How 3 Top On-Demand Companies are Redefining the Industry Market leaders are using these strategies to stay ahead of the competition.

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It's no secret the on-demand economy, pioneered by companies like Uber and Airbnb, is still growing rapidly. Just check out this graph showing the rise in income from "side gig" platforms from 2012 to 2015:

Source: Small Business Labs

While the number of people participating in the on-demand economy is surging, this doesn't mean the picture is completely rosy for everyone. Increased competition and automation are both threats to the market share of the major players as more companies compete in the space.

Established on-demand companies are finding it harder to retain quality users that they ultimately derive revenue from. One report found that a paltry 4 percent of Uber drivers were still driving one year after signing up.

Retaining quality "contractors' – whether that be drivers, freelancers, hosts, or couriers – is crucial to reducing turnover costs and maintaining a high level of service. Simply put, if on-demand marketplaces are unable to attract and retain reliable talent, they won't last long.

The number one reason on-demand workers leave? Pay. Logic has it that the companies empowering their workers to earn and profit the most will succeed in the long-term.

To find out how the top on-demand companies are working to increase profitability, we spoke with executives at Postmates, 99designs and Turo. Check out what they had to say below.

Postmates

Kristin Schaefer, Senior Vice President – Finance & Strategy

Hurdlr: How is Postmates helping drivers become more profitable?

Postmates: Since the inception of our business we gave customers the opportunity to tip for excellent service. Over the past 5 years we've dramatically improved the efficiency of our platform to enable the fleet to do more deliveries per hour, which leads to higher earnings.

Hurdlr: What is the indicator that correlates most in Postmate retention? Total earnings or another factor?

Postmates: To date, we've paid over $350M in fleet earnings. We also ensure that they have the tools, resources, service support they need to get the job done efficiently, including supplemental insurance protections for incidents and the ability to deduct a higher number of work related expenses, and Postmates are also eligible for free Unlimited subscriptions.

Hurdlr: What features/initiatives are you working on to increase earnings potential for Postmates?

Postmates: We are constantly looking at ways we can improve the experience -- and earnings for our fleet. One piece of this is making our product the best and most efficient out there, which then yields higher earnings for individual Postmates. We communicate the best times for Postmates to jump online to make to make the most. Also, once the delivery is complete, we make it clear to the customer that they have the opportunity to tip.

99designs

Pam Webber, Chief Marketing Officer

Hurdlr: How is 99designs helping freelancers become more profitable?

99designs: At 99designs, we believe steady, follow-on work is the ticket to more profitability for our designer community.

To help our designers get more follow-on work, we take steps to educate them on how to earn it. For example, we developed a Freelancer toolkit where we give them ideas on how to find follow-up work. We explain the "do you want fries with that" approach and other techniques to start a follow-on conversation with the client after their first project. We also use marketing techniques to put the designer in front of a client. For example, we feature the designer and their work in follow-up emails and throughout our product flow to encourage the customer to continue working with them.

For those who perform well on 99designs (our Top Level designers), we find ways to get them in front of more clients with more regular work. For example, we give our higher performing freelancers access to higher paying work. We also give them the ability to advertise custom services on their profiles that include pricing, turnaround time and their creative offering to more easily kickstart projects with clients.

Turo

Steve Webb, Head of Community

Hurdlr: How does Turo help hosts increase their profit? Do you implement "smart pricing" like Airbnb to identify peak demand and rent more days, or offer resources to help hosts deduct their vehicle expenses?

Turo: We offer numerous ways to empower Turo hosts to increase their earnings, including opting into our automatic pricing, offering delivery of their vehicle to travelers, and providing free professional photography for their listing.

Hurdlr: Does Turo see increased host profitability correlate with increased retention?

Turo: Turo has hosts of all sizes on our marketplace, and we often see that the longer a host is on the marketplace, the better they get at maximizing the earnings from their vehicles.

These on-demand companies are working hard to solve the contractor profitability problem -- because if they don't, both users and workers will simply switch to a competing platform.

Finding a mutually beneficial model for both platforms and users is the single-biggest challenge facing the on-demand economy today. Will anyone be able to solve it?

Disclosure: This is brought to you by the BIZ Experiences Partner Studio. Our goal is to feature products and services that we think you'll find interesting and useful. If you purchase them, we may get a small share of the revenue from the sale from our commerce partners.