Building platform products - part 2

Building 3rd party ecosystem

In the first part of this blog series, I shared my thoughts on building a platform product for internal products within your company. In this second part, I will focus on how to build a third-party ecosystem around your platform.

To recap, a platform product, by definition, enables other products and services to enhance the value proposition of the platform and create network effects. These complementary products and services are often provided by third-party developers, partners, or vendors who leverage your platform's capabilities and access its user base. For example, Apple's iOS platform enables developers to create apps that run on iPhones and iPads, while Amazon's AWS platform enables partners to offer cloud-based solutions to customers.

As we discussed in Part 1, you first need to earn the license to be a platform, whether you are enabling internal products and services or whether you empower external partners.

Assess the motivation to expand your offering to 3rd party

Assuming you have met the technical prerequisites to being a platform, identify the objective in extending to 3rd party products. A desire to extend your platform to 3rd party typically originates from the need to grow your business. The growth includes the number of acquired or engaged users/subscribers, customers in the case of B2B products, and revenue. For example, Atlassian integrates with 100s of work productivity apps to make their products more compelling to the end users and compelling for the buyers. Having an integrated offering not only makes Atlassian products more well-rounded but also makes them stickier with their paying customers.

Other times, you need partners to bridge a critical gap in your product offering. For example, when early versions of iOS relied on Google Maps to make iPhones essentials to their users and when they had their critical mass, they launched their first-party map app.

Choose your first partner

Once you have validated the business case, you start with a hypothesis and validate it by identifying a 3rd party product that is easy to integrate with and can align with your ecosystem strategy.

While working at Limeade (now part of WebMD), our goal was to grow the Limeade SaaS customers by offering best-in-class well-being tools and products through the Limeade mobile app and web experience. While it was tempting to start with a big brand that could boost our business, we grounded the ecosystem strategy on Limeade’s mission of measurably improving the well-being of the workforce. We envisioned how Janice, our target user persona, achieved her fitness goals by working with virtual coaching (served by a Limeade partner) offered through her employer-sponsored Limeade program. We chose the first partner product that would achieve this objective and was easier to work with. Once we built the integration, and launched it to a few customers, it validated the hypothesis that by integrating with best-in-class tools and solutions, we can improve the efficacy of the Limeade program, make it stickier for our customers, and deliver tangible well-being outcomes for the end users. The lessons from the first partner integration informed a pattern that we could gradually apply to several other partners, including large brands.

Ensure partners move the one metric that matters

Your platform’s success is not measured by the number of partners signed up on your marketplace but by the engagement of the users in the partner-led solutions. Make sure to track and achieve this outcome before you expand and scale your ecosystem.

In my case, it was the number of users signing up for the coaching sessions through the Limeade app. More important was the number of users who finished the coaching program. Ultimately, the success of the Limeade platform was to improve the user’s well-being. And fully utilizing the partner-enabled experience was a prerequisite to the final outcome.

To do so, I optimized not just the native UX but also influenced the end-to-end experience leading in and out of the partner product. This involved aligning the metrics with the partner product team and influencing their roadmap to achieve the shared outcomes to deliver a healthy usage funnel.

Simplify the onboarding for partners

Once you have a healthy adoption of the integrated offering for a couple of partners, automate the steps for the partner to integrate with your platform. Initially, it’s reasonable to handhold your partner developers to integrate with your platform APIs. But as you expand to more partners, ensuring a simple integration experience is key to scaling onboarding new partners. Building easy-to-consume articles, tutorials, and SDKs is part of it but productizing the signup experience, seamlessly generating auth-tokens, and testing the end-to-end experience will deliver a true scale.

To summarize, building a third-party ecosystem around your platform is an effective strategy for growing your business and creating network effects. Before expanding to third-party products, it is important to assess your motivation and validate your business case. Choosing the right partner and tracking engagement metrics is crucial to achieving success. Once you have healthy adoption, automating partner integration and creating a seamless onboarding experience is key to scaling your ecosystem. By incorporating these steps, you can create a thriving ecosystem around your platform and deliver tangible outcomes for your end-users and buyers.