How do online marketplaces retain customers?

First, let’s clarify who you mean by “customers” – Marketplaces have two customer types. Depending on your business model, you may actually monetize both in different ways. Traditional P2P marketplaces offer a medium where a safe (and sometimes even insured) transaction can take please with ease. In return for providing this platform and intro, you take a share of each the transaction (either flat fee or percentage). So in this case, your “customers” are both user types. You require both parties to make money.

Marketplaces like Thumbtack are getting more creative with the way they charge and turning their suppliers into their customers by charging them a fee to reply to their potential customers quote requests through the platform. In this case, their customers are the service people. But they still require both sides to make their money (a bid solicitation step is necessary).

Regardless of your business model, if you are in fact a “marketplace”, and not the seller or customer yourself, then you will need to retain both user types.

Typical strategies for high retention rates are:

  1. Maintaining the “best” users – don’t let just anyone sell on your platform, vetting all registration attempts, requiring references, implementing review/rating policies (crowd source quality)…
  2. Offer insurance and guarantees – freelance platforms like Fiverr and Upwork do this very well. If you are not satisfied, you are not required to pay (unless you chose an hourly contract on upwork). So, therefore, the small fee to use these platforms, or a slight increase in rate, is worth it. This keeps customers coming back.
  3. Engagement campaigns using relevant retargeting – track what your customers buy, what content they view, who engages with what type of profile tags… using and event data provider like Clevertap and/or CRM like AgileCRM so you can supply relevant messaging back to your users based on what you know they need. A step further would be adding machine learning to the site so you can serve dynamic unique content to each user as they browse (check out Boomtrain or getblueshift.com).
  4. Be the largest – If you have the most ______, users will always come back to you before going elsewhere. Have a team constantly recruiting or adding profiles to your platform. Keep your vetting systems in place, and only show the reviewed profiles to cold traffic, but have all of your profiles be searchable on a directory page.

In the end, a niche platform with the most and the best (and a good UX that works on mobile), will gain the search traffic and continue to grow.

Hope this helps.

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