by Alan w
Getting people to buy from us has this Virtuous Cycle:
Attract >> Screen >> Optimize >> Retain or Let go of.
An example is when we hire people to work with us.
We tend to spend a LOT of time on attracting and screening. And almost all of us are bad at that. We make mistakes. We’re just bad at screening!
But, when we work with them, we very quickly figure out whether they are good or bad at what they do. We spend too much time and energy and money on brilliant screening techniques, trying to screen well. It remains a very difficult task to do screening right. What we SHOULD do is let more people in and then take a very active role in using the data to optimize everything in our marketplace (or in a product/service business model). Make sure the best gets the most work and the worst gets kicked off the platform.
We should spend most of our time in the Optimize zone - what we learn there matters most.
Feedback and false signals:
5 Star systems do not provide granularity. Observe all the well-known marketplaces (Amazon, etc) using 5 Star systems for a moment. Almost everything on these platforms either gets a 4 or 5 star rating, especially for products. Even on platforms like Upwork, Fiverr and so on. In general when it is about services or humans rating other humans we tend to be very nice, we don’t want to be a jerk so we give a high rating. Most 5 Star feedback systems gets a 1 (when someone is really upset) or a 4/5 for a distribution of ratings.
When you go to a restaurant you don’t think about the evening out in terms of stars. You either think it was amazing, or it was okay, or that sucked. People think more in terms of a 3 point scale. 5 Star rating really only helps you identify the bottom part of a normal curve. And you should take action on it.
Ask for private feedback. Why do you want to share with the buyers? To get them to buy? Then your product or service isn’t worth it in the first place, rather make sure it provides enough value.
Have a look at the ELO Ratings System. Arpad Elo is a chess player and he developed a sysem for scoring 2-person competitions. Basically for ranking Chess Players. This results in a more real world distribution. More about the Elo System over here: https://en.wikipedia.org/wiki/Elo_rating_system .
We can take a lot of the fundamental in the ELO System and apply them to marketplaces.
Why is it so powerful? Because it’s either: Will you work with them again or not? Will you buy it again or not? Will you tell someone else about it or not?
Or you can even ask your audience: which one is better? And list the options, try limiting it to two at a time.
We should ask the relative question (e.g. buy it again or not, which one is better, and so on) instead of the absolute question (how much do you like what you bought). Asking relative questions will get us much more interesting data to act on.
Work with Alan W
“Solving niche challenges founders face”.
Illustrator: Lisa Williams (Instagram: @artist_llw)