Whether you’ve received services from a gig worker, know someone who has served as a freelancer for independent and ad hoc jobs, or have even considered joining the gig marketplace yourself, it’s safe to say that by now, many of us have experienced the direct impact of the gig economy boom in some way.
Currently, 57 million workers participate in the U.S. gig economy, making up 36 percent of this country’s workforce. According to Deloitte, by 2027, freelance and other gig workers are expected to account for most of the U.S. workforce.
The global pandemic accelerated this already-growing sector, with the significant loss of jobs and increased job insecurity. According to CNBC, over the past year, the number of U.S. freelancers has increased by 2 million compared to 2019. During the pandemic, these freelancers contributed $1.2 trillion to the U.S. economy, highlighting “the importance of the alternative workforce [in] helping keep a disrupted economy afloat.”
With the gig economy continuing to grow and expected to eventually become the norm for many, it’s important for companies to have a competitive advantage that sets them up for success in dealing with a shifting and increasingly gig-focused landscape.
Here are common situations companies may encounter when working with the gig marketplace and how to resolve them.
When we discuss supply and demand in the gig marketplace, we're talking about consumers or their clients’ demands. For industries like food delivery services, the need for food shoppers and delivery people directly depends on demand from the consumer side (i.e., how many people request food delivery from a website or app). If there's a surge in demand on the consumer side, and delivery requests are increasing (e.g., such as during COVID, which more than doubled food delivery app’s business), then companies would need to hire more food shoppers and delivery people to meet the demand for this service.
Although demand for food delivery services rose during the pandemic, food service companies had difficulty finding enough drivers, creating delays and stretching business models thin. If people can't get a timely delivery service through one company or app, a consumer might buy from another -- as the food industry is highly competitive. This alone can impact these organization’s revenues.
However, if there’s a surplus of delivery people, the consumer will have a good experience with timely deliveries and multiple delivery options. However, a surplus of drivers has its own downside. For example, there could be 100 drivers in the area waiting to make deliveries. If there’s only 50 available deliveries to be made, that leaves 50 people on the sidelines waiting for the next delivery that may come their way. Or, they may opt to work for multiple companies or apps, maximizing the possibility that they’ll stay busy in an overly saturated market.
To avoid losing revenue, companies must proactively balance both the consumer-side demand as well as the number of gig workers on the platform. To be proactive, companies must know their business's inner and outer workings and understand the ebb and flow of seasonal patterns and retention. In non-pandemic times, leaders must also understand how the economy can impact their businesses, from customer demand to hiring practices.
This past year has been unusual with the pandemic and its drastic impact on the economy. It’s not something for which businesses (or workers) planned. With COVID, companies had to pivot to keep up with rapidly shifting demands. For example, DoorDash “added two million drivers since September 2020” to their team. Also, Uber mentioned in a press release earlier this year that, "We’re launching a $250 million driver stimulus to boost already high earnings for drivers. Boosted incentives and guarantees will help welcome existing drivers back to Uber and ensure first-time drivers do well as they learn the ropes."
To accurately analyze performance across an entire recruitment funnel, companies and recruiters must track multiple metrics. Often, the top of the funnel - which includes driving traffic, monitoring the number of clicks and impressions, and receiving applications from gig job applicants - gets the most attention because of this.
Recruiting clients want to hit their goals, but they don’t want to do so at a cost that will lose them money in the long run. For example, let’s say a corporate client's goal is to receive 1,000 gig applications in a week, and they know that for every ten applications they receive, one will convert into a hire. If every hire makes them $1,000, the company will not want to spend more than $1,000 for ten applications.
This is where end-to-end (E2E) job analytics come into play. However, these can be very difficult for even the most sophisticated recruiters to digest, not to mention their clients.
Recruiters and recruitment marketing agencies should look at the whole funnel, assessing quality, conversion, and optimization. They can also review their client’s data frequently, depending on the volume in terms of acquisition, helping to establish monthly, quarterly, or annual goals.
Additionally, when clients communicate their hiring goals to a marketing strategist, the strategist can help them break these goals into specific targets, such as application and CPA goals. From there, marketing strategists can monitor trends against those established goals, determining if the goals need to be adjusted.
Further, recruiters will start to examine down funnel quality, comparing trends and goal achievements month-over-month. For instance, when digging deeper into the funnel and looking at conversion rates, they may find that costs-per-application targets are unreasonable, thus requiring adjustment.
