April 29, 2022Gig economy

How to build a labor pool for service marketplaces

Over the last few years, service marketplaces have gained popularity after the success of companies like Uber, TaskRabbit and Fiver. And more startups are cropping up to fill needs for labor in unique niches like stadium staffing, home care, delivery, and more. So, what is the one crucial thing that service marketplaces need to scale? Labor. Booming service-based marketplaces need to know how to build a labor pool in order to scale successfully. This post will cover the basics of a service marketplace, where to go to find workers and how to expand the labor force to meet customer demand. 

What is a service marketplace?

A service marketplace connects customers with individuals and professionals who perform specific services. The 4 main functions of these platforms are to:

  • Help customers identify the right service providers
  • Eliminate friction in connecting customers with service providers
  • Offer a seamless payment process for wages earned by workers
  • Provide new jobs and ongoing opportunities to service providers

Labor marketplaces give gig workers new, short-term income opportunities and a broad network of customers. The gig economy model eliminates the commitments associated with full-time jobs and allows workers to build clientele as an independent contractor. Gig platforms are growing and gaining popularity by the day; in fact, research shows that by 2027 the highest percentage of the U.S. workforce will be freelancers. If you make finding and paying independent workers easier, affordable and faster than your competitors, your service marketplace can maintain a competitive edge. 

How to build a labor pool for a service marketplace or gig platform

The success of a service marketplace or gig platform depends on having a large volume of service providers who are readily available to meet a customer’s needs. One of the biggest challenges in a labor marketplace is providing and managing supply of skilled labor. As demand changes, the power to scale staff up or down boosts businesses’ responsiveness and agility. The first priority for any gig leader is to attract and retain a talented workforce. If you fail to keep your gig economy workers happy, you risk losing the crucial success factor: labor.

RELATED READING: Is the gig model right for your business?

Where to find workers

With today’s low unemployment rate, finding workers is a formidable challenge. The first thing to consider when looking for independent workers is geography. Do you want to build a pool of labor for one specific region or do you need a flexible workforce that can work from anywhere?

If you don’t have a physical location, online job posting sites are going to be key to getting the word out to workers looking to pick up short-term gigs. When posting on these sites, make it clear the work is temporary and will be paid as a 1099 worker. Of course, highlight the flexibility of the opportunity in order to attract more interest. There are plenty of niche job sites out there, but this list below encapsulates the best places to post jobs for flexible and hourly work.

Build your labor pool through this list of job listing sites to post openings for hourly workers and contractors

Beyond location, considering the skills your customers need and the type of services they demand will help you target the right type of worker in your job description. Once you have your descriptions finalized, it’s time to get the word out. In addition to the websites listed above, you can share that you’re looking for workers in the following places:

  • Physical locations like cafes apartment buildings and gyms
  • Schools and universities to find students looking for flexible work and extra cash
  • Booths at a job fair or local hiring events
  • Trade organizations’ newsletter, emails and events
  • Professional associations like the local Chamber of Commerce
  • Referral program (if you have existing workers)
  • Car flyers, posters and direct mailers

How to expand your labor pool

Your business reputation highly depends on your relationship with your service providers. Gig workers and independent contractors have their pick of employers, meaning you must stand out with attractive benefits to build a labor pool. Finding talented and reliable workers is a series of strategic decisions, not just job postings.

RELATED READING: 4 ways to motivate and incentivize gig workers

Make hiring contractors easy

As mentioned previous, gig economy workers have optionality and, therefore, want the most seamless hiring and onboarding process possible. One of the easiest ways to attract top talent is by making it simple for freelancers to sign up to work with you. Descriptions need to be short and without cumbersome terminology. Consider using link shorteners or QR codes, so workers can visit your website or job application right from their phones as they view a posting. 

The application process shouldn’t take more than five minutes, and you should only require the bare minimum of information. Follow-up from a completed application should happen instantly—many automated hiring platforms offer this functionality. If you can’t automate follow-up, try to make contact with the candidate within 24 hours of a successful submission. These steps will let potential workers know you value their time and effort.

