Marketing for Online Marketplaces

The role of psychographics, habit design, and community hacking in driving sustainable growth for online marketplaces

Catalina Butnaru
Apr 17, 2016 · 7 min read

Good marketplaces thrive on data. They pull in information from the world around them to better cater to their buyers and sellers’ needs. They repackage that information to help sellers adapt to changing needs and expectations. They use that information to help buyers make decisions they are happier with, beyond in-the-moment purchase impulses.

In many ways, user behaviour data, trends, and transaction stats are obtained via multiple overlapping channels, all of which are crafted by marketing, customer service and community development teams; although most of the time these teams are reduced to one super-skilled marketer.

Good marketplaces thrive on data. Great marketplaces, however, are all about people.

Here’s why.

1. Most Valuable Transactions Are Not Orders

Online marketplaces are so much more than digital platforms that mediate orders. It would be a grave mistake to have such a uni-dimensional view on such complex ecosystems.

Think about it: if your success metric is the number of orders placed, then your definition of success is a skewed representation of one-time transactions, out of which some may never turn into subscriptions, repeat business, let alone referrals.

Marketplaces don’t become trusted because of high volume trading. They become trusted and popular because:

a) trusted suppliers are able to build more effective relationships with customers, which in the end leads to repeat business

b) one time customers find it easy and convenient to do repeat business while diversifying their spending habits

c) the marketplace creates a distinctive experience that goes beyond the ordering / booking process.

High-value transactions are interactions that generate both more revenue over time (order volume) AND have a positive impact on brand KPIs: lifetime transaction sizes / customer, loyalty and retention rate, subscription renewal rate or repeat business, positive reviews, referral rates, customer happiness.

If your marketplace is selling services, focusing on the average monthly transaction size of all services can derail you from facilitating high value transactions. Although maximising in-the-moment conversion rates is important, it’s not a sustainable marketing strategy (the lead acquisition cost will never go down, and will compete with new marketplaces).

For a house cleaning services app for example, getting users to schedule monthly appointments is more valuable to the marketplace than one-time bookings. First, it demonstrates that the user trusts the marketplace, and is receptive to automating some of his orders. House chores are no fun for anyone, so if users don’t come back — you’ve cashed in short-term, but lost the battle long-term.

Second, it helps you learn buyers needs and habits, and perhaps offer complementary services as time goes by. Your marketplace not only thrives on repeat business, but also on cross-selling services, and slowly diversifying your product range to fit a broader spectrum of buyer requirements.

2. Psychographics Before Communities

It takes a village to build an awesome marketplace - eBay, Etsie, CreativeMarket, and Tindie being just a few examples.

Before you get to have a community though, you start with people. Again, people, not demographics. Sometimes I feel like too many performance-driven marketers focus on LTVs and CTCs only to neglect a deeper understanding of real people and their real needs, motivations and goals.

In reality, it’s not the channel per se that brings in a converting customer, it’s the compound effect of various marketing efforts, from market research and A/B testing to targeted content and psychographics. It’s a deeper, more refined understanding of your person out there, with their specific needs and expectations. It’s a sophisticated, tested and verified model of their decision-making.

Psychographics are no joke, no fad, no buzz word. They are super important. And they cost less per qualified lead than regular demographics.

Why use such a sophisticated term though — psychographics? Sounds a bit fancy? Not to me. It actually makes more sense than “personas”. You build the psychological profile of several super users, combine it with website / app usage data, and you get a meaningful profile ready to be used for targeting, re-targeting, on-boarding, drip-email campaigns, and multi-channel user engagement.

Think about it: affluent buyers who don’t bother about price, but care about experience and convenience — they are more likely to make in the moment purchases because they care less about price, more about experience and convenience. The psychographic profile of affluent users should reflect these nuances, and help you craft marketing messages that target precisely those motivations. Instead of talking about bulk purchases or discounts, emphasize the story around the brand, or talk about limited-edition products.

On the other hand, buyers looking for good value for less money— they will appreciate a marketplace that helps them get that over and over again. Make repeat purchases easier and advantageous long-term. Work with suppliers to offer better deals tailored to THEIR needs and purchasing habits, as opposed to out of the blue discounts for everyone.

When using psychographics to target a specific type of buyer, you usually go far beyond demographics. You start including motivations, interests, purchasing needs, preferences, product perceptions, and even content consumption habits.

Socedo Psychographic Builder

Facebook has some pretty advanced psychographic capabilities included in their campaign management dashboard. For other media, things can get a bit difficult on a budget, but I recently discovered Socedo — and it works wonders on Twitter! For Google Analytics, it’s always useful to check out demographics reports after each campaign, especially if you’re doing A/B testing and persona-centric landing pages.

On top of psychographic segmentation, understanding and predicting buyer behaviour based on viewed content is a tremendously powerful strategy for mature marketplaces looking to build habits into an existing user-base. This can be done with more advanced tools at the intersection of big data and user analytics, called content analytics.

3. Habits Make Marketplaces Addictive

There’s no easy way to sustain and increase interest levels in the products and services available on a marketplace, but one strategy is to build habits around desired user behaviours directly related to demand generation.

These behaviours range from automating a monthly purchase to planning long-term or complex purchases on your marketplace. Here are some ways you can build habits on your marketplace:

Shareable wish-lists + “Waitlist Me” option for sold items.


Get users to build wish-lists for various life events or projects. You can follow the Amazon model, where buyers can create multiple folders and wish-lists depending on their shopping needs. They also get notified about price changes for products they follow or add to a basket. You can take it one step further by turning wish-lists into shareable lists, like this example here on Nasty Gal.


Curated marketplaces like MyHabit have a timer for every product added to the basket. Sometimes there are indeed multiple buyers vying for a product, but most of the time that’s simply not the case. The psychological effect of a timer is twofold: (1) it creates a sense of urgency, and (2) it plants the seed of curiosity in a buyer’s mind who feels compelled to come back and check out new limited time only items. Now, that’s a good habit.

“Just because you’re a cool member” perks

I really love receiving freebies — and sometimes even look forward to my monthly gifts. Often I end up not using them, but it just feels so nice to get the impression that someone is thinking of you as a member of a marketplace.

And even if you don’t buy anything for months, you still have reasons to come back and perhaps make mental notes of what you might want to buy from that marketplace in the future.


Very few marketplaces manage to build engaged communities, and even fewer become even more popular as a result of community-driven viral campaigns.

Audible is a perfectly versatile marketplace that can explore the viral power of an engaged community because you can do so many things while listening. I think that some of their best campaigns run on Instagram and Twitter, asking listeners to share their moments of awe, inspiration and delight while listening to their favorite books. #donewhilelistening is one example. The downside of this is that users can unintentionally promote loads of other brands — in this case — the Beats headphones.

Understanding how marketplaces work is not as easy as replicating what Amazon or Ebay are doing. Whilst my love and appreciation for psychographics, habit design and communities is heavily influenced by my passion for psychology and behavioural economics, I don’t think I am biased in saying that perhaps KPIs, volumes and transactions are not really everything.

Hiring data-driven growth hackers works great for some type of marketplaces, but nowadays buyers and sellers together prefer having a great experience in the first place. There’s no real science to understanding what makes customers tick, but you do have plenty of opportunities to be your very own scientist in your marketplace.

I do advocate for a more people-centric approach in marketing for marketplaces because I believe that building more meaningful relationships with the people that come to your marketplace is the key to sustainable growth in the digital e-commerce industry.

Catalina Butnaru

Written by

City AI London and Women in AI Ambassador | Product Marketing | AI Ethics | INFJ

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