Once upon a time there was a typical business tool belt sprinkled with digital tools: email marketing software here, website CMS there, and possibly software for accounting and sales tracking.
Over the past decade, software has gotten smarter, consumers are more engaged and easier to learn … and business owners are overwhelmed. What was once a handy tool belt has become a cluttered tool kit, similar to what you’d find in a construction worker’s pickup truck.
According to a recent marketing technology study, the average marketer uses around 12 software tools every day – some over 30 of them.
It doesn’t even take into account sales, support, human resources, or financial instruments that these companies use. Impressive.
As versatile as the technology is, it doesn’t necessarily solve the challenge of managing, connecting, and aligning all of these different tools. With the vast amount of software and technology out there today, is it even possible to return to the practical tool belt that our entrepreneurial ancestors once knew and loved?
Yes – with one platform. Platforms are key to creating a central base for all of your marketing technologies and more.
We’ve put this guide together to teach you all about platforms, their various uses, and why your company should consider adopting a platform.
What is a platform?
Platforms create networks (compared to products or services). They are ecosystems that enable and support the exchange of information, content or products between two dependent groups, typically producers and consumers.
The concept of platforms is not new. In fact, platforms are practically as old as civilization itself – they came from the marketplaces and bazaars of ancient Rome. In recent years, shopping centers and auction houses have taken over this stationary representation.
Thanks to the rapid rise of technology, platforms have largely become digital. Scott Brinker, HubSpot’s VP of Platform Ecosystem, defines this type of platform as “hub with spokes that connect other products to its center. The hub connects these different products and orchestrates them in a common mission. “
A platform makes it possible to connect tools, teams, data and processes under one digital roof – it creates the tool belt discussed above. It is at the core of all systems and allows you to seamlessly connect all of your favorite tools together using integrations.
Check out the HubSpot Integrations and Applications Marketplace to see some of the integrations that will work with your HubSpot software.
Read on to learn how platforms work and how they can benefit your business.
How platforms work
Traditional companies follow a linear business model in which they manufacture products or services and conduct transactions with other companies or consumers. These companies also own their inventory, and consumers access them to buy their inventory.
Platform companies, on the other hand, follow a circular business model in which they enable and facilitate transactions between two parties without creating, manufacturing, or owning inventory. Consumers use platforms to purchase products or services from other platform users.
Platforms Companies have proven to be extremely valuable – both for consumers and investors. Did you know that six of the top ten companies by market capitalization are platforms? That’s right: Apple, Microsoft, Amazon, Alphabet (Google), Facebook and Alibaba.
It is clear that in today’s economy Who a company is associated with is more important than the product or service it owns and sells.
As mentioned above, platforms enable interactions and transactions between interdependent groups. These direct interactions inherently generate supply (from a seller, service provider, or producer) and demand (from a buyer, service seeker, or consumer) – something that benefits both parties.
While traditional businesses create value by creating products or services, platforms create value by enabling those transactions.
This is what this transaction usually looks like:
However, the success of a platform depends on more than these transactions. Platforms also need to attract consumers and producers, enable consensus between these two groups, and provide the right technology to support a transaction – while adhering to rules and standards that protect both parties and the platform itself.
This is what the cycle of these four functions usually looks like:
The platform’s business model has revolutionized business and technology as we know it. Here are some reasons why.
1. Platform business models grow faster and scale better.
Platforms that follow the platform’s business model can grow or scale quickly because they do not have the resources to create the value; H. The application, content, service provider, or product. Your growth does not depend on resources or capital.
2. Platform business models form a reciprocal, self-sufficient community.
Platforms that follow this business model exhibit “two-way network effects”, which means that demand arises from the supply of buyers and sellers, sellers and users, or developers and consumers.
This equates to fewer advertising dollars (to attract buyers or sellers) and more word of mouth marketing. It also creates a win-win situation in which both the platform business and service providers or sellers can benefit from the users.
3. Platforms solve connection and efficiency problems.
As marketers (or sellers, or support professionals), we access dozens of tools every day. In fact, as of 2018 there are over 7,000 marketing technology providers worldwide. Platforms create a central place for the tools and applications we use to grow our business, reach our customers and collaborate with our teams.
