them.
Marketplaces can deliver the best experiences and offer the best products, but those efforts are worthless if buyers and sellers aren’t coming to the platform. As mentioned earlier, there’s no shortage of platforms for consumers to shop on, and so it’s up to you to effectively communicate to lure them to your platform and keep them coming back. One way to effectively communicate is to send only relevant, personalized, compelling content at the individual level.
Communication can be a brand’s secret weapon if done right. For a long time, marketers have attempted effective communication by employing A/B testing to determine which message variant works better to pique the interest of consumers and increase engagement.
Here’s how it typically works: marketers test two variants by sending 10% of the total messages, wait a day or two, see which variant out-performed the other, and then move forward with the winning variant, sending it to the remaining 90%.
Unfortunately, this approach isolates a significant chunk of the audience since those people may be sent a message that they find uncompelling and therefore see as disruptive. Overall, the point here is that A/B testing groups people into segments instead of considering them as the individuals they are. With that comes consequences, like losing some of those audience members to competitors as time goes on.
But it doesn’t have to be this way. Marketplace marketers can better communicate with consumers by embracing extreme personalization in how they approach message variant testing. New-age message variant optimization solutions test multiple (not just two) variants of messages in real time, determining which one is out-achieving the others when it comes to increasing key metrics like engagement and conversion and then only sending that variant out. This way, every consumer gets served the message that is right for them instead of what’s right for other people.
Further, marketplace marketers can leverage new tools to bolster email engagement in particular, like subject line optimization. Here, it’s possible to intelligently estimate the effectiveness of a subject line to elicit an open before the email go out, thus empowering the marketplace to send fewer messages, but with much more accuracy.
Provider and customer liquidity are two of the core elements that go into running a successful marketplace. A marketplace without liquidity is like trying to run a car without oil. Aside from not generating any revenue, the marketplace suffers from the stigma of being a low-quality platform for buyers and sellers.
By definition, provider liquidity is the percentage of listings that lead to transactions within a given timeframe. Customer liquidity on the other hand is the probability of a visit leading to a conversion (transaction).
One of the biggest challenges many marketplace marketers face is facilitating transactions from start to finish. Retailers are in the fortunate position of having full control over purchases. Customers simply come in, choose the product/service, and make the payment.
Peer-to-peer transactions on the other hand require coordination between the buyer and seller. While many transactions are successful, issues of stalled communication and breakage (when a transaction occurs off platform) are prominent.
That being said, those issues can be resolved with a simple nudge from the platform, via a timely message sent on a set schedule after a transaction is initiated.
Extreme personalization solutions enable marketplace marketers to send these messages based on individualized logic. For example, messages that are sent to nudge a conversion could be sent only if five days elapse and neither the buyer or seller have completed their transaction.
While dialogue-based transactions are a core component of marketplaces, there are still a variety of sellers who choose to embrace the retail transaction model, where the customer selects the product and purchases it on the fly.
In an ideal world, that’s what happens, however Statistia puts the average cart abandonment rate at 76.9% which means only 23.1% of customers make a purchase immediately. Considering how there’s no shortage of marketplaces for buyers to shop from, once the customer leaves your site, there’s a strong possibility they’ll check out a competitor…and not come back.
While you could send a reminder message to the customer regarding the item(s) in their cart, that puts you at risk of over-messaging. One purchase might have a consideration period of a week. Another might only take a few minutes or even seconds. Extreme personalization tools make it possible for marketplace operators to perfectly time their promotional messages based on individual browsing/purchasing behavior.
One of the biggest frustrations marketplace operators face is not getting enough traffic to seller listings. While search and categorization functionalities used to be sufficient when online marketplaces were just starting out, the average buyer isn’t likely to go beyond the second or third page of search results.
In order to overcome this challenge and deliver a better user experience, marketplaces have long turned to product recommendation engines as a way to cross-sell relevant products. Although useful, buyers are often frustrated by being recommended irrelevant products or by seeing desired items be out of stock.
Extreme personalization tools for marketplaces address this problem by making recommendations based on inventory availability. For example, if a seller has a limited quantity of goods (such as 10 pairs of jeans), improved recommendation engines would only suggest the jeans to customers who are most likely to make a purchase, thus refraining from over-messaging those customers who wouldn’t be likely to make a purchase and saving them from the frustration of being over-messaged—and saving you from them being annoyed with your marketplace platform.
Extreme personalization is more than just an approach to enhance buyer/seller experiences through effective communication; it’s also a cost-effective way to improve marketplace liquidity.
Marketplace operators can’t afford to miss out on extreme personalization. Although it’s relatively new, more & more platforms will start employing extreme personalization tools over time. Ultimately, the marketplaces that embrace extreme personalization early on are the ones that will outperform the competition over time.
For more information on extreme personalization and how you can make it a reality in your marketplace, be sure to check out The Kahuna Blog. Simply click the button below!
A Bi-Weekly Newsletter Focused Exclusively on Online Marketplaces