You’ve been there: “we’ve got this KILLER app, and we’re going to make MILLIONS by selling this.” It’s one of the most exciting conversations tech entrepreneurs have before and during the launch of their transformative product. And the beauty of it is: no one can say ‘you’re wrong’ as you stir up a plot to world dominance in your preferred creative space. Our goal here is to look at ways to refine those conversations and help founders understand the scope of opportunities to monetize available to them. 9 out of 10 times, tech entrepreneurs think too small. Let’s take a look at why:
There are a variety of ways on how to monetize your app. Whether it was built with the intent to sell something, a product or a service, or built to solve a problem for free, this exercise should help any team focus on where their real value is, and begin to think of ways to leverage that value.
Here’s a three-step process that we’ll walk through:
3. Pinpoint what is unique about your engagement with your users
1. Focus on why your users come to you (what do they trust you for?)
First, let’s look at why your users come to you. If you’re a store, it’s logical to think they want to buy your stuff. If you’re a service, it’s also logical to think they’re using you to solve a problem. If you’re a freemium utility, it’s also logical to think they’ve found your solution useful and that’s why they’re hanging around. All of these are true in part, but they’re not the reason why your users chose you. This is why your scope of monetization may be limited.
Your grandmother could have thousands of followers on Twitter if she spent her waking hours tweeting about pastries and retweeting stars from The Food Network. At the same time, you could build a wifi connected, app-controlled dryer that sorts and folds your socks – and never have more than two customers. How could both of these be true?
We’re in the age of Amazon, Facebook, and Google. Today’s consumers have millions of options available to them, to solve any problem they can imagine. They choose products because they’re easy to find, relatable, and they like them. Need is no longer a driving factor. In other words, socks may remain unsorted FOREVER unless someone figures out how to expose that brilliant technology. Point in case, if it exists, its number one prospect (me) doesn’t know about it – and that’s a huge problem.
Note: A quick google search lead me to this video of a robot doing ‘Sockifying’: 436K views – what a proof of demand!
Try to understand what drew your users to you. What do they like about your communications, your experience, your service? Maybe you’re like AMEX, and even though your distribution is limited and expensive, your service is so incredible that users love dealing with you. Maybe your service is terrible but your brand is brilliant, and users chose you because they like to talk about your tech, and to be considered an insider with you. If you can pinpoint why you think your users chose your product / service / tech, you can figure out what they get from their relationship with you, which will help you understand what’s fair for you to ask of them. This is the foundation of your offering to customers, partners, and affiliates.
2. Identify the needs of every other business/organization facing your audience
Next, let’s look outside of your service and focus on your space at large. Who else values your users? Maybe you’re ‘blue ocean,’ and anyone could use your technology. But think about the people who ‘choose’ to use it. What do you know about them? What else are they likely doing? Could someone else in your space, facing your audience, benefit from a customer nudge through your platform?
Credit Karma does a great job here. Their ‘appeal’ is that they allow users to monitor their credit score. But once inside their system users are exposed to all kinds of financial institutions, credit card offers etc. Because your credit score is directly related to your access to funds, they’ve built a service that gives you access to your reporting for free, and makes money by referring you out to organizations that can help you use the score you check via their service. It’s a perfect system: User: “I want free access to a credit report I understand” so “I choose Credit Karma to tell me about my score” therefore “I trust Credit Karma to make sense of my credit rating” and “I’m likely to trust them to recommend other products that depend on my credit score, to me.” They’ve identified #1 – why users trust them – and built relationships with everyone in their space who may be interested in a customer’s credit report.
Another way to look at this would be: If my users trust me for X, what else could I help them with that is related to X? If Samsung or LG ever decided to open up a partner marketing relationship on their laundry appliances, including a coupon to a sock sorting service with each unit might be a great way for them to open up an advertising revenue stream on top of an already successful product line.
3. Pinpoint what is unique about your engagement with your users
Finally, what’s truly unique about your engagement with your users? Since we already know why they’re coming to you and who else is interested in the same users let’s focus on what’s really unique about your interaction. Is there something happening in your app, that wouldn’t make sense anywhere else? I’ll give you an example: I’ve been lucky enough to work with some brilliant entrepreneurs who are launching an app that’s an effective user-generated highlight reel of the most beautiful locations on the planet. The only way to get to any location is to travel so whether or not this move is deliberate, they’ve created a sort of boon in a trillion dollar industry. Scratch that Forbes said Business Travel alone eclipsed $1T dollars… in 2013…
But no one in that space is building a way for users to really share theirs in-person experiences. These things happen indirectly via Instagram and Facebook, but the industry is focused on the same old same old: check out this photo of a resort you can stay at for $599/night. There’s nothing wrong with that, it’s certainly working. But wouldn’t these businesses, that spend billions competing for a share of tourist’s dollars love to partner with an app that gets travelers excited about visiting new places?
In this example, the unique element is that while the industry is focused on ‘making travel accessible’ to folks (letting them know where they can stay, and how much it costs), this little app will help tens of thousands – maybe millions – get a real taste of how incredible a new stay might be: they help ‘make travel desirable.’ This unique engagement is exactly what they may focus on building their business around.
If there are users downloading your app, you’re already 90% of the way there. It’s harder than ever to get the word out, and even more difficult to communicate why your tech is valuable in the split second a prospect is focused on you. Try to understand what helped them make that decision to download. Think about what they might like about you – not the problem you solve, or what they may need. Understand who else is trying to do the same thing you are. Then identify what part of your engagement is unique. This will help you blueprint dozens of ways to work with partners, advertisers, customers, affiliates, investors and more. Go big! I’m looking forward to it.