How to Create Digital Platform Flywheels

In today's digital age, digital platform apps are more important than ever. They allow us to do everything from ordering food to sourcing our financing needs. But what makes a digital platform app successful? What are the secrets of creating an app that people will love and that third-party partners will focus their time on supporting?

A digital platform is a digital space that connects users with other users and partners to collaborate, interact, or transact.

The most important factor in creating a successful app is setting up the flywheel between users and your partners.

A two-sided flywheel is a virtuous cycle that drives engagement and growth through your platform’s connection between users and your partners. It starts with creating simple-to-use services that attract users and drive downloads. Once you reach a tipping point in the number of users engaging with your app, this drives demand, and new partners will flock to your app to provide services. This cycle of ever-increasing demand provided by users, with partners meeting that demand, will naturally continue to grow and strengthen as your app becomes more popular.

Steps to create a digital platform app flywheels

1. Define your target audience. Who are you trying to reach with your app? What are their needs and interests? Once you understand your target audience, you can start developing a set of partner-provided services that appeal to them.

2. Create frictionless services. Reduce as much friction across your app platform as possible. The app should provide clear and consistent services in every engagement, and the process must be seamless.

3. Lead with lighthouse partners. Focus on launching with the best and largest partners to provide services on your app. These partners will drive demand for your app from users and will signal to other potential partners about your platform.

4. Generate user demand. Once you have created a great platform and onboarded some of the best partners, you need to get the word out about your app. There are a number of ways to promote your app, including social media, paid advertising, and word-of-mouth.

5. Track your results. It's important to track your results, so you can see what's working and what's not. This will help you make necessary adjustments to your flywheel. Creating a digital app flywheel takes time and effort, but it can be a very effective way to grow your app's audience and engagement. By following these steps, you can create a flywheel that will help your app succeed, and below, we will give you tips that will assist you in doing just that.

   Let’s start with the second step.

The Importance of Clear, Seamless Services

A set of clear and frictionless services creates the engine for your app flywheel. It's what will attract users to your app and keep them coming back. When creating clear and frictionless services for your app, it's important to keep in mind the following:

• Your target audience. What are their essential needs and interests? What will they value the most and what is optional?
• Your app's business model. How will you make money with your app? Which business model aligns the incentives for you, your users, and your partners?
• The competition. What other apps are out there that are similar to yours? What kind of services do they provide and what’s different about your app?

Once you've considered these factors, you can start developing the product features for your app. Here are a few tips:

• Be super clear on what services you will and will not provide.
• Reduce the features and functions to only those that are the most valuable to your users.
• Find the surprise and delight moments for your users that will keep them coming back.

Take, for example, Zoom. A clearly defined audience, represented by enterprise customers (ranging from large financial services companies, universities, government agencies, healthcare, and IT companies); the freemium business model; the focus on videoconferencing, as opposed to the platform’s competitors’ audio-first strategy, and other factors carefully taken into account at the development stage, have brought an undeniable success to the app.

Lead with lighthouse partners

Once you have a great digital platform, you need to work with some lighthouse partners to ensure that the best services are provided to your users. Key things to discuss with the partners are:

• Incentive models. Make sure your incentives, user incentives and partner incentives are aligned.
• Partner service delivery models. Understand the service delivery models your partners will use and make sure they align to the experience you want your users to have.

A well-known example would be Uber, where continuously growing supply was ensured mainly through driver incentives, such as discounts on gas, mobile phone service, vehicle maintenance, money management services, and Uber rides. Sufficient supply led to a steady growth of demand from users, thus making the company itself expand in leaps and bounds.

Generate user demand

Once you have a great digital platform and lighthouse partners, you need to get the word out about your app. There are a number of ways to generate user demand, including:

• Organic marketing on social media and influencers.
• Incentive campaigns to attract new users and their friends.
• Partner marketing leveraging the existing channels your lighthouse partners have.

It's important to promote your app in a way that is consistent with its brand and tone. You also need to be patient and persistent. It takes time to build an audience for your app. But if you create great content and promote it effectively, you can find loyal followers that will help your app succeed.

Let’s take Airbnb as an example: its marketing mix has a strong focus on building a community and utilizing its existing users for user-generated content, social media, and its referral program. Both hosts and travelers publish posts on the Internet, the former – to advertise their property, and the latter – to share their vacation photos on their social media accounts, tagging the Airbnb brand pages. This helps the company reach its authentic audience, hence increasing the awareness of the website. To create a further social media presence, Airbnb partners with many travel bloggers. As for the referral program, for Airbnb, it turned out a huge success, as when the program was first launched, it led to a skyrocketing 900% of annual growth.

Track your results

It's important to track your results so you can see what works and what doesn’t. This will help you make necessary adjustments to your app flywheel. There are a number of ways to track your results, including:

• User analytics. Make use of user analytics tools to track how the users are interacting with your app to understand friction points and most popular features.

• App Store / channel analytics. Use App Store analytics tools to track your user funnel metrics and conversion rates.

• Customer feedback. Collect feedback from your users to see what they like and don't like about your app. By tracking your results, you can identify areas where your app is performing well and areas where it needs improvement.

In this article, I’ve covered what it takes to create a great two-sided flywheel for your digital platform. Be sure to follow the steps described and adhere to the tips provided, and you will have laid a good foundation for creating a successful app. Good luck!

*FYI, this conclusion was written with the help of AI

The lead image was generated using HackerNoon's Stable Diffusion AI Image Generator feature, via the prompt "a human architect standing and looking at a building".