As a product manager, I came across numerous situations where I had to put myself into the shoes of customers as well as stakeholders. This is a necessary step to get to know the requirements from both sides and integrate these requirements into a product. That being said, one could argue that the product is basically an intermediary between the stakeholders and customers. Well, not literally stakeholders but their businesses. That made me think of an approach where each product could be built as a multi-sided platform, which connects two groups of participants — the ones that offer a service (stakeholders or business owners) and the others that are looking for the same services (customers or other businesses).
What is a multi-sided platform?
A multi-sided platform (MSP) is an intermediary economic platform having two distinct user groups that provide each other with certain benefits. The platform creates value by enabling direct interaction between two types of customers. The added value of a platform, compared to traditional marketplaces, is that information is easier to find and the products are cheaper due to numerous participants and network effects. The more clients join the platform, the more businesses will enter the playground, which creates competition, which lowers the price, which attracts more customers, which attracts more businesses and so on and so on…
But, besides the network effect, what is the main role of the MSP? The main role is to connect two parties and establish a “give and take” relationship. Business owners have something to give, but they want to take something in return. Same goes with the clients — they have money to give but they want a product or service in return.
Well-known examples of a platform are Airbnb, Amazon, Uber, etc. In this article, the platform refers to a digital product (website, app, data form) which moves an existing business forward.
Digital products as MSPs
When building a digital product, we’re often biased by the dominant influence of a business owner. Or, in certain cases, we’re biased by the user-centric approach, putting the business needs in a subordinate position. Neither of the two is good and this article is intended to suggest a solution. A solution which will equally address the needs of business owners and customers. Equalizing the needs of two parties will naturally establish an organic “give and take” relationship between them, making the product self-sustainable and in some terms necessary for the transaction.
Let’s try this new approach. You can think of this article as a workshop or a way to guide your meeting agenda based on the idea that follows. The purpose of this article is to give you ideas for balancing the influence of both sides, business and customer side, in order to have a sustainable value exchange.
In order to fulfill the needs of both sides, let’s figure out who are the participants. Who is the customer that we want to bring to our platform and what is the business case of the business owner? This part is important because you have to identify user groups so that you can detect their needs and establish their “give and take” relationship.
That relationship will be established if we just simply give the answers to these two questions:
- What do I have?
- What do I want?
We need answers from both sides in order to verify that the exchange is fair and that the transaction between the involved parties is equivalent in value. Otherwise, unbalanced transactions will lead to unsustainable exchange model which will, later on, lead to failure of this platform. If the answer to “What do I have” question of the customer matches the answer to “What do I want” question of the business owner and vice versa, you got yourself a fine business model to start with.
Verify that the exchange of value is fair in order to ensure the sustainability of the platform
The objective of your digital product is to get these two user groups together and meet each other needs. The product or the platform that you’re building is the medium which will ensure that the transaction is carried out properly, fulfilling the needs of both sides.
Designing the platform as a transaction facilitator
Your digital product, or a platform, is basically a facilitator which is supposed to enable a transaction between separate user groups. The storyboard in the image below is a canvas for your workshop. The main purpose of this part of the workshop is to identify the role of the platform. The platform should enable seamless transaction flow between the participants, from the discovery phase to the very end of the transaction.
Here, we’re not talking about the core functionality of the product itself. Rather, our goal is to establish a healthy connection between the customer and our business. We will do that by setting clear expectations of our “give and take” relationship.
Let’s observe four segments from the storyboard displayed in the image above:
- What I need to do,
One of the main characteristics of multi-sided platforms is a simple and intuitive discovery process. Customers can easily find what they need and understand what the other side has to offer. Also, business owners should also have information about their customers and what can they offer in exchange for their products or services. Your digital product should provide this to each participant to ensure early validation of transaction viability and validity.
I named this part “handshake” because this is the first interaction between the two parties. This stage should clearly communicate what do I offer and what do I ask from you in return. Transparency is the key to every successful transaction and it should be addressed early on in the process. This is basically a heads up of what each side expects from another. If everybody is happy with the plan, they can shake hands on it.
What I need to do
In order to receive what you’ve asked for, you have to give something in return. The platform should be able to accommodate and facilitate the transaction and data gathering from each side and forward this information to the other party.
Outcomes can be successful or unsuccessful. If “give and take” relationship has been fulfilled, the outcome is positive, i.e. each side got what it wanted. Otherwise, the intended transaction has failed for whatever reason.
These steps will help you to extract information from both your clients and your stakeholders. As a result, you will have all the information to establish a balanced transaction between buyers and sellers. And if you succeed in that, you got yourself an organic, self-sustainable platform for your business.
Why should you consider MSP approach?
You might wonder why should you create a product for your business which can accommodate more that one business? Well, you could sell your product to multiple similar businesses. If you don’t have a monopoly, you could benefit from your competition by having a proprietary technology — your platform. Your competitors will be forced to use your platform, giving you the leverage to steer the business in a direction you want. Food for thought…