KPI for a two sided marketplace will be discussed in this article. I touched on how we make sure the products we sell on AppSumo will be a hit before they are even introduced to our audience in my previous blog. However, I was shocked by how frequently my coworkers asked me in the past few days how to measure business-wide performance.
Working on a two-sided marketplace might be difficult because we must divide our time and resources between two primary parties: partners and customers (demand) (supply). Our success depends on knowing where to allocate our limited resources in the marketplace and when to shift course.
Defining KPIs for a Two Sided Marketplace In 2022
In this article, you can know about KPI for a two sided marketplace here are the details below;
The traditional supply and demand curve may be one that you remember from Economics 101. As a middleman, it is our responsibility to reduce friction between supply and demand so that we can as closely as possible achieve the ideal balance of quantity and price for each product that is offered through our platform.
I like to visualise two-sided markets as a seesaw, with supply and demand on the contrasting sides. Making both sides as equal as feasible is the aim in order to prevent one side from dominating the other in terms of resources, focus, traction, etc. The usage of North Star measures and KPIs is crucial in detecting this.
Step 1: Who are we and why do we exist?
According to my experience, it is better to add marketplace key performance indicators (KPIs) after defining the overarching objective and North Star metric of the organisation. The North Star metric (NSM) resembles a global KPI that you should monitor on a regular basis to keep an eye on the firm as a whole. North Star measurements must be, as Sean Ellis emphasised in a recent article:
- Easy to recall
- Related to consumer value and what motivates your company’s product/market fit
- anything with a sustainable growth
When this measure is used in conjunction with the mission statement, it helps the entire organisation understand what it means to expand the NSM and what success might entail.
In order to determine if you are doing well or not, you essentially ought to know 1) Who you are & 2) Why you exist.
How other businesses approached their NSM and mission is shown here:
NSM: Scheduled nights
Mission: Contribute to the development of a society in which one can reside anywhere and where one can stay permanently as opposed to only visiting. Also check SEO Services Primelis
NSM: Monthly purchases made.
Mission: To provide the greatest convenience, the best choices, and the lowest costs to our clients.
NSM: Monthly listening duration
Mission: Unleash the creative potential of people by enabling a million artists to make a living from their work and a billion admirers to appreciate and be inspired by it. This is another KPIs for a Two Sided Marketplace. Also check online legal services
NSM: Regular outings
The goal is to provide transportation for everyone and everywhere.
Daily active users: NSM
Mission: Increasing global cooperation. This is another KPIs for a Two Sided Marketplace.
So at AppSumo, we started with a thorough examination of our corporate identity and our core objectives. So, for our NSM and mission, we came up with the following:
NSM: The quantity of answers offered
Our goal is to enable every entrepreneur.
Step 2: Defining Primary and secondary KPIs
Your firm can be further divided into extra primary and secondary KPIs to better gauge on various aspects of the business once you have your NSM and mission.
The new article by a16z discusses the various crucial KPIs that marketplace companies need to monitor. These metrics are a wonderful place to start when determining which indicators are appropriate for your company because no two marketplace businesses are precisely alike.
You may wish to start by segmenting your company into supply and demand and allocating key and secondary KPIs to each side if your marketplace is two-sided. I contend that liquidity—defined as the possibility of someone selling something or of someone buying anything on the website—is the most crucial statistic to monitor for a two-sided marketplace. This metric is split into metrics for both buyers and sellers, and it is calculated as follows:
A measure of buyer liquidity is the ratio of transactions to visits.
Seller liquidity is determined by the ratio of listings with purchases to all listings.
Your sort of business will determine how you define “transactions,” “visits,” “purchases,” and “listings.” Additionally, you should time-box these indicators (i.e., the last 7 days) in order to track their development. When you have these core liquidity measurements, you may choose supplementary KPIs for buyers and sellers to dig even deeper.
Acquisition retention, and engagement
According to the three main topics of acquisition, retention, and engagement, I like to segment the customer KPIs. Depending on your product and line of business, you may want to track these across different time frames.
Here are the metrics at AppSumo that we focus on the most:
Number of active consumers, core action retention (defined as the total number of customers who have purchased a product within the last month). In order to examine trends over time between our newest and oldest customers, we further analyse this data by segmenting it into cohorts. Also check printing services singapore
Engagement: comparing the number of sessions to the percentage of sessions that result in product views, cart additions, and sales within each stage of the e-commerce flow To track this, we mostly use Google Analytics, particularly the indicators for the e-commerce shopping funnel.
Acquisition: Number of new clients (defined as the number of customers who made their first purchase within the last month)
On the partner (supply) side, we focus on how much value we are delivering to our partners and how easy we can expand our marketplace by adding additional self-listed sellers.
Unsurprisingly, acquiring new clients and increasing revenue are the main ways partners claim that they evaluate their success. Additionally, since partners receive a larger income share for each new customer they bring in, they have an incentive to promote their listings and attract new clients. As a result, we categorise our secondary KPIs into the following groups:
Acquisition: Monthly new seller count (defined as the number of new sellers who listed a product within the last month)
Total number of sellers: Retention (defined as the total number of sellers with a product available for sale on the site)
Income: The typical revenue per partner.
Engagement: The amount of new clients that made a purchase (defined as the number of customers who bought a product in their first marketing).
Step 3: Bringing it all together
I am responsible for leading the strategy and product development for our two-sided marketplace at AppSumo as the Lead Product Manager. Even though my work continually centres on determining and developing the most crucial functionality for our audiences, no two days are ever the same. This is another KPIs for a Two Sided Marketplace.
Our company’s current top objective is to quickly grow the business over the coming years, which necessitates that we actively seek out and keep as many buyers and sellers as we can. This entails entering new client segment marketplaces and luring new product verticals to satisfy those new target consumers. This is the reason why we decide to concentrate mostly on liquidity and growth measures.
The indicators you want to pay the most attention to ultimately depend heavily on the objectives of your business. For instance, are your goals to double market share or to forge new ground and upend an established sector? You would want to track many indicators because each of these objectives will call for a completely different strategy. Depending on whether your company has a comparable business model and strategic direction to ours, the KPIs you select for your enterprise may resemble ours or be drastically dissimilar.