There’s little question that two-sided markets, built properly, can create considerable value for both sole proprietors and the clients they serve. This is evidenced by platforms like Turo for car owners and the renters they serve, Uber for drivers and people looking for rides, and Fiverr connecting freelancers with businesses in need of their services. But building a successful two-way platform requires more than identifying a niche market that’s being under served by its current suitors.
This past week’s news that US legal technology player UpCounsel was abruptly shutting down was surprising, especially given how well funded they were. Perhaps more importantly though, it shed light on some of the challenges that need to be avoided when building a two-sided market. UpCounsel connected freelance lawyers with small businesses, an industry with a reputation for being excessively expensive, but credibility became an issue when customers rightfully questioned the credentials of the lawyers they’d hired through the website.
Here are four areas that need to be considered in the operation of a credible two-sided marketplace:
- Credentials
Credentials of the individuals or businesses delivering the service must be properly validated so that customers can have confidence they’re being served by professionals that know what they’re doing. Not just anyone should be allowed to use the platform. They must meet minimum requirements and have those requirements confirmed. While this might take time and resource to accomplish, it is necessary to building a platform that will last.
- Two-Way Feedback
Potential customers can be confident in the service provider they select based on reviews from others that have used their services in the past. Service providers will want to deliver as positive an experience as possible to ensure they receive top marks. On the flip side, problem customers can be identified by ratings they receive from their service providers. This allows services providers the opportunity to raise red flags about clients that others may not want to deal with.
- Responsiveness
As with any business, problems will be impossible to avoid, but the quicker they’re addressed the better. Responsiveness to both client and service provider concerns will go a long way in helping to prioritize important platform improvements as well as to identify bad apples on both sides of the market.
- Repercussions
When you’re managing a two-sided platform both sides need to be accountable, and there need to be repercussions for things like poor behaviour or inadequate service delivery. While two way feedback channels and public ratings will sometimes take care of this by themselves, extreme cases will require those running the platform get involved to hand out appropriate punishments in order to avoid future issues.
I’ve been on both sides of two-sided markets and strongly believe in their capacity to create a better experience for both sides. While my negative experiences have been few and far between, I credit that to having used platforms that are mature and already well established as credible.
What kinds of experiences, positive or negative, have you had with two sided platforms?
