Marketplace Trust and Safety – Minimizing Risk in the New Distrust Economy
Minimizing Risk in the New Distrust Economy
The sharing economy has been built on trust. But that trust has eroded. In fact, it’s reached a level where 2020 has become the tipping point for entering the distrust economy. Consumers now value security and safety over convenience, making trust and brand reputation more critical to user acquisition and retention than before. This new status quo has left marketplace providers faced with a complex balancing act. They need to minimize reputational and operational risk, to avoid slipping into a vicious negative cycle of distrust and lost revenues, but how? Based on a wide range of consumer and executive insights from our latest report, The New Distrust Economy, Emailage will explain what steps the industry must take to address this problem. And why it’s essential to stop the enemy at the gates, rather than waiting for fraudsters and bad actors to make their presence known from inside.
As part of the Emailage, a LexisNexis Risk Solutions Company and Marketplace risk virtual event series Lewis Besley and Dan Roberts from Emailage presented the results from a 500+ customer trust and reputation survey on the shared economy. The transcript below features the presentation and has been edited for clarity and brevity.
What is the current state of the shared economy?
Dan Roberts: For those of you that are either servicing or building a shared economy company, the industry has been exploding over the last 10 years and is set to continue on that trajectory. Yet there has been a fundamental shift recently where trust is synonymous with reputation. So it’s more important than ever for the platforms to really ensure that they create this safe and high trust environment and keep bad actors off their platform, because that is going to be the primary driver of damaging the reputation of the platform itself. The other piece is that with bad actors damaging trust and impacting reputation, it really just creates this negative cycle of distrust.
What are the survey results you are presenting on today?
Lewis Besley: This unique research contains results from five hundred respondents we surveyed on their experiences on Trust and Reputation using shared economy platforms such as Uber and AirBnB. We’ve also been out to get some executive insights from global players in this space.
What are the four key trends uncovered in the survey results?
Dan Roberts: The first trend is that consumers inherently are not trusting others online as they once were. The shared economy was really built on convenience and safety has actually overtaken that as the primary force on what consumers are most concerned about.
The second trend is that the negative expectation around peer reviews and people’s general distrust of them, and that bad actors are gaming the system in order to shift their consumers beliefs on a particular user or platform.
Trend three is risk is at an all time high within these platforms. There’s a lot of upfront costs when it comes to user acquisition costs and that these platforms are really having to balance the cost of user acquisition with the lifetime value of a customer. It really dictates how successful that company will be in long term. What we found is that 33 percent of users will churn after their first bad experience, especially as consumers now have a lot more choice. It’s more inherent than ever that platforms need to to protect that experience and ensure that bad actors are stopped.
In trend four there’s a growing expectation among consumers that the sharing economy platforms they use should immediately know who is or isn’t trustworthy. What that really amplifies is that users don’t want to experience friction, but they also expect low friction in the onboarding process and that the platforms should be able to weed out the bad actors. So that makes the shared economy platforms and marketplace place jobs even harder in managing risk moving forward. So trend number one on reputation is now paramount.
In summary – the game has changed.
Lewis Besley: Being able to distinguish between good and bad actors during onboarding is the most critical piece of the puzzle because without it, good users may be accidentally stopped.
If you put too much friction or the wrong types of controls where your good users are getting stopped it’s not good business. In theory, you could have zero bad actors on your platform, but also have zero good users, because you’re stopping everybody.
The balance between friction and being able to stop bad actors is very delicate and one that we’ve certainly helped many customers in the past. Reputation is synonymous with ensuring trust and will really help drive your bottom line. Nonetheless, our poll found that three quarters of users were spending £51 per month on shared economy services. That represents a huge opportunity for platforms.