For the past ten years, a steady stream of new digital networking platforms has been emerging. These websites facilitate, as if by magic, the contact between people offering something (most often professionals who are willing to pay for this networking service) and people with a need (most often users who will benefit from the website’s services, free of charge). However, one year after their launch, we’ve noticed that a majority of these websites disappear again.
At GENILEM, we meet with many entrepreneurs who are embarking on this adventure and as they discuss the challenges they’re facing with us, we’re able to advise them on next steps and appropriate strategies. Throughout this article, I’ll share what I believe to be the essential steps for anyone looking to launch a digital platform and, most importantly, what are the key success factors.
1. Sell before you build!
This is the most common pitfall: founders of this type of platform spend a lot of time (and money!) developing a huge range of very complex and interconnected features, and also end up with a very expensive brand image (logo, visuals, goodies, t-shirts, etc.).
Unfortunately, when they go live 6-9 months after initially conceptualising their idea, they realise that users either aren’t searching for the professionals on the platform at all, or they aren’t searching for them in that manner. If you’ve spent all of your budget (time and/or money) on building your platform, you won’t be able to adapt your website to the market after the fact. Often, the founders of this type of platform don’t have the technical skills to adapt the website code themselves. This turns out to be a double whammy, because they’re then left with no options to adapt their website and very little resources.
This is a real shame, because you actually don’t need a website filled to the brim with all the features you could ever imagine, in order to start selling! You only need people to be aware of your product or service. And for that to happen, the internet is a fantastic tool! Let me explain this concept in more detail.
For you to be able to evaluate a networking website, you don’t need a finished and completely polished version of your platform, looking exactly as you’ve imagined it. On the contrary, a simple website that acts as if you have these features is more than enough. The important thing is not that the first version of the platform seems like a finished product; it should instead be used to validate that your target users are indeed searching for the type of professionals you’re looking to offer to the market. Not without having those professionals available, of course. In other words, a landing page and/or a static site is enough! When it comes to making contact, filling in a form that you process ‘by hand’ is more than enough for you to be able to research and understand your market better.
The ultimate goal of this very first phase is to validate the fact that your initial idea can be implemented with real people, who are willing and ready to use your platform.
2. Understand who your first users are (early adopters)
This first version of your platform should also be used as a tool to understand who your first users are, often referred to as “early adopters”, both on the private and professional side.
Once your website has attracted a few of them, you will then need to meet them (physically or by phone) to understand who these early adopters are and what they’re looking for!
They’re the ones who can tell you more about the features they need and also how much they would be willing to pay for the connections you could facilitate.
The objective of this step is to get to know the different stakeholders of your platform. You can use tools such as the empathy map to get a clear overview of all the stakeholders.
3. Keep selling
Again, once you have understood who your users are and who your customers are, you still shouldn’t spend too much time and/or money on creating a finished platform. Keep selling as much as you can in order to earn profits and collect as much data as possible. It’s not that important if several features have not been automated yet, and if you still spend some time having to do things manually. The most important factor is that your site generates transactions and some revenue. Keep building on your experience, talking to the various stakeholders and collecting data! The effort you put in now will pay off later.
Collecting and analysing data will allow you to define your CAC: Customer Acquisition Cost, which is what it costs you to recruit your customers. For example, when you spend CHF 1,000 on an Adwords and/or Google ads campaign, how many conversions will you create? This data is essential to know how much each new user and customer costs you.
The main objective of this phase is to understand more about what your visitors want before you build precisely what they are looking for.
4. Build your platform
At this point you can start coding and building something more than a first prototype version of your platform. Now, as both your users and your customers have told you what they’re looking for, what problems they want you to solve and how much they are willing to pay: you’ll be able to satisfy them with a more mature version of your platform and therefore improve the operational part. The first three steps should also have allowed you to test and/or acquire the technological skills you need to finish your platform.
In this fourth step, you can finally improve your different performance indicators and automate everything that can be automated, in order to start growing your platform and business.
It’s also during this period that you’ll be able to sign strategic partnerships for further growth, leveraging the legitimacy and experience you’ve accumulated since you initially launched your platform.
5. Create your legal structure
In parallel with the re-launch of an improved version of your platform, you can finally create the right legal structure that will allow you to transform your project into a fully operational business.
You’ll also be able to set up the first ‘real’ marketing campaigns and start spending the money you have earned so far. You’re in control of your KPI’s and can make decisions based on the feedback you receive. In other words, you’ve discovered your users’ ‘lifetime value’ (LTV) and can therefore optimise your marketing, to ensure that your CAC doesn’t exceed your LTV.
This is also the right time to delegate certain tasks to your first employees (part-time or full-time, depending on your growth), while you continue to stay in the field, having regular contact with your users and customers, so you can anticipate the evolution of needs in the marketplace.
Cyril Déléaval, Business Development coach