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Trust & UX in Marketplaces

Trust is critical to building a successful marketplace. But trust is not the same as good user experience.

Update 1/28/19: This morning I saw a post by Brianne Kimmel about the risk of losing trust (full of fun references to Fyre Fest). Her post is a good reminder that trust is tough to build, easily lost, and nearly impossible to regain.

New Marketplace Models Emerge

The advent of the social web was a fundamental change that enabled new marketplace models like Uber and Airbnb. As I wrote back in 2012:

Previously, only large corporations might have been able to buy and sell “unused inventory” this way — typically due to much larger scale.

With new marketplaces, individuals could for the first time put their otherwise fallow resources to work the same way big companies could.

But established options, like cabs and hotels, had spent years and considerable resources earning trust, whereas these new marketplaces had not.

Distinguishing Between Trust and UX

You trust a cab to get you safely to the airport, but is it a good experience?

Uber and Lyft achieve the same job, functionally, but in an emotionally preferable way. They not only gained the customer’s trust — a critical step where Uber paved the way — but provide the customer with a preferable experience.

New marketplaces were able to disrupt the competition because the incumbents did not have particularly good economic moats.

Cabs, in particular, had few defensible advantages to speak of: two of the biggest advantages any company can have are cost and quality, but cabs lacked both compared with ride-sharing (especially with ride-sharing companies spending millions to offer discounted rides in user acquisition).

Especially once ride-sharing apps gained the network effect advantage, it was game over for the taxi industry.

Lyft then went a step further and gained market share at Uber’s expense when they prioritized customer and driver satisfaction. In a multi-sided marketplace, it makes sense to prioritize one side first, but no side can be neglected long-term. (Uber has since invested more in rider relationships.)

Gaining trust is critical—but not enough to win.

User Experience: Going Beyond Trust

There is no better example of a marketplace prioritizing UX than Airbnb.

It’s true that AirBnB had a greater challenge to overcome than Uber or Lyft–after all, opening a home to strangers is a very personal thing. Joe Gebbia talks about this in a great TED talk:

From the beginning, though, Joe and Brian Chesky asked themselves not just what “good” looked like, but what a ten-star check-in looked like. They literally obsessed over the user experience. (I’d highly recommend listening to Reid Hoffman’s interview with Brian Chesky if you haven’t already):

In a way, none of this should come as a surprise. For Airbnb, the product is the experience.

Anand Iyer, the former head of product at Threadflip, wrote a fantastic post about building trust in modern marketplaces. He not only covers how companies have gone about building trust but how they have invested in the user experiences of customers and partners:

How Modern Marketplaces Like Uber and Airbnb Build Trust to Achieve Liquidity

The Risk of Neglecting UX

It’s not hard to see how companies might deprioritize user experience when the connection to trust isn’t quite as strong.

Just think about how many two- and three-sided marketplaces have raised millions and are now in hyper-growth mode.

Food delivery is a great example, with a big field of well-funded companies battling it out (GrubHub, Doordash, UberEats, Postmates, etc.). But sometimes a focus on growth can come at the expense of the user experience, whether it is intentional or not.

People have noted shady behavior (i.e., dark patterns) like:

  • Providing inaccurate costs or inflated estimates.
  • Estimating misleadingly short delivery times, which steadily increase after an order is placed.
  • Putting additional fees below the order button and separate from the original costs.

A/B tests may well show that these tactics increase orders, so it’s understandable why growth-minded marketers and product managers experiment with them.

But it’s also easy to see that, while this approach may lead to short-term growth, it is far from optimal or sustainable. If UX is not a priority (typically a priority set directly by leadership), then not only will there be a diminished competitive advantage, but trust will erode and retention will suffer.

It’s like Brian Chesky says in the “Masters of Scale” interview above, “If you’re only doing A/B tests you’re never designing with empathy.”

Update 2/6/19: The New York Times has another article about more shady practices by Instacart and Doordash.

Instacart and Doordash — two giants of the app-based delivery industry, collectively valued by investors at more than $11 billion — are under fire from critics who are accusing the companies of taking advantage of their workers with deceptive tipping policies. Both companies have admitted to putting customer tips toward workers’ minimum pay guarantees, in effect using them to subsidize their own payouts.

Conclusion

Building trust is only the first part of a one-two punch. Companies must prioritize user experience to win.

Few companies have prioritized UX like Airbnb. Just look at the moat they have built, full of happy users.