92 - How to Measure Marketplace Growth

How to Choose the Right Metrics for Your Marketplace

Tracking growth metrics is crucial for online marketplaces because they serve as your compass. Without them, it’s easy to get lost in a sea of data or prioritize tasks that don’t move the needle. For marketplaces, it’s not enough to track generic performance metrics; you need to zero in on what drives value for both sides of your platform—your supply (freelancers) and demand (clients). One common mistake marketplace founders make is focusing on vanity metrics like page views or social media followers. While these can show activity, they don’t necessarily reflect meaningful growth. That’s why every marketplace should have a North Star Metric, the single most important KPI that represents the core value your platform delivers.

How to Define a North Star Metric for Your Marketplace

For Unicorn Factory, the North Star Metric is leads generated for freelancers. This metric has evolved over time. Initially, I focused on closed deals facilitated through the platform because my goal was to secure freelance work for myself. But as the marketplace grew, tracking closed deals became impractical, and leads became the more reliable measure of growth. I review this metric quarterly to ensure a consistent upward trend. Why quarterly? Shorter timeframes can be misleading due to external factors, like seasonality or unforeseen events. By focusing on quarter-over-quarter growth, I can better assess how well the marketplace is performing and make informed decisions about what to prioritize next. You can explore more about Unicorn Factory in New Zealand (unicornfactory.nz) or Canada (unicornfactory.ca).

How to Track Submetrics for Supply and Demand

While the North Star Metric provides a high-level view of growth, it’s influenced by several submetrics from both the supply (freelancer) and demand (client) sides. Here’s how I break it down:

How to Measure Client-Side Metrics

1. Discovery:
2. Measure how many potential clients discover the marketplace. This is influenced by activities like paid advertising, organic social posts, and email marketing. Tools like Google Analytics help track overall website visits and referral sources.
3. Engagement:
4. Track how many clients engage with the platform by browsing directory pages, visiting profiles, or staying on the site longer. High bounce rates might indicate misaligned traffic or areas of the website that need improvement.
5. Conversion:
6. The ultimate goal for clients is to either contact freelancers directly or post a job on the platform. These actions are the clearest indicators of client-side success and are tracked in Airtable as part of the site’s workflow.

How to Measure Freelancer-Side Metrics

1. Discovery:
2. For freelancers, discovery starts with creating an account. Instead of just tracking page views for the “Become a Freelancer” page, measure the number of sign-ups via Memberstack. This provides a more meaningful gauge of interest.
3. Activation:
4. After signing up, freelancers must apply to join the marketplace. Track completed applications to understand the effectiveness of your onboarding process. Simplifying forms or improving instructions can directly boost this number.
5. Conversion:
6. Measure how many freelancers become paying members by upgrading their accounts. This step directly impacts revenue, which can then be reinvested in growth activities like advertising. Eliminating free trials can help align this metric with financial sustainability.

How to Use Metrics to Drive Business Decisions

The beauty of focusing on metrics is how they inform your next steps. For example, when I notice a drop in engagement on the client side, I review the website experience to identify potential friction points. If freelancer applications are low, I examine the onboarding process to ensure it’s clear and streamlined. If you're looking for actionable ways to improve your workflow, check out How to Automate Marketplace Workflows Using Make.com. While it’s tempting to track every possible metric, simplicity is key. Focusing on a handful of high-level KPIs—like the North Star Metric and submetrics for supply and demand—helps avoid overwhelm and ensures you’re concentrating on what matters most.

How to Set Up Metrics for Your Marketplace

If you’re building an online marketplace, here’s how to get started with tracking meaningful metrics:

1. Define Your North Star Metric:
2. Identify the one metric that best represents the value your marketplace delivers. For marketplaces, this is typically the number of transactions or leads facilitated between supply and demand.
3. Break Down Submetrics:
4. Divide your North Star Metric into key stages for both the supply and demand sides. For example:
   • Demand: Discovery → Engagement → Conversion
   • Supply: Discovery → Activation → Conversion
5. Track Your Metrics with the Right Tools:
6. Use tools like Google Analytics for website visits, Airtable for workflow management, and Memberstack for tracking sign-ups. Keep your setup simple to avoid being overwhelmed.
7. Iterate Based on Insights:
8. Metrics are only as valuable as the actions they drive. Regularly review your data, experiment with improvements, and iterate to optimize your results.