Other parts of this series:
Platform businesses have the ability to transform industries and economies. But to do that, they need to ignite the “network effect” which can only be done when the platform has enough users. Accenture’s Kirtan Sita explains the five Ps that drive critical mass.
Digital platforms are transforming economies. And when it comes to platforms, bigger is better.
The key to unlocking the power of platforms is the “network effect” which occurs when the value of a product or service increases according to the number of others using it.
That is how digital platforms will play a significant role in driving growth and jobs across the continent and transforming economies. The network effect is the bigger prize we must aim for. In other words, we need more platform companies, each with more users—ideally not limited to South Africa, but across the region.
As you can see in Accenture’s platform economy model, there are five Ps that drive the critical mass that a platform needs.
If we look at them one at a time: The Proposition (in classic marketing-speak, the “product”) is what makes the platform attractive in the first place. It differs from the classic product because it cleverly combines or connects different services or ecosystem partners into something new and uniquely useful to the user. For example, RecoMed assists patients to find and make appointments with healthcare providers 24 hours a day, seven days week, without any phone calls or paperwork. The company has become South Africa’s largest and fastest-growing online healthcare booking platform with over 100,000 patients and 1,500 providers connecting with each other every month.
The P of Personalisation is what is also being called hyper-relevance. The buzzword is “mass personalisation” so that every user of the platform gets a uniquely tailored experience. The aim is to understand what the customer wants to do next. South African online retailer Takealot.com has partnered with predictive customer analytics platform Zodiac and can now predict when a customer will churn. It can then give that specific high-risk customer an offer unique to them and so drive up retention.
Third is Price, and pricing on platforms is a rich source of innovation. Companies are experimenting with pay-as-you-go models, freemium models, rewards programmes and surge pricing to respond to peak demand. For example, South African health insurer Discovery and FNB have partnered with Takealot.com so that their customers and members can spend their rewards currencies online. This drives adoption of the rewards currencies and locks customers into the Takealot.com platform.
According to Accenture’s Technology Vision research, over a quarter of South African executives rank cybersecurity as the top concern for participating in digital ecosystems. Which brings us to the fourth P, Protection. Customers and ecosystem partners alike need to be sure the right safeguards are in place. An effective platform strategy must use prevention and compensation techniques to attract customers and differentiate the platform. E-commerce payment-services provider PayGate (acquired by DPO Group in 2016) partnered with global fraud-prevention company ReD to provide added protection for South African online merchants. This will become increasingly important as more local merchants do business outside the country’s borders.
Finally, Partners improve the potential for platforms to scale rapidly and robustly. In this fifth step, identify digital partners, such as application developers and payment service providers, who can enrich the platform experience and fulfill customer needs. The aforementioned payment services provider PayGate launched PayPartner, a support and rewards programme for the community of web developers using its services. Companies turn to developers for advice on how to implement e-commerce and what payment services provider to choose. Approved developers receive rewards for referrals as well as free shopping cart plugins. In addition, developers get their own back-office area where they can track the performance of each client and get all the information they need to manage them effectively.
As arguably the richest country in Africa, South Africa is well placed to create and deploy platform businesses across the region, unlocking billions of rand in trapped value. If you’d like to discuss the practicalities of creating a platform or joining an ecosystem, please get in touch – I’d love to share ideas with you.