Many companies are under-investing in monetization efforts, partly because it's so tough to get right
One concept that has helped unpack this topic as I've worked with @ElenaVerna @Patticus and @bbalfour on the new @reforge monetization track:
monetization as friction 👇
One concept that has helped unpack this topic as I've worked with @ElenaVerna @Patticus and @bbalfour on the new @reforge monetization track:
monetization as friction 👇
Monetization is not an output of growth. It's an overlay on the whole system that can either add or eliminate friction
The art of monetization is applying that friction in ways that aren't in tension with growth but enable it
The art of monetization is applying that friction in ways that aren't in tension with growth but enable it
This is why monetization strategy has to be tied to acquisition strategy from day 1:
If dollars are the currency powering growth (paid mkt, sales) more friction can fuel growth
If users are the currency powering growth (virality, NFX) more friction can grind it to a halt
If dollars are the currency powering growth (paid mkt, sales) more friction can fuel growth
If users are the currency powering growth (virality, NFX) more friction can grind it to a halt
It's also why there is so much potential in levers beyond price. Price is largely zero sum - either you keep a dollar or your customer does
But an initiative focused on allowing customers to pay when and how they want might remove purchase friction with much less downside
But an initiative focused on allowing customers to pay when and how they want might remove purchase friction with much less downside
In freemium businesses you can shift friction away from motions that drive acquisition or activation, and toward stable customers with high willingness to pay
This framework from @onecaseman captures it:
This framework from @onecaseman captures it:
But freemium isn't for everyone. For one thing, you need need to be able to deliver value fast enough that customers will continue to invest in the product and ultimately be willing to overcome the friction to buy
@far33d breaks this down:
@far33d breaks this down:
In marketplaces you can use monetization friction to drive the only metric that matters in the early days: liquidity
That's one reason Airbnb has shifted more monetization onto the supply side as they've become less supply-constrained over time
That's one reason Airbnb has shifted more monetization onto the supply side as they've become less supply-constrained over time
The best incentives drive incrementally by removing friction from a critical path
Often, that means helping a customer activate and receive value for the first time, or convincing a customer to refer another. Most other incentives are wasted.
Often, that means helping a customer activate and receive value for the first time, or convincing a customer to refer another. Most other incentives are wasted.
