"We spent $1,000 on Paid Ads and lost 70% of potential Signups due to poor funnels on core workflows."
Signup Funnel Spend
| Phase 1 (Intuition - MVP) | Phase 1 (Design Thinking - MVP) |
$$ Ad Spend | $1,000 | $1,000 |
Total Traffic | 2,000 | 2,000 |
% to Convert to Signup | 2% | 2% |
# Potential to Signup | 300 | 300 |
% to Complete Profile | 30% | 70% |
# to Complete Signup | 90 | 210 |
Cost per Signup | $11 | $4.5 |
Phase 1: MVP - Founder Intuition
Entrepreneurs who have strong domain knowledge often believe they know best because they have either lived the problem they’re solving or are experts in their field. This would make you believe you know exactly how to build your MVP Marketplace, based on what you know, think, and guess would make the most amount of sense.
Don't get us wrong, we've done the same thing on our first project in a rental marketplace. Our Core Team has strong experience in traditional rentals and we thought we could build and launch a custom marketplace mobile app and be instantly successful. We were humbled and proved very wrong. It is getting caught up in the excitement of building a new platform that potentially has a chance to have a lasting impact on the world. Again, been there and understand!
We created a Signup Process on our mobile app which was launched 1 year before our desktop version that was 6 steps that included a heavy KYC (Know Your Customer) process. We thought we were geniuses because other platforms like the famous accommodations rental platform were around twice as long. It wasn't until we embedded Pendo for our adoption analytics that we realized how wrong we were and how much money was being wasted on Marketing Spend.
Our Signup Process was converting at 30%, meaning if 100 Users attempted to signup, only 30 would actually complete the process. This equaled thousands of dollars lost on ads.
The truth is, you can't build a workflow that your Community will adopt or convert on without validating your hypothesis through Design Thinking or at least talking to them.
Phase 1: MVP - Design Thinking
Enter Design Thinking, now we've talked a lot about Design Sprints in previous posts. For those who aren't aware, it is a 5-step process that validates assumptions that results in a high-fidelity prototype your Users are more likely to convert on than that alternative described in the first section above. It is all about researching, designing, validating, iterating, and finally, coding.
We were introduced to Design Thinking in 2020 by our Lead Designer at the time. She was experienced in facilitating Design Sprints (Compressed Design Thinking) at a previous company and had demonstrated to our Co-Founder, Steve, all of the benefits.
We spent a total of 2 months running a Design Sprint on our Signup Process asking our Users, why? Why aren't you completing your Profile and What is causing you to abandon it? We learned many, many things but one prominent issue was our required field to add a profile picture. We explained how profile pictures help sell trust and add social proof to our platform, however, our Users saw it differently. They simply weren't comfortable adding a profile picture on a platform they just found or heard of, unless they were referred by a trusted friend.
Again, 2 months for our whole Product Team was spent on research, brainstorming, testing, and iterating mocks in low-fidelity to churn out something that literally flipped our conversion on its head. We had our 2 Product Designers, 2 UX Designers, and 1 Product Manager engaged in this project. We had to get our C-Level executives to agree to our effort budget but it paid off in the end. Afterward, we had buy-in from the whole company to revamp our V1 and run each core workflow through a detailed Design Sprint started with the worst offenders in terms of conversions & importance.
Let's look at another example, the highly valuable Supply Posting Process.
Supply Posting Process Funnel
| V1 - Intuitive Founder Workflow | V2 - Design Sprint Workflow |
# of Complete Signups | 90 | 210 |
% to Convert to Supply | 60% | 60% |
% to Convert to Demand | 25% | 25% |
% to Convert to Browsers | 15% | 15% |
# to Start a Posting | 54 | 126 |
% to Complete a Posting | 20% | 80% |
# of Postings | 11 | 101 |
Our Founding Team of this project, the experienced Rental entrepreneurs turned techies created an 8 Step Posting Process. Again, this was a rent-anything marketplace, so someone could be posting a Chainsaw to a pair of skates, earning a few hundred dollars to $15. We thought this was going to be dynamite because an accommodation rental platform was 22 steps and an RV rental marketplace was 25. Once again, we were humbled by our community.
Now, we had some great concepts such as a dynamic process based on the subcategory or personalized questions based on the asset being posted. But there were just too many steps and lots of questions. Would you spend 5 to 10 minutes posting an item that would earn you $15 on a rental? Most people did not and we don't blame them.
We tackled the Posting Process second and again spent 3 months running a Design Sprint on the workflow with the same Product Team of 5 people. The result was extremely powerful for a variety of reasons.
Conversions went from 20% of people completed the Posting Process to 80%
Condensed the steps from 8 to 4
Gathered the same amount of data plus more in a friendlier UX
We did some extra digging and married our new conversion with our past and future business projections to see how much money and how many Postings would have been saved if we had done it the previous year.
The amount of money that could've been saved was in the hundreds of thousands of dollars & thousands of items posted.
This was providing more and more proof that Design Thinking was an absolute necessity for future Product Discovery & Development. We were no longer building a platform that we wanted, we were building what our community needed.
Compact Design Sprints
At Marketplace Studio, we run compact DTS (Design Thinking Sprints) on each workflow. We run through the whole 5 steps but more efficiently with our Core Team.
Market Research & Inspiration
Taregt Personas x2 (Supply & Demand)
Workflow Low-Fidelity Mocks
Validate & Test
Iterate
High-Fidelity Prototype
Desktop & Mobile
We are able to run through the above 6-step process in 1.5 weeks with our Core Team embedded with yours.
If you're interested in learning how a Design Sprint can benefit your marketplace, please schedule a consultation with us.
