Communication in the gig economy: buying and selling in online freelance marketplaces
Overview
The gig economy is global and growing exponentially. In the US alone, millions of buyers and freelancers contribute $1.2 trillion in value to the economy. Often in relatively anonymous interactions via text-based messages, buyers first post call-for-bids for their gigs, and in turn, interested freelancers submit bids to offer their services.
Yet, while 59% of U.S. companies use a flexible workforce to some degree, more than one-third of the opportunities are never filled or completed.
Recent research published in the Journal of Marketing suggests that ‘uncertainty’ during these interactions leads to high rates of gigs that go unfulfilled, reduced bid success, or less-than-optimal pricing for freelancers. So, what can be done to improve the success rate for both buyers and freelancers?
Research points to several key principles buyers should use to entice freelancers to bid:
- Moderate length: Successful buyers keep their calls for bids succinct.
- Task information: Buyers should avoid excessive task information – too much information makes the gig appear overwhelming, restrictive, and prescriptive.
- Limit personal information: The less buyers describe themselves (and instead focus on describing the task), the more freelancers apply.
- ‘Concreteness’: Research points to only a moderate to level of ‘concreteness’ as attractive to freelancers, and if buyers are too concrete in their calls for bids, the task appears narrow, reducing the gig’s appeal.
- Limit affective intensity: Affective intensity reflects the proportion of emotive terms included in a message. However, calls for bids are more effective if they are formulated relatively impassively. Overly enthusiastic project descriptions, for example, raise freelancers’ suspicion that the project is too good to be true.
Buyers also face uncertainty when deciding whom to hire and how much to pay. By managing these uncertainties through their bids, freelancers can affect their chances of winning bids and their price premiums. Freelancers are not necessarily natural marketers, but here is what the research suggests they can do to increase their marketability:
- Stars matter, communication too: Online reputation systems are useful, but they also create entry barriers to new freelancers who are starting out. Fortunately, winning gigs and achieving price premiums also depend on freelancers’ communication.
- Mimicking the buyer: In line with the mantra of adaptive selling, the call for bids provides a starting point, and mimicking the buyer’s task information and affective intensity increases freelancers’ success - even if the buyer seems impassive.
- Personal information and ‘concreteness’: Freelancers should always offer personal information and be concrete. Freelancers’ chances of success and price premiums increase if their bids contain more personal information and are at least somewhat concrete.
- Build relationships: The strongest predictor of bid success is a pre-existing buyer relationship. Freelancers should focus on developing buyer relationships.
This research shows that buyers and freelancers in online freelance marketplaces should carefully manage uncertainty in their communications to improve their chances of achieving success in the gig economy.