How Advocacy Can Drive On-Demand Marketplaces
When Michael Overell, CEO of RecruitLoop, launched a new on-demand marketplace for employers to outsource the recruitment process, he knew it could be met with resistance. “Online marketplaces get a lot of criticism. You often hear that they drive prices down and make life unfair for freelancers.” As a startup, RecruitLoop didn’t have the means to aggressively market the platform to win over customers. So, the brand decided to focus on turning their current customers into raving advocates. The gamble paid off: 30% of RecruitLoop’s revenue is now driven by referrals from happy employers and recruiters. Watch Michael’s Advocamp presentation to learn how on-demand marketplaces can harness the enthusiasm of their advocates to successfully disrupt the market.
Who took an Uber here, today, instead of a taxi? Anyone staying in an Airbnb rather than a hotel? Has anyone booked a cleaner on their mobile phone? Welcome to the future.
Marketplace platforms like these are taking over every element of our lives. Have you ever paused to think about what’s behind them, what’s driving them, and what makes them work? These platforms are driven by advocacy. It’s the oxygen that makes them work. And today, I’ll share a few ways they’re doing this. I don’t think you will look at these platforms the same way again.
The first online marketplace we all know that is eBay. It’s a website built in—I don’t know—’99 that connected independent buyers and sellers to sell new products. Now, marketplace platforms have evolved a lot since then, from products to services almost every time. But I think it’s helpful to think about the definition of a marketplace platform as a website, a mobile app, or a platform that connects two independent parties to complete a transaction of some form online.
These platforms are exploding. There’s literally been billions of dollars invested in marketplace platforms like these over the last few years.
There’s a joke in San Francisco about entitled tech employees living on-demand lives subsidized by VC money. It’s kind of true. Just imagine this Saturday afternoon and you’re ready to party. You can sit on your couch, organize that party end to end from different apps on your phone. You can have the alcohol delivered by Postmates. You can hire a private chef on Kitchensurfing. You can engage a babysitter to look after the kids. You can hire a DJ and security guard on marketplaces specifically designed for that purpose. Your anxious friends can have their medical marijuana delivered in 15 minutes. And at 9:00am the next day, you can have a cleaner arrive, clean up all the mess while you book a massage to come to your the living room to come to help you get over the stress. So, it’s an easy to joke to make, but some of these platforms are literally taking over entire industries.
So let’s come back to Uber. There are now more Uber cars in New York City than there are licensed taxis. Think about that. On Airbnb, there’s more rooms available than all of the Marriott Hotels globally. It’s not just happening in the consumer space. These are some of the brands we know about and we hear about everyday, but this revolution is happening in the enterprise. So, every professional service you currently consume as part of your business is in the process of being disrupted by a marketplace platform.
On UpCounsel, you can search and hire an independent lawyer from the marketplace of over 6,000 across the US. On HourlyNerd there’s over 10,000 MBA students and consultants that can help you manage your business, and you don’t need to overpay for consulting (and I used to be a consultant). On Scripted, there’s over 50,000 writers and journalists you can hire. DesignCrowd, 80,000 graphic designers. And RecruitLoop, which is my company, is an online marketplace of independent recruiters who work on-demand, that companies can hire on hourly basis. This revolution is happening everywhere you look.
Now, for the consumers of these products, whether you’re at home on a couch, or in your business, trying to look at faster, more efficient ways to doing things, these platforms are unbelievable. They’re convenient, they’re fast, and they’re mobile. You get what you want, when you need it.
And for the providers? They’re equally as good. This is the embodiment of freelance economy. These are platforms where solopreneurs, work-from-home parents, consultants, contractors, can control their own schedule. A lot of these people are building a life on these platforms. So for both sides, it seems like a win-win. Until it’s not.
This is not the party we just organized on our mobile phone. This is an image of an Airbnb apartment that was trashed by its guests and left with hundreds of thousands of dollars of damage. I’m sure we’ve read about stories of Uber drivers behaving inappropriately. Just last week, the cleaner that I booked on my mobile phone, left the front door to my apartment unlocked wide and ajar right out on to the street. Which always brings us to one of the most interesting problems to these marketplace platforms as they start to take over. It’s a problem for the platform owner itself, but also impacts us as consumers or users of these platforms. I think it’s unique to this sort of business model. And that’s the challenge that as a platform owner, the customer experience is directly impacted by someone you don’t control.
