12 Metrics for a successful marketplace
Marketplaces are hard but when they start working it feels so deceptively easy. How do we get to saying it is a piece of cake. Here at Wanteet, we have gleaned a few things from our experience with building marketplaces. First of all, do you have a strong vision for the marketplace? If you do, how are you going to get there? How do you measure your progress along the way? What milestones do you need to tell if you are on the right path?
As a CEO of a marketplace, it is important that we measure our progress, to setup a successful marketplace. What you don't measure, you cannot improve said Kelvin years ago and that continues to ring true today. Peter Drucker echoes this in his book and so do many other gurus. We need to measure in order to determine where we are on the hockey stick growth that all of us strive for in marketplaces.
What are some areas that absolutely need to be measured?
Number of transactions
Are the number of transactions growing every month? Is the marketing on social media, mail campaigns, etc working?
Revenue month over month
Are we making more money every month? Are we reducing our cost of operation? What is the revenue from existing customers and new customers? Are both those numbers growing?
Number of requests on a demand based marketplace
Is there enough demand in the marketplace? Are we creating enough demand? Is the marketplace interesting enough?
Average number of bids on a demand based marketplace
How many sellers responding to requests in the marketplace? Are we seeding the marketplace?
Number of repeat customers
How many customers came back this month to place orders?
Number of new customers
This is a very valuable indicator in the life cycle of a marketplace indicating how many
Lifetime value of a customer
This is the total revenue from a customer's time on the marketplace. Annual contract value is the value of a customer over a 12-month period. Ideally this should be more than four times the average cost to acquire that customer.
Number of unique customers
How many unique customers to the site is a very important number to determine how the marketing department is doing. For example: are the mail campaigns connecting with the prospects? Is the article talking to the customer's needs
Number of conversions
What percentage of prospects contacted is converting to customers? What percentage of users on the trial version converted? Is the value proposition actually working?
Customer acquisition cost
How much did we pay in advertising costs, marketing material to reach a customer? Is this reasonable and can we continue on this path? Are the inexpensive acquisition channels working? Which channel is cost effective for this marketplace? This will depend on the customer. If he or she is young, it is social media like instagram? If it is a company perhaps organic searches work better? Which ads are working better?
1. Number of problems reported
Are there issues in the system that need to be tackled to improve usability for the user? Do we need to make a feature easier to use, add more servers?
- Turnaround time for solving an issue
How fast is the customer being served when he has an issue? Is the customer having to wait a very long time?
How soon do we reach out to the customer and how long does it take for the customer to continue his user journey?