In addition to tracking the full funnel with end-to-end job analytics, sometimes companies have a significant number of workers sitting somewhere in their funnel, stagnated. These people may have already applied or have been hired, but they have yet to complete their first gig, project, or shift. In this case, the company has spent money recruiting and hiring this worker, but they have yet to receive a return, as the gig worker has failed to complete their first assignment.
If companies can’t push these workers through the funnel to the other side of hiring, then it's just sunk cost. Sometimes companies will spend even more money on the worker in the future, trying to get them back into the funnel or move them along in the hiring process. But if the gig worker still doesn’t get through his or her first task, then that sunk cost increases.
No matter the reason, this stagnation directly impacts cash flow for the company and the gig worker.
When addressing this situation, companies need to understand the full funnel, and how people may be getting stuck somewhere along the way. Often, a visual is best for companies to understand the flow from initial impressions to hire and beyond.
Here’s a graphic that illustrates each step of the recruiting funnel.
For each step of the funnel, employers need to make sure people move through each stage quickly and efficiently, eventually making it to the hiring stage and beyond. In the example of food delivery gig workers, companies need these workers to complete their first delivery to get revenue.
One way companies can try to combat this is to ensure they have the appropriate outreach program or marketing assistance to engage these gig workers. For example, companies should provide engaging email flows or responsive call centers, incentivizing people to complete their first task (and future tasks) as a gig worker. Something that’s being leveraged now is if a worker makes a certain amount of deliveries by a certain date, they get a bonus.
If a company differentiates themselves by providing benefits and added value, it helps to obtain and retain workers.
As the company or its recruiting firm digs down into the metrics and trends, they may discover that the recruiting costs for these gig workers will be higher than initially anticipated.
To address this issue, the company or its recruiting firm must understand the willingness to pay for each metric, such as cost-per-application or cost per first delivery or drive. Once the metrics are established, these numbers serve as crucial measuring sticks, dictating the next recruiting and optimization steps.
Of course, the metrics need to be reasonable, based on the goings-on in the marketplace. Companies must understand that the metrics should be tied to the reality of the market. For example, the client may state that they want a specific cost-per-hire cost, such as $2,000, however based on market data and trends, that cost-per-hire may be wholly unreasonable at that point in time.
Further, the company must understand that the marketplace changes based on the economy, politics, technology, and competition. Or, in the case of last year, a global pandemic. Companies should understand their cost targets, but remain reactive and agile based on market trends -- ready to make adjustments as needed to attract the best gig talent.
Another situation that companies will encounter with gig workers, especially younger gig workers, is how their job applications appear on mobile and through social media platforms. If a company’s job applications aren’t smartphone-friendly, it could be losing out on qualified candidates at the top of the funnel.
Also, having candidates provide too much detail and information in a job application is a recruiting shortfall, as it makes these applications too lengthy and often too complicated. Needing a lot of information does not optimize well on mobile devices or social media platforms. If it takes more than a few minutes to complete the application, companies will lose out on younger workers who might not spend the time to complete it.
The job application should only request enough information to confirm that the applicant meets the basic qualifications for the position. Many gig roles do not necessarily require specialized qualifications, such as food delivery drivers, where you don't need a specific vocational degree or a certain level of educational attainment.
Many times, if a worker passes a background check, has a valid driver's license, and can confirm that they have reliable access to a vehicle, they can work with these specific employers -- so it’s easier to keep the application process short and ask for only the most necessary information. If the process isn’t simplified on the front end, those job applicants could hit roadblocks down the funnel.
Further, employers must ensure that their applications and application process are both mobile-friendly and social media optimized, making it easier (and faster) for job applicants to move through the funnel to that first gig. If candidates run into issues getting an application to display properly or find the process is clunkier on the platform or device they’re currently using, some may take the time to push through to the end anyway or even try to access it through a different channel. However, they’re significantly more likely to lose their patience or interest and abandon the application altogether.
It's really about shortening that process, making sure it's clear and concise, highlighting why this position is attractive and competitive. Most people know what many of these gig roles entail, so speed is more critical than explanation.
According to NASDAQ, “[i]t’s certainly been an unprecedented year for both businesses and employees around the world, and if one thing is certain, it’s that we are in the midst of a freelance revolution. . . . Now, the question is when modern companies will understand where the workforce is headed and make the necessary change to adapt to the new rules of the game, leveraging freelancers to build their businesses.”
With the gig economy growing and becoming more common in the workforce, you’ll want your business to get ahead of this rapidly changing economy.
If you would like to know more about your recruitment marketing data and how to remain competitive, contact Recruitics!