To put it simply - we love talking through new product ideas. It’s a lot of fun to help facilitate discussions with our clients and support them in thinking strategically about the challenges their product is solving and the basic needs of the target users. In particular, we talk through a lot of ideas for two-sided marketplaces. A two-sided marketplace is a platform that has two distinct user groups which provide each other with network benefits. These types of communities are great because they not only connect the two user groups but they allow for their goods and/or services to be transferred more easily, reducing friction compared to other options. For example, a platform connecting available dog walkers with individuals looking to schedule dog walks throughout the day.
That being said, there are a few variables that should be thought out to best determine how to support these audiences, and at what scale the business will need to function to be successful. Having an understanding of these variables can establish sound targets for our first release, and identify when our product will be generating revenue that can power the business and future product iterations.
In an effort to share what we’ve learned and help other product ideators, we’ve put together the discussion points we dig into with companies in an early product development stage. At a high level, we work together to think through the basics: user needs, platform goals, competitor differentiator, and success metrics.
We don’t necessarily have to have all the information Day 1, but spending some time thinking through these variables and identifying where we need to learn more goes a long way toward making sure we are building the right product for our target users. Another positive outcome is it helps a team think through the larger picture and begin to put together the full landscape for investors.
Establish The Foundation
To get started we spend time discussing with you the origin of the product idea, what information is known about competitors, target users, and the overall market. Again, it’s not critical to be an absolute expert but there are some benefits in thinking through the pain points, industry, and players in the space to help understand where your product fits in.
In particular, when building a product that has competitors in the space, it’s important to think through how to set yourself apart. It’s not going to be possible to build the entire product our competitors have spent years bringing to life, but it is important to determine what key tasks can be done better.
How did you come up with this idea?
Who are your competitors?
How does your product fit within the competitive landscape?
What is your (or your team’s) knowledge in the space?
What assumptions are you making?
Does your product idea introduce workflows that work better or cheaper or a mix of both?
Understanding Our Users
The magic of a two-sided marketplace is providing value to two distinct audiences and allowing them to reach each other effectively through the platform. Understanding what drives and also challenges each audience helps us establish a priority for our feature set.
Your product should help both buyers and sellers reach their desired outcome in a way that is better than existing options. For example, your platform could allow them to complete a transaction faster, be easier to use, have a more pleasant experience, and/or give them a higher confidence in the outcome. Another benefit of building out this marketplace is that both groups can tap into a larger pool of options. Buyers are able to connect with more sellers, and sellers have more options available to them.
- Who are your two customer audiences? (seller / buyer)
Answer the following questions for each audience:
What research have you done with your target customers?
What access do you have to these communities?
What are their pain points?
How are they working through these pain points today?
What is motivating their behavior?
What is the expected frequency of transactions?
What is the ideal seller/buyer ratio?
How will you keep them coming back to your product?
Confirm Critical Functionality
Now that we have a sense of who you are building the product for, we can use that knowledge to lay out the prioritization of our features. It’s easy to get excited thinking through all the possible features, but at this early stage it’s most important to determine what will have the greatest impact balanced by design and development effort.
Completing critical thinking and prioritization exercises enables us to outline a roadmap that uses our initial investment wisely and gets the most out of an MVP. Thinking through the below prompts helps us uncover our riskiest assumptions to bring into a Product Design Sprint. This will also be helpful in thinning the tech stack for MVP by leveraging third-party solutions to get something into the hands of our users, sooner.
What feature…
is the most important to your user audience(s)?
brings revenue into your business?
supports (re)engagement?
supports user audience growth?
sets you apart from competitors?
needs to be custom built?
can be implemented through a third party?
Crunch The Numbers
As you’ll see in the spreadsheet below, laying out the basic inputs goes a long way in determining what target audience size we need to be successful as well as ensuring the value proposition is sound for both audiences. Is the effort and potential cost of being on our platform lower than the value they will receive?
We’ve created this google doc to help think through some numbers. The first tab shows a filled out example, and the second one is all ready for you! Remember to make a copy of the document and add to your own drive so you can edit.
We are here to talk more through your product and ways we can help support you: https://thoughtbot.com/hire-us
