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Talk by Elena Verna, Head of Growth, Amplitude:

Amplify Sessions - Amplitude

Catch up or rewatch the highlights from the #1 product and growth conference.

amplitude.com

Highlights

• Revenue is an outcome (not a KPI) of a successful monetisation strategy
• Monetisation is a core component of growth model - which includes acquisition and retention

4 step monetisation model

1. Monetisation introduces friction

• how much friction can your customer and growth model sustain. Price < Perceived Value + Friction

• When to charge: perceived friction reduces with increased engagement → the later you charge, the higher your perceived value and lower the friction. Allows the customer to understand what they are paying for. This is why usage-based pricing is picking up.
• This is where companies bring in trial vs freemium vs reverse trial → give them a glimpse of the value they’re paying for.
• Trial leaves a lot on the table in terms of usage and ignores the opportunities of indirect monetisation (for eg, usage by non-paying customers can lead to acquisition of new users who will pay).
• SurveyMonkey spent 0 on marketing for first 10 years → 60% of their users were free users and they helped acquire new customers
• Conversion rate on freemium is low (5% on avg). Users optimise their behaviour to avoid paywalls.
• Reverse Trial combines best of both worlds - starts with trial of full product, and when it ends it moves to freemium (rather than cutting them out). Leads to more participants in your growth loop

2. Who are you monetising?

• Think about it in terms of use cases - five components: problem, persona, alternatives, why, frequency.
• Centred around the problem you are solving - in your customer’s words
• It’s mistake not to name your competitors. It’s important to understand the customers’ view of who they are comparing you to.
• Why: solve for their price / save me time / save me pain (best one) - you make my life easier
• Frequency: use cases we pick should be daily/weekly/monthly frequency → don’t pick ones that are forgettable
• Start with 3 use cases tops. Add use cases as you grow

3. Fit your existing monetisation model to use cases

4. How will you sell?

• Most successful companies have to play in both product-led and sales-led
• In product-led sales, the product qualifies a lead for sales. You start with usage, rather than marketing
• What do we anchor our monetisation on: outcome / usage / features

• Outcome: Airbnb only makes money if you find and book a host to stay with
• It’s hard to start off with this though. For eg, how do you measure “collaboration” to take a cut of that? Hard to do for b2b software.

• Feature-only monetisation creates sleeping bears: I buy the product but don’t use it. I’m a paying customer, but not a user anymore. What happens if you poke me and remind me I’m still paying for your product? I churn.
• Gyms and nutrition apps have a lot of sleeping bears.

Optimisations = finding the local maxima to your existing model

• Most conversion issues are due to a lack of awareness among customers of your monetisation model
• MongDB feature walls → showed free customers the paid features. Led to double digit relative lift of conversion from free to paid

• Next big opportunity is to align monetisation usage to your growth model
• Krisp:
• Before - had 240 min/week free. But majority of people would burn through that in the first day.
• After - switched to 90 min/day. Led to 25% lift of conversion from free to paid.
• Allow growth teams to own optimisation + collect data on model changes.
• Create monetisation council with stakeholders to decide on model changes

Visual notes by Bulent Duagi