The formula for great platforms is clear. Start with plug and play technology infrastructure; add data that makes suppliers and consumers smarter about each other; and foster the network effects that increase the direct value for all involved: producers, users and, ultimately, the platform.
A cursory review of platform winners can teach marketers a trick or two. Let’s see how the formula (technology + data + network effects) has yielded distinct competitive advantages.
- YouTube thrives by leveraging search data to help users find videos best-suited to their needs. This capability makes the platform appealing to content producers too, because they have confidence they’ll reach a significant audience. The more users and contributers, the richer the search data.
- Airbnb has become one of the fastest-growing startups by encouraging and facilitating user-generated data; renters and property owners provide honest, objective feedback to ensure a good experience and protect both parties.
- Medium has become the publishing platform of choice for both writers and readers because of its rich search functionality; it supports attraction and connection between content creators and readers.
- Amazon has become the de facto virtual marketplace and is a prime example of a platform benefitting from network effects. As the number of sellers increases, more buyers are attracted to the platform – and vice versa. Search functionality established the foundation. Newer tech-enabled services like Prime and Alexa continue to increase the perceived value for users.
There are many other examples of successful platforms in B2B and B2C spaces. While every platform (and every brand) is unique, there are four things successful platform brands have in common. They:
1. Build Relationships
People must be drawn to a platform for it to take off. It must spark interest and connect with users in a relatable and meaningful way.
Good platforms connect. Great platforms build relationships. The first step toward building stronger relationships within a platform ecosystem is determining the key benefits the platform will provide to its participants.
MySpace connected people in a very basic way. But, it stayed basic. On the other hand, Facebook shifted the platform toward relationships. Rather than just being about “me” on MySpace, Facebook answered the needs of content creators, users and advertisers equally. It leveraged user content and made it easier for users to customize and share. It organized news feeds and collaged users’ friendship anniversaries. Those collages took individual posts or connections and turned them into a rich history – highlighting the relationship – between participants.
2. Respect Relationship Values
Relationships have rules, even virtual ones. By letting you into their lives, users and producers expect something in return. At a minimum, that means customizing content and initiating smart interactions based on past behaviors utilizing the platform.
Nobody likes a bully. As an example, think of Uber. It had the right balance of supply and demand, and offered unique benefits by connecting riders and drivers. But, the platform started to struggle when it made decisions that favored riders over drivers. Nothing was wrong with the underlying technology. The platform worked. But it failed to bring equal value and equal protection to both participants in the relationship. That broke the promise of the Uber platform and gave competitors an opening to enter the market.
Facebook is under scrutiny for not regulating the veracity of its content leading up to the 2016 U.S. presidential election. It’s now revaluating its role in the political sphere and must regain trust and confidence across the entire ecosystem.
Great platforms govern well. Using data, platform brands quickly learn how to protect their communities and build a safe and supportive marketplace. Guiding principles for the ecosystem must be carefully considered as the platform brand is built. Once established, they should be transparent, shared often, and followed accordingly.
3. Keep the Relationship Fresh
Physical relationships take work, and at least some vulnerability. Rather than shield users from their weaknesses – or pretend they don’t exist – successful platforms share their journey with users and mature together.
Successful platforms don’t always start with superior features – but they work within their community of users and producers to steadily enhance the experience.
Take YouTube as an example. It has worked hard to bring content creators and content consumers together. Many of the features that exist today – rating mechanisms, subscriptions and other crowd-enhancing features – have improved the sharing experience between the supply and demand sides. The platform eases friction between participants and supports steady and easy content exchange. New features keep the platform fresh and relevant. User feedback continually enhances the platform. Everybody wins.
Evernote, the cloud-based note taking platform which was once valued at $1 billion, is now struggling to maintain relevancy and appeal in the market. Instead of listening to the needs of its users, it was quick to churn out a multitude of products in hope that it would attract a wider user base. Rather than focusing on its core product and deepening its relationship with users, this multi-product approach led to a hurried production of code, resulting in feature creep and over-complication rather than a simple and seamless user experience.
Successful platform brands actively work on strengthening the relationship between users and producers. They understand growth is dependent upon keeping everyone engaged and excited about a future together.
4. Inspire confidence, despite the short term costs
We’ve talked about having solid technology, attracting the right folks and governing well. Here’s why those infrastructure pieces are important: platforms must consistently deliver a great experience. Consider the difference between buying on Airbnb vs. Craigslist. Hands-down, Airbnb instills more confidence. Travelers have maps, photos, ratings and user reviews to help them make decisions and land in a safe place. Airbnb hosts have resources to help market their properties and finance mechanisms in place to ensure they get paid. Airbnb takes on a lot of responsibility to ensure a good experience. On the other hand, Craigslist … can be kind of scary for both parties.
Great platforms leverage data and continuous feedback loops to improve their matchmaking and to ultimately reach network effects. Successful platforms are great curators. They use technology and social signals to separate the best from the rest and to accelerate consumption. Consumers want quality products – just as producers prefer qualified consumers. To inspire confidence, platform brands set the bar for quality and makes sure the target is met.
Join us soon for Chapter 3 where we walk through the steps to build a successful platform.