How not to fail at setting up a b2b marketplace or digital sales channel.
There are two essential points to start this article out with, firstly, a lot of what I describe here will seem obvious, but that does not mean you should overlook it. I’ve seen many failures and successes; this is hard-won wisdom based on expensive errors or profitable success of b2b marketplaces I’ve worked on, with and for.
Secondly, let’s be specific about whom this article is aimed at because, despite the veracity of my thoughts, they still have a target person or situation to which they are relevant.
You will either be an existing business of reasonable scale (circa 50m+ of revenue) in the b2b space looking to digitise the way it sells to customers (a single-sided market). Or you will be a well-funded start-up (or internally funded project) to create a new multi-sided marketplace, bringing buyers and sellers together in a new electronic venue, with a minimum all-in budget of 2m+.
Start with a vision to engage with the end users.
You will need a grand vision, a well-thought-through mission statement, or a concept about the transformation of how trade is conducted within your business or sector. You must begin with a north star; it shouldn’t be a wordy 100-page document; it should fit on one PowerPoint slide. It must catch people’s attention, you don’t want this to be another zebra in the herd.
Without a vision to begin with, you have no narrative to create the initial engagement.
People respond much better to something they can either agree or disagree with.
Listen to feedback, find the problem which needs solving.
Park your ego, the corporate strategy, and everything you’re expecting about the main problems in your industry. All of it.
Listening with a practised ear so you can pick out the salient points from the feedback you get about what problems are important to your potential end-users.
Have composites in mind to drive the process to more concrete outcomes using what you’ve heard. Is this more important than this? Is this more practically solved in the short term than this?
People respond much better (and are more accurate) to comparatives between two things than measuring something intangible on its own. A simple and stupid example; how much does an elephant eat every day? Or does an elephant each more than a giraffe every day?
Remember, if this is transformation, you’re not in the process of incremental improvement; you have no baseline; it’s all theoretical.
Iterate the thinking to ensure the solution space represents the least possible effort to test.
In business, there are many entrenched practices, workflows, and IT systems. Refine your MVP (first-stage product) to require the least amount of change and effort to test; it’s about everyone’s effort, not just your business, department, or team.
Everyone likes progress; no one likes change, lean into this and try to reduce the number of obstacles to adoption.
Revise the vision, create a tactical vision and a future strategic vision.
Once you have your thinking and approach nailed down into something resembling a strategy, go back and boil it down. It’ll help you back-check what you’re doing to make sure the things you are doing are going to make you progress towards your vision.
Have a short-term tactical vision and a “shooting for the moon” longer-term strategic vision. This will help you once you start to iterate so you don’t iterate yourself down a rabbit hole. In other words, don’t overfit your solution to today’s needs; keep one eye on the future.
Decide how you will measure your success.
You will need at least two KPI’s, one for your tactical solution and one for the moon shot. Think about how you will measure yourself and set the expectation based on this with your peers and stakeholders. Do not allow yourself to be classified as a failure because you are being measured in the wrong way for what’s appropriate in your current stage of development.
B2B marketplaces are a long-term slog, not a short-term sprint; you need to make sure you keep support for what you are doing. KPIs are the only way to do this.
Test, Measure, Learn.
Don’t be tempted to “develop your way into being the best marketplace”; technology has very little to do with success.
Never, ever think more features will increase adoption or create a differentiator. Value, efficiency, and simplicity are your watchwords.
Technology is expensive and time-consuming; use it like a scarce resource, not a fuel for the engine of adoption and growth.
This is about selling and value creation or removing inefficiencies.
Things like Machine Learning can help deliver efficiency, but don’t expect it to be a silver bullet.
Over-engineering technology and potentially making the end-user experience complex is the most common reason for failure. Spending your budget on lots of features before the business case is tested and having an empty tank when you need it most to respond to post-go-live improvement or pivots is unwise.
Emphasis should be placed on the M of Minimal Viable Product.
Design with the end-user in mind, test your interpretation of end-user with real people.
This one links to the above; the simpler something is, the more likely it is to be used. The old Domino’s pizza adage works here; the easier they made it to order pizza, the more pizzas they sold. Also, think of the Amazon ethos; the least number of clicks to complete a transaction.
B2B marketplaces are self-service, a lot of the B2C thinking should be baked in.
Early on, test your User Interface and Customer Experience with actual users who know nothing of your vision and product. Keep doing this as much as possible.
The caveat, only look for ease of use and other worthwhile feedback. Don’t be tempted to “design the camel” by taking every bit of feedback into the design loop. As with KPIs make sure you know what you’re testing and what you’re looking for, and discard the rest within reason (I wish it did this…etc.)
Don’t go big or wide; go niche and focused; a little success is easier to build on than a big failure.
The second biggest reason b2b marketplaces fail, big ambitions lead to a very difficult cold start. Otherwise known as the “empty disco syndrome”. Think of it like this, a large room, big dance floor, music’s on, but no one is getting up first. A small room, a small stereo and a good vibe amongst a few people, and you’ve got dancing.
Use the Uber mentality where possible; start geographically small, with a very specific service and expand out.
The broader your marketplace intentions, the more money, time, effort and likelihood you won’t be able to build momentum. You have been warned.
Keep moving forward, small steps towards creating bigger value.
Your MVP / tactical vision is your first baby step towards a broadly adopted marketplace or digital sales channel. Never spend all your budget on the first phase. However wise you are, however much planning you’ve undertaken, user feedback, etc., there will be some pertinent lessons learned once transactions start to flow.
For example, it all works fine for single transactions, but there are a bunch of things needed to make repeat transactions work well. Perhaps you got a few of the building blocks wrong, or the users of the system are not the CFO you expected but a junior somewhere in eProcurement who needs a different customer experience. Or, your user group is made up equally of CFOs and eProcurement people who want a different experience based on their user role… well, you get the picture, save something back.
This is a two-parter, because there are the things you need to do to refine, and then there’s what you need to do next to build out the value proposition.
Once you’re up and running
Well, that’s a topic for another blog post, but thank you for taking the time to read this one. I hope you’ve found it helpful.
Head over to my blog at mrphilbird.com for more from me.
