Creating Value Propositions for Marketplace Businesses

The value proposition:

One short, easily digestible and simply understood phrase that encompasses everything your organization stands for.

For startups, developing and testing a value proposition isn’t particularly difficult. A/B testing different copy from day one on the very first launch landing page makes it easy to figure out what type of messaging resonates with your target customer.

Strategically, however, delivering on this value prop is where the rubber really meets the road. If you really are providing the best, easiest, cheapest, or fastest whatever, your product needs to back it up.

What a Value Proposition Means for a Marketplace

To make it more difficult, marketplace businesses have a whole host of additional challenges. Delivering on the value proposition for a non-marketplace business, while by no means easy, is relatively straightforward. Identify the problems your customers are trying to solve and work to build a solution. At a marketplace, however, you’re creating an environment in which each side of the market solves the other side’s problem.

By bringing both parties together and reducing marketplace friction, you’re enabling both groups to fulfill the other’s needs. So, how do you develop and promote your value proposition if you’re merely providing a platform for communication and interaction?

Ultimately, you need to think strategically about what else your product does besides merely connecting these two parties. At sharing startups, as an example, this can be difficult, but to truly add value to each side of the equation your product must actually ease a specific pain point for each side of the marketplace, whether that pain point is time, cost, etc.

While your company may not be at one end of an actual interaction, you control the arena where interaction takes places. You can shift marketplace dynamics by changing the monetary structure, communication structure, or timing of how the marketplace should interact: add value to the marketplace that makes it one party’s best interest to satisfy the interest of the other party.

And as with any company, if your marketplace is supposed to make it better, easier, faster, or cheaper to transact, it needs to back it up: adjust the marketplace dynamics to make it so.

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