How to sustain a long-term relationship between the buyers and sellers on
your on demand app
One of the challenges that you will face running a business through an on-demand app is that once buyers and sellers have connected with one another, they may decide to “cut out the middle man” (you!) and conduct their business outside of your platform. If this happens frequently, it can take much longer to build up your online marketplace and it will be hard to reach a critical mass.
To understand how to discourage buyers and sellers from circumventing your platform, you first need to understand why they use it in the first place, and why they may eventually be tempted to leave it.
Why will buyers and sellers use your app?
The simple answer to this question, is that you are providing value. You are connecting service providers with customers who may not have otherwise found each other. But if that is the only value that you are providing, then your business could be headed for trouble.
Why will buyers and sellers leave your app?
Again, the answer is simple. It is because you are no longer providing value. Once buyers and sellers have found each other – if that is the only service you are providing – they can easily exchange contact information and save themselves the commission that they would otherwise have to pay to you.
How to keep buyers and sellers on your platform?
If you want buyers and sellers to continue to use your platform after they have met and worked with each other, the best way to do so is to continue to provide value that goes beyond the initial introduction. Fortunately, you don’t have to reinvent the wheel to do this, as there are a number of best practices that you can look to for guidance.
- Offer insurance. Liability can be a major barrier to buyers and sellers getting into the sharing economy. For example, if you are renting out your property, how can you be sure the renter won’t trash the place? Or if you are working with a car sharing model, what happens if there is an accident? Apps such as RelayRides give buyers and sellers peace of mind by offering up to $1 million in insurance.
- Damage deposit. If insurance is too pricey, having a system for a damage deposit in place is another option for providing value to your users. The car sharing platform, Deways uses this model.
- Reputation ratings. Another way to provide value to your users is through reputation ratings. Apps like ebay and Airbnb do this extremely well with both buyers and sellers being able to leave a star rating as well as feedback on each other. As they earn a better and better reputation through your app, they will in turn receive more business. Airbnb’s “Superhost” designation is a prime example of this.
- Legal contracts. Protecting your sellers with formal contracts is another way to add value. When the customer makes a booking, they will have to accept the terms and conditions and there are clear consequences if they violate those terms.
- Business software. Finally, you can provide value to service providers through your app software. If you can help your sellers automate tasks such as booking calendar updates, invoicing, email reminders etc. then they are more likely to see the commission you charge as money well spent.