Your Uber driver is not an employee of that company. It’s a random guy or girl driving their car for as long as they want. Your Airbnb apartment is not owned or managed by Airbnb. It’s completely independent. As a platform owner, your brand is controlled by someone else. The customer experience is provided by someone else. And the delivery of your service is directly impacted by someone you don’t control.
But as consumers, our experience of the platform is intimately tied to that individual service provider. So think about how many bad or slow Uber fares it would take before you tried Lyft, instead. How many cold pizzas would have to be delivered by Postmates on a Friday night before you just go and pick it up yourself, or try a different service?
Think about that challenge as a platform owner. How can you provide a great consistent service where you don’t directly control the outcome? If you didn’t control the user experience, or the people who provide the service, what’s the direct impact with your brand and your platform?
I believe advocacy is the foundation on which every one of these successful platforms is built. From the two sides of the marketplace, advocacy is not a nice to have. It’s not an add-on for the marketing department. We have to fight for budget to get a tool like Influitive installed. Advocacy is built into the core of every part of this platform from the ground and up.
Let’s think for a minute about what makes a platform or marketplace like Uber so successful. You got a consistent and high-quality service delivered to an end user every time by someone you don’t control. It’s advocacy. You got reputation and trust built into the system, often generated by ratings and reviews from other members. That’s advocacy. You need loyalty from members to keep those transactions on the platform, so your Uber driver is not trying to take it offline and take that extra 10% or 20% for themselves. That’s advocacy. And in a perfect world, you’ve got user-generated growth. You’ve got members on both sides of the platform telling people they know, and bringing other people in. That’s advocacy. That’s what most of us here are trying to learn about.
This is something we thought hard about in building our business over the last three or four years – first in Australia, then in the US. We focused heavily on advocacy, particularly on the supply side, the sale side, which in our business is a network of independent recruiters across the world who we don’t control but who we rely on to provide daily great service to clients through our platform. I also spend a lot of time studying the best and the biggest platforms, and see what works for them and what doesn’t. So, I’m going to share today three ways that advocacy is driving the on-demand economy. I hope that’s useful for the builders of marketplace platforms, because there might be one or two of us in the room. But I think as consumers as well, to have an understanding of some of the mechanisms that are behind making these sort of services work, you might also take some ideas away to apply to your own business, whatever the business model might be.
So the first way advocacy is driving the on-demand economy is through incentives. Now every action on a marketplace platform is driven by an incentive of some kind, whether that’s designed or accidental. And the very best marketplaces will very specifically and very carefully identify the types of behaviors that make successful outcomes for both sides. And they craft incentives designed to grow and accelerate that sort of behavior.
So for the platform, advocacy becomes a mindset in how you’re designing every part of your business: payment model, pricing model, commission structure, every part of that is geared towards driving an incentive for someone to take an action that drives and grows your brand.
In our experience, when we started thinking about our advocacy program, or advocacy in a more structured sort of way, we had a pretty simple goal: user generated growth. We wanted to drive growth through our members. And we saw this sort of behavior when some of the recruiters in our network would bring in clients to the platform that we’re growing and bringing in referral business. And initially, we set up pretty crude financial incentives. We take a lower cut from those providers when they brought in that sort of client. We found the biggest bang for our buck, or the biggest increase in that sort of behavior, was when we combined those financial incentives with non-financial incentives—things like, badges, status, recognition, and access to exclusive content. We found that those, rewards combined with the financial incentives, were huge drivers for that behavior.
As a quick example, this is Kim.
Kim is in Brisbane, Australia. And she’s one of our most active and engaged members in the community. So the last month alone, she’s brought in over 25 new client projects to work with through our platform. So she’s big. Now when we launched our formal advocacy program, Kim wants won enough points to claim that top prize (a couple of times over). And our top prize at that time was a flight from Australia to San Francisco and 5 days accommodation. So that’s pretty meaningful.
But she came to us when she had that many points, and said, “I don’t want to go to San Francisco. Never been to the US, but I don’t want to go. It’s not going to help me grow my business on your platform. You know what I’d really like? I need a sponsor for my rally car.” And our first reaction was, “Come on, we’re a tech startup. We’re not a cigarette company.” But she explained that she drives this rally car around Australia tracks 10 to 2 times a year. And she say, “Guys, I want a RecruitLoop logo plastered across the front of the windscreen. I want my support team decked out in RecruitLoop t-shirts. That’s the one thing that’s going to help me grow more business through your platform.” So we said okay.
