Tackling the monetization challenge for SMEs, we achieved eight times higher conversion rate and a substantial reduction in user complaints.
The Challenge
OLX is the most popular classified ads service in Ukraine. 50%+ Ukrainians have the OLX app on their smartphones. Many entrepreneurs also sell their stuff on OLX
Basic OLX services are free for individual users. But merchants (professional sellers) must pay for listing their goods on the service
The listing price depends on the category of goods or services offered and on the number of listings. When new merchants discover that the service is not free for them, they often complain and try to outsmart the system making the situation even worse
Roughly a quarter of all complaints on the service are related to monetization
OLX invited Lanka to improve customer experience and monetization of their services
Key insights
The team had a pre-conception that merchants are claiming that they are “not business users” because they don’t like to pay listing fee
We saw four different segments of potential customers. Three of them did not consider themselves entrepreneurs or “business users”
The most promising segment – “Side Job” – sees trading goods as a temporary necessity. Users from this segment are not prepared to invest effort or money in growing sales. They are risk-averse and opportunistic in their nature
We can categorize sellers into segments by analyzing their listings
The Outcomes
A machine learning algorithm was trained to identify user segments
A pricing model for new users was radically simplified
Communication with the new merchants is changed. They are now called “regular sellers,” not “businessmen.”
The value proposition is “sell easier,” not “grow your business.”
A conversion rate has risen 8 times, and the level of complaints has fallen dramatically
The process
Designed solutions
Persona identification
The team has manually reviewed and classified 200+ new merchants. Then ML algorithm was trained to identify personas automatically
Simplified value proposition
The listing price at OLX depends on many parameters: category of goods, number of listings, and additional promotion of the listing on the website. The research showed that such an approach confuses new customers. They are afraid to make a pricy mistake and thus try to avoid paying at all
For the new merchants, we designed a straightforward choice: you pay the same price either to sell your goods faster or to be able to publish more listings
Reduced pricing
The minimal listing price at OLX was comparable with the competition, and experienced users did not complain about it.
But new merchants used to free OLX service and perceived listing prices as too high
We tested promotional discounts, which help to onboard new merchants to paid service in three steps, gradually increasing prices
Communication
OLX perceived all merchants as established small businesses. They used such terms as “your company,” “return on investment,” and “scaling business” in their communication. All those terms we perceived as irrelevant by new merchants. “This is not about me,” they told us during interviews.
We changed the communication to use words like “clients who regularly list their items,” “publish more items,” “get more customer calls,” etc
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