Most marketplace owners nurture dreams of building huge communities that operate on a global scale. However, marketplace owners will see the best success if they keep the initial efforts niche and nurture the community. Explore the many benefits of starting small, and how to grow from small to global with the principle of 1,000 True Fans.
Small Helps You Understand Your Customers
Whether you are a young marketplace or a thriving one, customer satisfaction matters. However, this metric clearly matters a lot more for new marketplaces than it does for existing players. Uber won't suffer that much if a rider or driver decides to quit using the platform after a bad experience. Yet a new Uber competitor has much more to lose if that new customer decides not to continue with the service.
The best way marketplace owners can understand their customers is by starting small. When you have 100 members, you can learn their tastes and customize their experience far easier than if you have 10,000 customers. It's a basic matter of volume. Critically, you can also interact with customers with a leaner staff, which is important when you don't yet have the VC funding to hire new customer service representatives.
Small Helps You Figure Our What Services Your Customers Need
The services your customers truly need may not be the services you want to offer. With so many marketplaces out there, fit with the target audience is key to success. For your marketplace to succeed, you must offer services that your target audience really needs and wants. If your initial guess isn't quite resonating with your target audience, pivoting is far more doable when your audience is small.
Look no further than Twitch.tv for proof that small works. Video gaming platform Twitch didn't start as a gaming service, it started as a lifecasting platform that never took off. Twitch was able to pivot to video games and eventually leverage a $1 billion sale to Twitter because of the small size of the community.
Both video gaming and lifecasting are small, niche services, which was key to the eventual success of Twitch. The platform's founders were able to see what was working, revise their approach, and come to understand the needs of the community.
If your marketplace is too broad, you'll struggle to attract users who want the service you offer. Focus on offering something special and targeted, something that a particular user would really want. See whether the need is there by evaluating how early adopters are using the service. Are people trying your platform once, or are they becoming regular users? How can you tweak your approach or your niche to improve satisfaction on both sides?
You Can Position for Scalable Success and Grow Your Worth
When you are small, you can work out supply chain kinks early on. Effortless supply is one of the initial roadblocks any marketplace will have to get over to compete in the on-demand economy. After all, if you had to wait 20 minutes every time you requested an Uber driver, you'd just hail a cab.
When you get small right, you won't necessarily have small earnings. This is because small is scalable once you get the formula right.
As Kevin Kelly lays out in his concept of 1,000 True Fans, all you need to self-sustain is 1,000 fans who believe in what you do wholeheartedly and will buy everything you sell. If each True Fan spends $1,000 per year on your products or services, you'll earn $1,000,000 in a year. Since you can focus on pleasing individual customers when your marketplace is small, you have better chances of converting service users into the kind of True Fans who'll use your service exclusively. The personalized attention you provide will nurture users at all phases of their journey, earning you a greater share of business from occasional users and contributing to your $1,000,000 earnings.
In contrast, if you started with a large marketplace, you'd have a huge user base - and probably not sufficient data to really know your users. You'd be trying to please 10,000 people right away rather than 100 or 1,000. The odds of your success go down the larger the community gets. If your marketplace doesn't have the large numbers of users you want, be grateful for your small size. Then use the benefits of small to make the platform work for your user community, and for you.