Improve conversion by encouraging higher-priced bids in a two-sided marketplace

Summary

Users’ willingness to pay a premium price for a service depends on their perception of the value of that service. In this A/B test, we learned that a strong message that reinforces the value of a product or service can increase users’ willingness to pay more. We introduced a tooltip that explained to users that they could receive a significantly higher quality of service by setting their price 20% higher than the default. The result – an 8% increase in ARPU.

Overview

Kabanchik.ua is a two-way marketplace that connects users looking for a specific, one-time job and contractors offering their services based on professional skills. So a user posts a job and a contractor bids to win the job.

Our task was to increase the revenue per user (ARPU) metric by working with the conversion rate (CR) and average order value (AOV).

Research

Kabanchik.ua has default prices for each job that users post on the marketplace, and users have the option to change these prices. The quantitative data showed that some users set a price that is more than 20% higher than the price set by Kabanchik for that job. This led us to conclude that some users were intentionally paying more. We needed to know why.

To find out why, we conducted user tests and user interviews. We found that some users set a 20-30% higher price to get bids from more skilled and higher quality contractors. In other words, the main driver for setting a higher price was to get more bids from contractors with “Top Contractor” badges, which contractors earn by successfully completing a significant number of jobs and receiving positive customer feedback.

Hypothesis

We hypothesized that we could motivate users to increase the price of a job by communicating that a higher price would attract more “Top Contractors”.

Solution

We decided to test this hypothesis by adding a tooltip to the job creation form. The tooltip read as follows: ‘Increase the price of this job by 20% (to XXX hryvnas) to attract more Top Contractors’. The trick was to have this tooltip open by default on the form and to have the tooltip partially block the form so that the user had to close the tooltip in order to navigate the form. This ensured that most users on the form would pay attention to the tooltip.

Control variation

Alternative variation

Validating the hypothesis

To validate this hypothesis, we conducted an experiment that measured the impact of the new UX of entering the price of the job on CR, AOV and ultimately ARPU. The experiment had the following characteristics

The experiment had the following characteristics:

Type of experiment: A/B test

Traffic split: 50/50

Device: Desktop

Primary metric: ARPU

Secondary metrics: AOV and CR

Number of users who participated in the experiment 16,566 users

Number of conversions recorded during the trial: 4,352 conversions.

Results

The alternative variation with a tooltip encouraging users to increase the price by 20% resulted in an 8% uplift in ARPU and a 17.3% uplift in AOV. This was one of the most interesting experiments we ran because the change to the UI was minimal, but the uplift in key metrics was significant. It showed that understanding user triggers and effectively communicating your message can yield significant results. In our case, a simple tooltip did an amazing job. Once again, the takeaway is that quality research into user behavior and pain points makes all the difference in CRO.