Self-Serve and Sales-Led API Monetization - Unlocking Product Led Growth
There are as many monetization pitfalls as there are methods of monetizing APIs. As the market has shifted over the years, selling APIs and creating product userbases has become more important than ever. Today, we’re going to discuss a strategy that can lead to explosive growth – let’s talk self-service and product led growth.
The Shifting Product Landscape
The reality is that selling APIs is more difficult than ever before. The modern landscape has shifted dramatically over the years, moving both the consumption model as well as the value proposition for most adoptees of API platforms. A monolithic API provider with structured UIs and full-service integration plans used to be the gold standard, delivering a value proposition of a full-service partnership with full-service integration. As the industry and community has shifted towards automated microservices and product led growth, which deliver value through specific and targeted use cases, the idea of buying into a traditional integration approach has diminished substantially for the average API consumer.
The Decline of Sales-Led Growth
What this has ultimately resulted in is a shift of power between the provider of an API product and the consumer. When integrating a service requires bringing a team on premises to install proprietary systems and launch custom server clusters, the power and cost of this API management overwhelmingly lands in the camp of the software. As this has shifted, the calculus has changed substantially, with the adoptee becoming the powerhouse authority.
This has undermined the traditional pathway of sales-led API monetization and, subsequently, product growth. Sales-led is conceptually based on the idea that you have something someone else wants, and as such, you should set the price and API monetization strategy as close to the upper limit as possible to extract value and revenue. The problem with this growth strategy is that it assumes the product has a clear value proposition and is an outstanding choice. Today, the consumer has never had so much choice and flexibility, so the idea that a product can extract value through this pathway is not really true in most industries anymore.
All of this adds up to a simple truth – adoptees are more empowered than ever, and they need to have a solution that meets their specific needs with as little friction in adoption as possible. Each hiccup along the way reduces the likelihood of success and long-term retention of API users. When the authority was in the product, things could afford to be complex or high-friction – after all, the product was what the product was. In today’s API marketplace, the product has to be fast to deliver and easy to integrate with as few initial blockers as possible.
The Self-Serve Model
Enter the self-serve model. The basic idea of the self-serve model is to lower the friction to onboarding as much as possible by allowing the adoptee to decide on their API consumption and API usage: what they need, how they need it, and how they will pay for it. This can take several forms, but the core concept remains the same – low friction leads to high adoption. Self-serve delivers some major benefits – let’s take a look at a few of them.
Reduced Onboarding Friction
Self-service delivers reduced initial friction through a variety of mechanisms. Using click-through terms of service can help reduce initial legal paperwork and hurdles for an API business and the API developers using a given service alike. Automated integration of an API gateway with a simple step-by-step process can reduce the time to market for integration of the product. Simple payment options can reduce the need for client approvals and expenses. Even something as simple as allowing the user to decide between pre-pay and post-pay agreements can be provided far more simply and effectively through a self-serve business model.
Enhanced User Experience
The self-serve API monetization model is all about prioritizing the experience of the user, and as such, it delivers the best user experience for both adoptees and developers. Self-serve delivers ease and autonomy – not only is the product easy to use, the adoptee has autonomy to choose how they use it. This autonomy can result in long-term increases in adoption and retention, but even more importantly, it results in a product that is easy to use and easy to advocate for in a competitive API ecosystem.
Scalability and Extensibility
The self-serve model boosts scalability and extensibility by allowing adoptees to choose exactly what services they need when they need it, increasing revenue growth without losing direct monetization upsell opportunities. Standard systems of old might require a full rollout before any benefit can be gained, but with a self-serve approach, this barrier is lowered substantially. If a user only needs a low tier of functionality now, but is likely to use a higher tier later, they will prioritize a solution that allows them to increase their services at will over a system that requires manual deployment or support. With tiered pricing options, a flexible usage based pricing model is attractive to users who may not know their true product usage requirements, where they are granted API access, and which then results in the SaaS company to ensuring API revenue generation.
Cost Effectiveness
Self-serve systems are cost effective for all parties involved. Because you can tie business logic to the services being rendered at the developer level, costs can be controlled by scaling only to the demand your clients have placed on your self-serve product. For the adoptee, costs can be controlled by using only what API call volume (or whatever monetizable metric you’ve chosen) is needed at the moment and scaling over time. When an organization decides to open APIs up to the public, they not only join the API economy, but diversify their revenue recognition. This increased cost effectiveness positions your API to be a powerhouse option, as flexibility is almost always going to be valued quite highly on a ranked list of attributes for services.
Accelerating the Flywheel - How Self-Serve Feeds Product Led Growth
Self-serve models unlock a massive potential benefit in the form of product led growth acceleration. product led growth is a simple concept – the product should sit at the center of your growth, driving user acquisition, conversion, and retention. A self-serve model is the first big step towards accelerating this process.
Consider what a typical self-serve model looks like in practical terms. First, your user onboards and decides to check out the product. From that moment, everything rides on the product – all the user needs to experience is their “Aha” moment, the moment where they realize the product is a good fit for their use case. Flexible adoption through a self-service API business model increases the chances of this happening, and a good product should provide ample opportunity for multiple “Aha” moments.
Once the user has had that moment, however, the self-service models kicks the product led growth model into high gear. As the adoptee accelerates their use, the sales team should engage their efforts, identifying new use cases and leading the charge on new product iteration. As the adoptee becomes an evangelist for the product, pushing for adoption and further iteration, the product itself becomes better and more attractive, bringing additional users into the fray, while accelerating the use of the existing client base.
This strategy has proven itself time and time again for exceptional growth – and all it takes is the creation of a strong product and a low-friction self-serve approach.
Creating Evangelists
One big benefit of this model is the creation of product evangelists. A product evangelist is a dream come true for many developers – an adoptee who falls in love with the product to such an extent that they evangelize its use and accelerate user awareness and acquisition. In order to effectively creative product evangelists, you have to think like a product evangelist – so what specifically does this type of developer want?
Product evangelists need:
- a product they trust,
- a product they can share widely and
- a product others can validate their experience with.
Effective self-serve models and product led growth strategies should meet these demands. A product that is low-friction and transparent in its pricing and functionality is a product that can be trusted – this can be bolstered even further through adequate and effective documentation. A product that is shareable is one that has clarity as to the value proposition – a product should have clear benefits and should document these benefits through blog posts, analytics, customer case studies, white papers, etc. Finally, a product that can validate experience is one where a new user can be influenced into adoption and immediately see the value in the product – in other words, a validating product is a low-friction product.
Conclusion
Ultimately, a self-service model is an incredibly powerful way to enable product led growth in API monetization, and should be considered within the full context of the form and functionality of the API. With proper attention, developers can create an incredibly powerful product led growth flywheel that is powered by a self-serve model which compounds evangelists into new evangelists day by day – and all it takes is a great product and the right intent.
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