Solving the chicken and egg problem: how to attract paying customers


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I am having a bit of a catch-22 with my business model. I am trying to link employers to prospective employees based on personality/work ethic profiles (think eHarmony for jobs). However, I need a large number of free users (potential employees) to fill out the personality profile in order to sell the service to employers. But no one wants to take the time to fill out the profile if there are no employers and conversely no employers want to pay for access if there are no employees to be hired. Any thoughts on how I can work around this? Thanks!

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asked May 1 '13 at 14:24
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User26065
8 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll
  • Isn't that the dilemma of every business ? What marketing/sales strategies have you come up with ? Why will I chose your site over monster or any other ? – Happybuddha 6 years ago
  • Not all businesses have this dilemma. Many companies only need to convince one person to make a decision (sign up, make a purchase, subscribe, etc) where this one requires two parties. There are a lot of similarities though. I've come up with targeted local advertising (ie "San Jose Jobs" vs just "Jobs"), adding content via a blog for SEO, creating a free informational app with some of the functionality built in. And I'm much cheaper than Monster and focus not on what a person known (resume) but rather if they are a good fit for their company. – User26065 6 years ago
  • Were you at Startup Weekend Houston this past weekend? I was a mentor. If you were there, feel free to drop me a note to discuss this one in detail. I have some ideas in relation to that particular effort. – Casey Software 6 years ago
  • Nope, I'm based out of Omaha. There's a startup weekend coming up here (Big Omaha) but the cost to attend is out of my price range. I really do appreciate the offer though! – User26065 6 years ago

2 Answers


2

This is the classic chicken and egg problem that every successful online site had to solve in order to build a double-sided market solution. The solution is to start by doing the work yourself and build a very small community within a niche that's on the side of the market that needs your service most. For instance, you could go to a college and find college students that need a job; now that wouldn't be very hard to find. You can start by asking 100 college students to fill out whatever you need and use that information to start making your site valuable to the other side of the market. Once you've got your site going, you go see a few companies that look to hire college students and show them your site. If you've got the value proposition right, then among the companies you'll be visiting, you're bound to find at least one that hires one college student using your site. At that point, you promote that success story and repeat the process until the site starts to grow organically and then you can expand to other target markets until you reach a point where your online community is valuable enough to justify some paying-access features.

All this is just an example and I'm sure there are other business plans that will work just as fine. But above all, this assumes that the online solution you're building creates value for both sides of the market; if your site doesn't create value then it will not work. Overall, I think the solution is to start yourself with a very targeted use case.

Good luck.

answered May 2 '13 at 02:07
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Frenchie
4,166 points
  • Not quite the magic bullet I was hoping for, although it was what I expected. I had hoped there was some way to generate revenue for a marketing budget right off the bat, but it seems like the answer is to try to create value and switch to a pay-model later. Might cause friction with the employers who are used to it being free when the change comes, but that is a question for another day. Thanks for your advice! – User26065 6 years ago
  • @user26065 "Might cause friction with the employers who are used to it being free" is losing a non-paying customer really that big a deal? If so, you could always "grandfather" them, and continue to let existing customers use it for free, while only charging new customers. – Gavin Coates 6 years ago
  • Yeah, that's what I'm currently leaning to. Getting a small core (15-30) employers to try it out for free and once I have a few success stories go from there. And in the grand scheme of things, a few free accounts won't (shouldn't) sink the ship. – User26065 6 years ago

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Doesn't Gallup Management do something similar?

First, I think you need to be a little patient here. It will take time to gain traction in terms of perfecting your profiling algorithm, getting employers to buy in to your assessment, which will increase high quality employer influx and in turn more job seekers.

That said, you should offer prospective employers a free trial period. This will attract job seekers and you will be able to gather enough data for your assessments (since you say not having listed employers is your main obstacle to attracting job seekers).

Second, go to colleges and get students looking for jobs to fill out the tests,

Third, partner with testing services( Kaplan, Princeton Review etc.) to have your service offered on their website. I am not talking about just targeted advertisement.

Fourth, you need to explore options to go viral. Incent job seekers to bring in referrals.

2nd,3rd and 4th options will help you increase job-seeker signups.

Lastly, look at how long it took LinkedIn to become profitable. Initially, you may have to offer your service free, gather critical mass of employers and job seekers and then look at ways to monetize your service.

answered May 2 '13 at 01:38
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Moonstar2001
186 points
  • I haven't heard about Gallup Management, I will have to do some research. College students are a very ideal group, as I am focusing more on employer-employee fit rather than what's on their resume (I've heard up to 90% get filtered out by automation). The job fairs are out of my price range right now, but I might be able to partner with the university's career center. I'll look into the Kaplan/Princeton partnerships too. Virality is one of those odd things that's hard to predict and even harder to plan for. Very good points to think on, thank you very much! – User26065 6 years ago

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