And since setting up that program we now got to a point where 30% of our marketplace volume—30% of our revenue—is driven by recruiters like Kim, bringing in clients to our platform.
The second way that advocacy is driving the on-demand economy: connections, community, and collaboration. You might not often hear these things talked about as advocacy when you think about Uber or Airbnb, but I’ll argue it’s advocacy. So beyond the individual incentives for each one of these providers to be successful, the best marketplaces are actually building sustainable communities. They’re connecting members with each other, not just with the platform. The benefits for the platform is obvious: you get greater loyalty from your users or members, and they’re less likely to take things off-the-platform. But the benefit to the members themselves is actually really powerful.
Think about who these type of people are. They’re independent business owners, and working from home. They get all the flexibility and control in the world they want. But the flipside of that is they’re often lonely. And a lot of these platforms—ours included, Uber, Airbnb—are being really active in trying to connect these members to overcome some of those challenges, but also build a sense of identity, not just with the platform, but with each other. We’ve done this in our business through meet-ups in real life and online. Some of these meet-ups have been organized by us. Some of them have been organized by community members directly. Kim has organized a couple herself. We have a private Facebook group where we connect all these members. (We’re a startup, so we go for cheap and free platforms when thinking about community.) It’s a way that these members have connected and talked with each other that’s not moderated from us. We’re not telling them what they can and can’t do. They’re actually connecting and engaging with each other.
The third, perhaps less obvious way, that we think advocacy is driving the on-demand economy is through human relationships. And I think this is an interesting point not just for advocacy programs in the marketplace, but in any other business. We believe you can strengthen that community you’ve set up if the members of the community have some sense of knowing the people behind the brand, behind the platform. The members of your community should have a sense of connection with the people behind your business.
Now this can be hard to scale, but there are ways to do it. And we think it’s particularly important early on as you try to build that engagement. As an example, last year one of our members challenged our founding team to do the ice bucket challenge. Within about 12 or 18 hours, I’d completed it in the San Francisco Bay. My co-founder Paul had completed it in front of the Opera House in Sydney Harbor. The first place we’ve posted that video, was into the private Facebook group of these community members. So they knew we have a sense of responsiveness. They could see there were real people behind this business, and we were building a relationship, even though we’ve never met them in person.
Paul, at the top right, drives a RecruitLoop branded car around Sydney. That’s his own personal brand of advocacy. Bet he’ll drive past recruiters and our members in the street and they’ll wave and they’ll say, “Yeah I know that. I know that guy. That’s part of the platform I’m a member of.”
Last year, a few of the guys in our team grew hideous facial hair. It was bad. In the spirit of charity, we raised a bunch of money, but we drove that campaign through the community. So they have a sense of personality of fun. And I think that’s really important point that’s not always obvious when you’re thinking about how you’re building out your advocacy program.
The best example of a big brand doing this really well is actually Uber. When Uber goes into a new market, or a new country, they hire a single person with a specific role of building relationships with the first drivers on the ground. So when Uber went into Australia some time last year, there was one guy whose job is to find the first 10, 20, 100 drivers, to know them all by name, to invite them into the office for coffee, then have happy hour on Friday. And so, what that meant for the drivers—and I’ve spoken to a couple—was that they were the first of users of Uber on the ground. They’re advocates, who are going to drive this brand for the next who knows how many years.
Uber to them wasn’t a black app on their iPhone that sent them jobs when they wanted them. It wasn’t a $40B company in San Francisco who’s getting strife in all of these markets it’s going into. To those first drivers (who were the first advocates) Uber was three or four young guys in a scrappy office in north Sydney who are having a go and trying to do something disruptive and innovative against that old taxi industry. And I think that’s a really important point, and that’s one of the reasons that it’s having such success, and growing internationally.
So, incentives, connections, and a human face: I think these are three things that show how advocacy is really driving the on-demand economy. So next time you jump into an Uber on your way home, have a chat with the driver. Have him think about how much of an advocate he or she really is of the platform, and just give some thought to all the mechanisms happening behind the scenes that’s driving his or her behavior and your experience in that car. And if it is a great experience, think about how powerful that advocacy is when it’s delivered to you through a 6-inch screen in the palm of your hand.