Marketplace owners invest anywhere from hundreds of thousands to millions of dollars to develop an easy-to-use two-sided marketplace for B2C, B2B, and peer exchanges.  After developing this high-value niche exchange, marketplace owners then spend additional time and money to advertise their marketplace and recruit sellers and buyers. To recoup their investment and stay profitable, marketplaces must find ways to keep sales on the marketplace and remove the frustration of losing their livelyhood as the marketplace maker to side deals (where the buyer and seller try to take the sale outside the marketplace after getting the benefits of the introduction).  So  let's explore some best practices to retain users.

Why Side Deals Hurt Marketplaces

It should be easy for marketplace owners to intuitively grasp the risks to them of customers conducting deals on the side. Yet let's briefly lay them out. Marketplace owners have invested a lot of time, effort, and money into recruiting clients and marketing their service. To recoup expenses, they must keep clients on the platform.

Every time a client conducts a deal on the side, the marketplace loses its share of the gig. If enough customers leave the marketplace to conduct deals on the side, the marketplace will lose money. Over time this could drive the venture to fail. And then everyone loses, the buyer, the seller, guest and host, the client and the service provider.  It's inevitable that some people just take, take, take - exploiting the marketplace and giving nothing back, mostly these types of people are in the minority.  But there's some other reasons that people feel justified in this losing behaviour.

Why Clients Leave the Marketplace

Before delving into ways to reduce leakage, it's important to understand why clients might be tempted to take the deal outside the marketplace.

Some markets take a high percentage of the profits. This may cut into the service provider's bottom line or penalize the buyer with access fees. Regular marketplace users may resent having to pay these fees and try to initiate an off-line exchange.

Other users may value efficiency. They like the idea of using the exchange to find service partners. Yet once they've found that person, they want to communicate with them directly by phone, not via email and instant chat.

Finally, some users may not perceive enough value in the marketplace and decide to return to doing business off-marketplace. Since these users have already made connections via the marketplace, they'll naturally keep doing business together.

How to Retain Clients

To achieve liquidity, your marketplace needs to not only attract clients, but retain them once they've conducted business. Adding value is one of these easiest ways to do this.

There are many different ways to add value, which improves the user experience and customer satisfaction. Tried and tested ways to increase value include:

• Make it easy to use - The easier your marketplace is to use, the better the experience will be for all. Streamline the number of clicks users need to make to complete a transaction. By keeping things easy, you'll reduce the temptation for guests to take the transaction offline. The Uber app is simple to use on the buyer and seller side. Compared with the hassle of flagging a taxi, it's a no-brainer to request an Uber.

• Add reputation reviews to build trust - One of the biggest risks of doing business via marketplace is extending trust to someone you do not know. By allowing clients to rate one another, marketplaces can increase the trust factor inherent in doing business. When users can see the reviews of other parties, they can make informed decisions and decrease the risks inherent with marketplace transactions. AirBnB's reviews and references features enhance trust in the P2P accommodation market.

• Create a community - By adding a community aspect to your marketplace, you can increase cohesion. Travel marketplace Couchsurfing dedicates platform space to community building in the form of local events. Craft marketplace Etsy allows buyers and sellers to engage in community around craft and providing free, value-added tutorials.
  
  
• Enable Click to Call (masked phone calls that hide the phone number between buyer and seller), making it convenient for the buyer / seller or client / service provider to have a conversation, this helps with conversion as trust and raport is built between the marketplace participants, while maintaining privacy.  
  And of course "This phone call is recorded for training and quality purposes." allowing the Marketplace Owner to review the calls and ensure not only quality conversations are taking place, but that deals are taken off-market.

Even if you strive to add value, you will inevitably encounter those users who just want to get the deal then take the job offline. What should you do with these users?

One option is to penalize users for conducting business off-market. Staff can monitor client messages for exchange of personal information. If a client shares contact information with a user, you can warn them or block them from the marketplace.

By sanctioning users who just want to take the deal out of your marketplace, you increase the odds of retaining those clients who do enjoy your marketplace. When planning your marketplace, it's important to consider these issues and find ways to plug the leaks. Get creative and offer a take on the issue of value that is in line with the spirit of your community. Close the loop by surveying users about the satisfaction, listening to their answers, and striving for a culture of continuous improvement.

Lastly, where there's a will there's a way and some people just take and not give.
Don't get too hung up on them.  Focus on the amazing value your marketplace provides and keep building that value and ease of use.  That's what will set you apart and ensure you win.