Posts Tagged ‘Two-sided Markets’

So… Who Are Your Customers?

Friday, April 2nd, 2010

Our entire team (Cynthia, Justin and I) were interviewed tonight by the founder of one of the startup accelerator programs we’ve spent the last month applying to. The time leading up to the interview was of course quite nerve-wracking, but the conference call itself actually ended up being a rather pleasant experience.

From the questions he asked, it was obvious that the interviewer had taken the time to read our application thoroughly, explore the supplementary materials we linked to, and research our market in significant depth. He returned several times to one particularly important question (a clear indication that I didn’t do a very good job of answering it): “Who Are Your Customers?”

So… Who are They?

I gave several different muddled responses that were long and circular. Here’s what I probably should have said.

Basic Segmentation

Genlighten acts as a platform provider in a two-sided market with lookup clients on the one side and lookup providers on the other.

Our clients probably consist of three segments:

  1. beginning genealogists looking for help, information, and some basic records
  2. serious amateur genealogists searching for specific hard-to-find records, and
  3. professional genealogists seeking offline records as part of client research projects.

Similarly, our providers likely include:

  1. history buffs or others with archival research background but little personal genealogy experience
  2. serious amateur genealogists looking to transition into the professional realm (so-called “transitional” genealogists)
  3. professionals who view lookups as a way to source clients for larger-scale hourly research projects.

How Many of Each?

I’m going to go out on a limb and attach some percentages to these different segments.

On the client side, I would guess the numbers break down about so:

  • 10% beginners
  • 80% serious amateurs
  • 10% professionals

And on the provider side, I’m thinking:

  • 5% non-genealogists
  • 65% serious amateur and/or “transitional” genealogists
  • 30% professionals

The One-Sentence Answer

If I had to sum up our audience in a succinct soundbite, I’d go with the following:

“Our sweet spot is serious amateurs helping serious amateurs.”

OK, That’s Your Audience. But Who Are Your Customers?

So… are our customers our lookup clients, our lookup providers, or both? That’s actually a pretty tough question. The Harvard Business Review articles on two-sided markets talk about the need to subsidize one side in order to speed adoption and increase the potential market for the other (“money”) side. The discussions tend to get quite technical — I won’t claim to have figured out how two-sided market theory applies to genealogy lookups just yet. For now, I’m going to take the simple route and say that both clients and providers represent equally valuable Genlighten customers.

Why Should You Care?

Ultimately, the way we at Genlighten answer these questions will influence strategic decisions such as pricing (what should our client-side “handling charge” and our provider-side commission be set at?), advertising (should we spend more money to recruit providers or to attract customers?) and hiring (should we hire more customer service people, more engineers, or more sales representatives?) All these decisions will affect our ability to grow and the quality of the experience you have when you visit our site and use our service.

So I’m grateful that our interviewer forced us to focus on this key issue. And I’d love to hear your thoughts on how I should have answered him.