Is your marketplace on track to meet your goals? To measure its performance, you must understand KPIs for marketplace success beyond simply adding users or getting enough transactions in a given time period. Dig deep to measure the success of your marketplace with these powerful metrics.
Sustainable growth is not simply growth over time, but growth that can be sustained over time. If your marketplace is signing up hundreds of new users per week, it could be good or bad news depending on whether you can deliver at scale. If your marketplace is growing faster than you can support with services or products, those new users will become disenchanted and leave your marketplace.
If you've got the back-end to support a broad user base but aren't seeing new signups at the rate you'd like, you can focus on marketing. On the other hand, if you lack the infrastructure to sustain your high growth rate, you need to act quickly to balance the scale.
The best usage metrics to measure the success of your marketplace are bounce rate, monthly active users, and time spent on your site. Track the number of monthly active users by calculating how many unique visitors sign on to the marketplace in a month.
Use analytics tools to check your bounce rate. A high bounce rate indicates that visitors to your marketplace are not finding what they need, your UX is poor, or something else is not working properly. The lower your bounce rate, the better you're doing; however, even established marketplaces like eBay have bounce rates of 25 percent.
Time spent on site is a good indicator of how well you're serving your target audience. If the average session is brief, users probably aren't converting. If the average session lasts for several minutes, you're probably offering the right content.
Liquidity indicates how successful the marketplace is for sellers and buyers. How long does it take to make a transaction? What percentage of goods or services are purchased daily? Your measure of liquidity for service providers will vary based on what you sell. AirBnB looks at the percentage of rooms booked per night, for example, whereas Uber checks how many logged-on drivers in a given time period get rides.
For customer liquidity, you want to understand the percentage of visiting customers who buy something. If one of every 10 customers convert, you might want to increase this to a 30 percent conversion rate as an initial goal.
Digging into some of the other data points can help you determine why the customer liquidity is low. If you determine you have few providers and a high number of customers, adding more providers increases choice. This could boost your liquidity on the consumer side.
You can get a very good idea of how satisfied users are by asking them on a scale of 1-10 how likely they would be to recommend your marketplace to a friend. Scores between 0 and 6 indicate users who are actively unhappy with your service and may badmouth it. Scores of 7-10 indicate happiness and enthusiasm for your brand. By aggregating the scores over time, you can gauge how satisfied your users are over time and keep your marketplace on track.
Repeat purchase ratio
Do your marketplace customers buy once and then come back, or do you struggle to retain customers after the initial purchase? Marketplaces with a high repeat purchase ratio enjoy increased profits from every customer they attract, since they can afford to market less. At the same time, these marketplaces can count on the majority of their new customers being repeat shoppers and can afford to spend more on marketing campaigns than marketplaces with low repeat purchase numbers.
Marketplaces that struggle to trigger repeat purchase suffer when customers do not return. In some cases, failure to grow this ratio can mean the difference between long-term success and failure.
If your repeat purchase ratio is low, try to figure out why. By making improvements to your marketplace to increase customer satisfaction, you can increase the ratio of repeat purchases and make everyone happier.
When you get into a habit of tracking these KPIs, you can enjoy both snapshot data of your marketplace's performance at a given moment and long-term data that can highlight trends in satisfaction, usage, liquidity, and growth. Start tracking the indicators now, and revisit them frequently to learn how your marketplace is doing and stay on track for success.