Time and energy are two things that companies don’t need to save. Platforms that follow the business model of the platform become a central point of contact for the daily processes of the users.
We defined a platform and talked about how platforms have important business implications. Next, we will cover some examples of real-world business models of platforms, their implications, and their success.
Examples of platform business models
How do platforms play out in everyday life? Surprisingly, you regularly use more platforms than you think. Let’s share some examples of platform business models that will help you understand the topic better.
When I plan a vacation and decide where to stay, the first thing I do is go to my Airbnb app. I could visit a website like Hotels.com or Google to look for places to stay (which are also both platforms), but I always choose Airbnb. Why? Not only does it allow me to “live like a local” wherever I am, but it is also relatively affordable and offers me a wide range of accommodations.
Airbnb has revolutionized the hotel and restaurant industry. For a company that doesn’t own a property, it has beaten some of the most popular hotel chains.
Airbnb has become successful because of its suppliers too – ordinary people like you and me. Airbnb buyers (guests) attract Airbnb providers (owners), promoting a reciprocal ecosystem from which both Airbnb and its users benefit equally.
Much like Airbnb doesn’t own real estate, Uber doesn’t own cars. Still, it has given the taxi industry a run for its money. Sure, it’s almost always cheaper, but it also offers a much more modern and arguably safer experience. Drivers can pay digitally, share the fare with other drivers and track their journey to their destination.
Uber drivers also get perks. They control their timetable, have access to frequent rewards and can find passengers anywhere – without having to wait at a taxi stand or in long lines.
The Uber platform supports both parties. By managing payments, reviews, and all dispute settlement procedures, Uber makes it easy to be both a driver and a driver – and only accounts for a small percentage of your income.
Chances are you didn’t realize that Facebook is a platform. Think about it: Facebook does not produce original content or own any media. Still, it gathers data and brings in tons of advertising revenue. Talk about brilliant. In fact, you can think of almost any other social network as the same.
By creating a fun, interactive place where people can connect and share content, Facebook has created one of the most influential platforms today. Content created by Facebook users will attract other Facebook users who create more content … and so on. Facebook is a great example of the reciprocal network effects of a platform creating monetization opportunities for the platform itself.
Amazon currently sells over 12 million products to over 200 million visitors per month – and that product count doesn’t include books, wine, media, and services.
What is even more fascinating? Amazon doesn’t own the vast majority of the products they sell. Sure, it has warehouse space, ad space, a handful of product lines, and now transportation fleets … but it mostly sells other companies’ inventory. It enables (simple, fast and inexpensive) transactions between sellers and buyers.
In addition, Amazon brings in billions in advertising, seller fees, and Prime membership subscriptions.
Medium rocked the world of online publishing when it was released in 2012. Bloggers, writers, and journalists could post content online (at no cost) without worrying about hosting a website or getting editors to approve their work. In fact, major news sources and companies – including Sports Illustrated and the White House – have started publishing content on Medium as well.
It became free content for all, and readers benefited anyway. Readers could visit Medium and access a wide variety of new content from thousands of authors. As a platform, Medium manages its website … and that’s it. The company does not publish its own content, nor does it employ authors. It simply connects readers and writers to produce and consume great content.
Last year, HubSpot announced the transition from an “all-in-one suite to an all-in-one platform”. This means that it will be expanded to include hundreds of more integrations that will benefit customers and help them easily expand their tool belt – instead of having to add and master even more diverse systems.
In short, more disparate software means more friction (and frustration) for customers. People are used to either using too many tools that won’t connect or using archaic platforms that aren’t suitable for today’s buyer (a.k.a. your customers). HubSpot plans to fix that.
With the HubSpot platform, you can seamlessly connect your tools, teams, data, and processes to provide your customers with seamless experiences.
Grow better with platforms
The platform business has revolutionized the economy and the way other companies do business. Not only do they bring consumers and producers together and create a valuable network, they also solve countless connection and efficiency problems.
When you’re juggling dozens of marketing tools, you should be working with one platform to streamline your tools, teams, data, and processes. In the meantime, keep an eye out for the platform stores around you – you might be surprised how many you are using on a daily basis.
Editor’s Note: This post was originally published in July 2019 and has been updated for completeness.