When “On-Demand” isn’t On-Demand

If you are a service marketplace platform, your inventory is time. Regardless of what service you are exchanging; a car ride, renting someone’s place, a cleaning person, etc., your users are paying to consume the service over a period of time.

Many platforms have some visibility into their inventory. They may know how many producers (how we classify Uber drivers or Airbnb hosts) are using the platform and, historically, what percentage of them will complete jobs. However, this level of platform visibility is still gray. There is a lack of clarity as to whether or not producers are available for work or not.

A black and white understanding is when the platform knows specifics about their producer base’s available times. Airbnb’s platforms knows every apartment’s availability because producers enter their schedule and indicate which days are free to be booked. On Uber, since the demand is instantaneous, the platform know its inventory in real-time based upon how many drivers are “available.”

Conversely, many service marketplaces have a grey understanding of their inventory. They know how many producers are on the platform and, historically, how many jobs were performed. So, if they have 10,000 producers in an area, 10% of their workforce is usually free on Friday, so the platform should be able to service 1,000 consumer requests. The math is rough, but you get the idea.

These platforms generate “job queues” or a list of jobs that producers can login and “claim.” Unfortunately, this system doesn’t scale too well. Platforms with “grey” visibility into their inventory need operations teams to handle the ~5% of requests which don’t get claimed. Producers get bombarbed with emails, texts, phone calls, etc. to see if they can claim the job along with additional incentives. Maybe the teams get the unclaimed jobs down to 0.5–1%. We call this system passive assignment. The platform lacks the data required to accomplish 100% scheduling of requests.

The better system is that when a consumer books a service at a specific time, they are matched with a producer with availability in the system. However, in order to perform such a matchmaking technique, the platform needs to understand its producers’ availability.

There are barriers to get producers to proactively enter their availability. It’s a classic chicken & egg problem. Can the platform generate enough demand that it’s worth the effort for the producer? If they take the time to enter their schedule, but only receive a minimal amount of bookings, will they continue to enter their schedule going forward? Here are a few tactics to incentivize producers…

Product Feature Subsidies

  1. Prioritize better jobs for your best producers

If you are transitioning from passive assignment to proactive assignment, make sure to give the better and more lucrative jobs to producers taking the time to invest in your platform by entering in their availability. If all producers are required to enter their availability, you can factor in the amount of time they allocate to the platform by deliberately routing better jobs in their direction. Reward the producers who are willing to put in more hours on your platform.

2. Give them apps!

Make it really easy to update and maintain your calendar while on-the-go with mobile apps for iOS and Android. Make it easy for your producer base to integrate with the calendar on their phone.

3. Distinguish between recurring vs. one-time availability

Let producers differentiate between one-time availability versus recurring availability. Some time slots are usually free every week while others might free up just once in awhile. Recurring time slots give you more visibility into the future about your inventory and make it easier for the producer.

4. Establish rules and standards to protect the producer

If your producers take the time to proactively enter their schedule, implement stricter rules on your consumers as it relates to cancellations or rescheduling. You don’t want your producers to go through all the effort of keeping their schedule up-to-date to lose out at the last minute when a consumer changes their mind or didn’t manage their schedule responsibly.

Monetary Incentives

  1. Loyalty Programs

If you are transitioning from passive to proactive, you could assign greater loyalty points to jobs performed in a proactive manner. If already operating in a proactive manner, you can use loyalty points to create inventory in times that you are lacking. Is Friday at 5am historically a time slot that you have little inventory available? Assign greater loyalty rewards to producers that indicate they are free at that time. Make it green in the calendar view for $$ [Symbol].

2. Tiered Pricing Systems

Perform 5 jobs, get paid 5X. 10 jobs, 10X * 1.25. 20 jobs, 20X * 1.5. Provide your producers visual indicators that if they open up additional inventory in your platform, you are going to work to give them more value. Creating a loyal producer base that works primarily for you and not your competitors gives your platform a reliable supply base. Help them help you.

Pro tip: Take a note out of Uber’s book, in order to qualify for the additional compensation, the producer needs to meet a “rejection” threshold. If they deny or cancel too many jobs, they are disqualified from the additional monetary benefits for that week. This will help ensure that the inventory in your system is accurate and kept up-to-date.