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I've read that it's important to have a critical few metrics (In Web Analytics 2.0 - Avinash Kaushik recommends no more than four) and I can see how that can provide a common focus for all departments in an organisation.

We are an event and ticket discovery platform (two-sided market place) which has achieved product-market fit in one sector in the UK with plans to grow further in this sector. I plan to use the following as our critical KPIs:

Active Sellers (a user who has listed at least one ticket)
Active Customers (a user who has viewed an event page)
Tickets Available

Do these seem sensible?

  • BH

    ben hoffman

    almost 6 years ago #

    i highly recommend you read this book. you'll love it and it answers your question exactly.


    • AA

      Anuj Adhiya

      almost 6 years ago #

      +1 for the Lean Analytics book

      Also read: http://platformed.info/online-marketplace-metrics/

    • ND

      Nichole Elizabeth DeMeré

      almost 6 years ago #

      I was just about to make the same recommendation. Ben beat me to it. :)

      I'm coincidentally reading the two-sided marketplace chapter right now!

      • SE

        Sean Ellis

        almost 6 years ago #

        Any takeaways for his question about key KPIs for two sided marketplaces?

        • ND

          Nichole Elizabeth DeMeré

          almost 6 years ago #

          Some notes from the book (I didn't want to just jump in an advise since I don't have any real-world experience here):

          "I almost always recommend modeling the buyer side as your primary focus, and then you model supply, more in the sense of total inventory. It's easy to find people who want to make money; it's much harder to find people that want to spend money."
          - Josh Breinlinger

          On tracking metrics:

          "The metrics you'll care about first are around the attraction, engagement, and growth of the seed group."

          "Josh cautions that just tracking buyer, seller, and inventory number isn't enough." "'I believe the better focus is on more explicit marketplace activity like bids, messages, listings, or applications."

          "Once you've got both sides of the market together, your attention (and analytics) will shift to maximizing the proceeds from the market - the number of listings, the quality of buyers and sellers, the percentages of searches for which you have at least one item in inventory, the market-place specific metrics that Josh mentions, and ultimately, the sales volume and resulting revenue. You'll also focus on understanding what makes a listing desirable so you can attract more like it. And you'll start tracking fraud and bad offerings that can undermine the quality of the marketplace and send buyers and sellers away."

          "One useful metric is the ratio of buyers to sellers - a higher number should convince more sellers to list their merchandise."

          Someone is a buyer if:
          S/he's made at least one purchase

          That buyer is engaged if:
          S/he's searched for something in the last 30 days.

          Sellers are disengaged if they haven't added a listing in the last 30 days.

          Listings are inactive if they haven't shown up in buyers' search results at least five times a week.

          To map out the conversion funnel, look at:
          - The number of searches
          - How searches produce results
          - How many of those results lead to viewing a detailed listing
          - Also track the sale and whether or not the buyer and seller were satisfied

          Finally, track the quality of the listings and the reputations of the buyers and sellers

          Ultimately which metrics you focus on will depend on what you're trying to improve.

          Metrics of interest:

          Buyer and seller growth
          Inventory growth
          Search effectiveness
          Conversion funnels
          Ratings and signs of fraud
          Pricing metrics

          Rate at which you are adding and buying sellers is important in the early stages.

  • AS

    Arush Sehgal

    almost 6 years ago #

    I had a long call about this with Simon Rothman of Greylock, who is the marketplace master of the universe. He said that one metric people often forget about is the supplier to buyer ratio. You should know this ratio in order to control liquidity, which is what a marketplace is all about.

    He also mentioned that healthy marketplaces aim for a gross margin of around 20%

    • ND

      Nichole Elizabeth DeMeré

      almost 6 years ago #

      "He said that one metric people often forget about is the supplier to buyer ratio."

      Yeah that seemed to be a common theme in the Lean Analytics chapter as well. Buyer to seller ratio.

  • CP

    chris pearson

    almost 6 years ago #

    Thanks Ben, Nichole for the lean analytics recommendation, I got my ideas for the above from that :) I'll check out that e-book too. Anuj I'll checkout your link - Cheers

    • MB

      Morgan Brown

      almost 6 years ago #

      Chris, the entire platformed.info site is brilliant for marketplace businesses. Lots of great stuff in there.

  • PG

    Pushkar Gaikwad

    almost 6 years ago #

    Yes, don't have too many KPIs as it only create noise and you will find it difficult to measure real growth. What really are your goals btw as KPI should depend on the goals. If you want the surface growth, the 4 metrics you mentioned looks fine.

  • DS

    Daria Shualy

    almost 6 years ago #

    I had a marketplace in the years 2007-2011 (senseofashion.com RIP, it was a social marketplace for indie fashion, like an Etsy meets Flickr for fashion). This is what we tracked daily

    # Sales
    # Buyers
    # Selling Sellers
    $ Sales
    $ Avg Item Sold Price
    # Canceled Items
    $ Canceled Value
    Sales (General)

    # Items added to cart
    # Items For Sale
    # Avg Items per unique seller
    # Quantities For Sale
    % SKU Apparel
    % SKU Accessories
    % SKU Shoes
    % Units Sold Apparel
    % Units Sold Shoes
    % Units Sold Accessories

    Total Signups
    Cart Signup
    Active Sellers
    Active Users

    Item Comments
    Private Messages

  • JM

    Jason Meresman

    over 5 years ago #

    Chris - You should check out a great essay on marketplaces by Bill Gurley at Benchmark Capital.


    The article doesn't go into specific KPIs, however it does explore the factors to consider when evaluating a marketplace opportunity.

    Benchmark was an original investor in eBay and has gone on to invest in oDesk and Uber. There's a ton of great insights here.

  • BS

    Bob Sanderson

    6 months ago #

    I think there are the 10 main Key Performance Indicators for a two-sided marketplace:
    1. A total number of sellers.

    2. Total number of listings

    3. Total number of active users (buyers)

    4. Total number of orders per buyer

    5. Buyer-to-Seller Ratio (Buyer/Seller Overlap)

    6. CAC (Customer Acquisition Cost)

    7. LTD (Lifetime to Date)

    9. Net Profit (NP)

    10. Month-on-Month (MoM) growth

    You can find more information about these metrics when you read this article. https://roobykon.com/blog/posts/140-measures-of-success-identifying-key-performance-indicators-for-your-marketplace

  • MB

    Maryna Bobrovskaya

    3 months ago #

    Speaking of a marketplace KPIs and how to measure and improve them, if you're not sure how to do this the right way, I highly recommend reading this article that explains what marketplace liquidity actually means and how to improve this metric: https://www.cleveroad.com/blog/marketplace-liquidity

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