Marc Cortes is Director of the Executive Master in Digital Business at Esade
What do corporations as diverse as Amazon, Uber, Airbnb, Taskrabbit and Spotify have in common? They have all implemented an enterprise platform style. In other words, they advertise and make it easier for teams of users to come together and interact, creating environments for exchanging goods or information.
The platform model, a new way of doing business imaginable through the virtual economy, consists of 3 elements: intermediation between two user/customer equipment; Source creation and call on the platform; and build the business based on third -party assets, such as Uber drivers, Airbnb and Taskrabbitt Taskers.
The good fortune of those corporations derives from their ability to take credit for those 3 components. This might lead some to think that it is an undeniable style that only requires adding source and demand. According to a McKinsey study, creating new business styles is a priority for 41% of executives, and platform styles are the most sensible on the list. However, many corporations try to ban in this industry and fail. So that? There are five key points for a good platform style.
1. Aggregator offer or request?
Not all platform templates are created equal. A first basic decision must be made: does the company focus on the source or the demand? Models that think they can start by capturing users on both sides of the equation inevitably fail. They will have to do it first. conquer a camp; This will then convince the other party to use the platform.
Some grouping paintings require an existing offer, thus lowering prices in a similar way to studies for users. For the latter, the platform will facilitate the location of the service they are looking for in a more fluid and efficient way. The Fork and Expedia are two examples of this type of model.
Others bring in combination the source of a call that already exists. The concept here is that the platform reduces acquisition and operation prices, such as payment strategies and, therefore, reduces prices for consumers and their transactions. An example is the logistics service that Amazon offers suppliers in their market.
2. Incentives, barriers and matches
The first step on the road to good fortune is to attract users. This type of style requires volume. Would you use Airbnb without its provision of hotels in the puts that users need to visit?This means capturing them by providing them with all the incentives available. When entering a new market, for example, Uber offers drivers high commissions and loose or lower-priced rides. to users.
The moment of the moment is to decrease friction. The platform’s capacity will have to effectively decrease or eliminate transaction prices for users. Using the example above, Uber can guarantee, through its algorithm, that users will locate a car to have, with data on estimated time of arrival and reason strength ratings. This improves the usability of the service tremendously.
Finally, when the platform has very low users and transaction costs, the correspondence phase begins. This means constant characteristics and prices to boost recurrent use, a good key fortune in any profit model. The use of knowledge and synthetic intelligence algorithms (AI) is key here.
3. Another set of metrics in phase
Another key to success is understanding in which phase each business finds itself at any given time and using the ideal metrics to measure its progress. The first phase is becoming known, and the main KPIs include the number of registered users, engagement with them and the cost of capturing them. After this phase, the conversion stage begins. Here, KPIs associated to the conversion rate and monthly recurring revenue (MRR) are essential. Lastly, the growth and retention phase kicks in, when companies strive to achieve profitable growth and increase transaction volume. The fundamental metrics here are KPIs focused on monitoring the churn rate, average revenue per user (ARPU) and cross-sales.
4. Data at the center of it all
There is no platform model in which data-based decision-making isn’t the center of it all. AI and machine learning are fundamental to help platforms grow and innovate. These technologies permit analyzing enormous amounts of data, identify trends and provide personalized recommendations. AI can also improve operational efficiency and automate processes, resulting in a more positive experience for users and greater value for companies.
5. A (temporary) competitive edge
Launching a successful platform model today is much more difficult than when Uber, Airbnb and Booking came about and took over the market in their respective industries. The keys for them were the non-existence of any competitors (leading these companies to sometimes be referred to as “category creators”) and using network effects (from which a good –in this case, the platform– increases value due to the fact that more users are actually using it).
The tension to succeed, therefore, lies not only in identifying an industry, product or service that represents an opportunity, but also seeking to create a competitive advantage, even if only temporarily. This gets to the point of locating the details that differentiate a company from its competitors, allowing it to grow and move hopefully through the stages described above. If a company is not successful in the conversion phase, its good fortune is practically impossible.
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