Offer fast pay benefits

Payment is a major factor in why gig economy workers stick with one platform over another. Research shows that 40% of gig workers would be more motivated to work for a company if it offered same-day pay. Fast and flexible pay offers numerous advantages, including motivating gig workers to return to the same employer for additional work. There are a few ways to make sure your workers get paid quickly:

Offer direct deposit: You can automate payments by offering direct deposit for independent contractors. This way, your workers can get paid faster instead of waiting for a check.

Same-day payroll for independent contractors: Tools like Everee offer daily payroll for gig workers using same-day ACH technology. This means your workers can get paid for their work the same day they do it, instead of waiting for a weekly or bi-weekly check.

Pay cards for contractors: If your workers don’t have a bank account or you just want to offer easy access to wages, you can deposit wages onto a pay card. Pay cards act as a prepaid debit card workers can use to access their income.

RELATED READING: How to pay independent contractors

Create community for workers

Much of the gig industry is characterized by fleeting collaborations and fast-paced exchanges; it lacks the collaborative energy often found in long-term work relationships. Managing a service marketplace business allows you to address this challenge by bringing together a disparate community of gig workers. Although these workers aren’t permanent employees, long-term relationships are possible.

Besides offering services, independent contractors and gig workers can be a community that understands your business values, mission, and goals and therefore work towards your business success. Working with service providers who can advocate for your brand is a considerable advantage. Word-of-mouth is a vital marketing tool in the freelance marketplace industry.

To build community within your labor pool, try:

  • Developing a private Facebook group
  • Fund a local or national meetup
  • Hire for community outreach
  • Establish worker advocates or an advisory board

Working with a team of happy, trusted, and experienced contractors allow you to manage the changing market demands and respond promptly to market trends.

Use tech for service marketplaces and labor pool management

Use technology that is purpose-built for organizations with many independent contractors. Technology streamlines processes like recruiting, onboarding and payroll for independent contractors

Incorporating technology in your recruitment process goes beyond finding perfect channels for your hiring model. It also involves targeting service providers that are fit for your business and streamlining processes. For instance, a considerable percentage of the U.S. workforce uses smartphones to find job opportunities. However, to lure individuals entrenched in tech, you must adopt new hiring channels and avoid conventional recruitment methods.

Invest in mobile apps and other recruiting software to automate processes and ensure that qualified candidates don’t go unnoticed. Technology, including AI-powered algorithms, allows you to learn and understand what potential workers prefer and fine-tune your recruitment strategy accordingly.

Payroll software can improve and simplify your payment functions. For example, automated payroll processes enhance accuracy and efficiency. Also, you will have access to service providers’ payroll data anytime, anywhere. 

A note on compliance: technology can help you manage a contractor workforce more effectively, but it’s important to be mindful of compliance issues. Make sure you understand state labor laws and worker classification before making any technology investments. You may need to seek help from an expert or retain legal counsel to ensure all your technology and process investments are compliant.

In a nutshell, adopting technology solutions allows your service marketplace to function efficiently. Leveraging the benefits of automation and high-speed internet makes it possible to handle vital tasks. Technology also improves your engagement with the service providers and clients. 

RELATED READING: How to choose payroll software

Offer growth opportunities

According to research by Deloitte, millennial job seekers are looking for opportunities to grow and develop their skills. This preference applies to the gig industry as well as millennials make up a significant percentage of freelancers in the United States. Although most people assume that gig workers and freelancers have no room for improvement, you should offer development and learning opportunities to remain competitive in the recruitment market. Invest in your team and empower them to provide better services through training, mentorship and collaboration.

Uber, for instance, launched a learning program for more than one million delivery partners and drivers in six Latin American countries. They focused on helping workers gain new skills like time management, personal finance tips, and interpersonal skills to enhance their growth.

Labor pools need continuous investment

To be a leader in the gig economy, you must build a labor pool that can easily handle the fluctuating market demands and grow your business. Finding the right workers is an investment directly into your business. By building a strong labor pool, you can find reliable independent contractors who are invested in your business’s success and growth. There’s no difference between investing in the quality and experience of workers and the labor marketplace platform itself.

Thoughtfully promote your job opportunities, develop technology to streamline hiring and payment processes, offer learning opportunities, and build relationships with service providers. With the right approach, you can create a strong community of talented individuals that will work alongside you to build your labor pool.

One of the most attractive benefits of a service marketplace? Fast pay. Grab some time on our calendar right now to talk about Everee’s daily payroll platform for independent contractors.