The Real Road to Customer Monetisation
Date Posted: August 7, 2017
Some potholes, hills and heavy traffic that lay ahead.
These days, no conference, business breakfast or publishing event comes without a lecture on customer monetisation. This is good, no doubt about that. It helps in shifting the product-centred focus which is still pestering the industry to a customer centred approach, which is a frequent topic, too. Unfortunately, most of the suggestions made aren’t very helpful. The lecture was summed up in a chart, where customer engagement and publisher’s products and services formed a nice exponential curve. Books and magazines that were bought in stores or at a newsstand ranked lowest, and when the customer was an active member of the publisher’s social community, it ranked highest. In between was everything from subscriptions to apps, from newsletters to event participation. The main message was to pull the customer up the hill, step by step, into your publishing universe. Unfortunately, most publishers will hear a different message: Don’t try this at home, kids. First, the sheer size of enlarging the portfolio to that extent is daunting. Second, these lectures are stop short in giving a practical roadmap. No one’s mentioning the huge organisational changes that will be needed, nor the financial strains or the enormous challenge of getting the IT right. Don’t get me wrong: I’m all in favour of that approach but painting the big picture isn’t much of a help.
Most publishers are aware that the two limiting factors are money and know-how. Do I have the right people and the financial resources? By looking at the big picture, the answer is no. So, is it big business only? The answer is still no. Only the approach has to be modified.
Building a community should be the first goal. This might sound like putting the cart before the horse, but it is the foundation for the future extension of the portfolio. Customer monetisation won’t work without the customer. You’ll need their feedback at every step. You’ll need behavioural information, information about their needs, their price sensitivity and so on. A community is the best platform for a continuous gathering and exchange of this kind of information. I can’t stress the importance of this too much. These exchanges with your customers will help you to provide the right services and products at the right time at the right price. It helps to identify miscalculations and poorly performing products and services, faster than any other method. You can use it to develop products and services together with your customers. In short: It’s essential.
The next step lays its focus on the IT. Customers are demanding a seamless experience. Furthermore, publishers will need much more data and information and they will need more and more tools for the different business processes, be it for app development, content creation, handling of rights and royalties, or sales and marketing. On top of that, customers and partners are demanding more data and information, too. The complexity is rising exponentially. Therefore, it is essential to follow a coherent IT strategy that keeps the whole as simple as possible. Otherwise the complexity will limit your ability to create new product and services and to react to customers’ demands. Complexity increases the costs and time needed for maintaining the coherence of workflows and the exchange of data with partners and customers alike.
The key is to find a system that is large enough to cover most routine tasks, from financials to social CRM, from rights and royalties to analytics. It is easily customisable, flexible in structure and in creating new business processes, and offers standard APIs to integrate as many tools as possible. It’ll become the linchpin of the IT structure. Niche products won’t do the trick. In a perfect world, this system will come in modules and as a cloud service to reduce the financial strain. Another criterion for the new IT structure is the ability to implement new products, services and business processes, because this is what you’re supposed to focus on in the future. If every change and extension of your business requires a major overhaul of your IT, your IT isn’t part of the solution anymore.
The third important thing, is to be very clear about the expertise you have in-house already, and what you will need in future. You may want to use partners before building up know-how internally, but be aware that this may come at a price. The highest cost today is data, especially when it’s data about and from your customers. So, this will be the balancing act between out- and insourcing. Just keep in mind that employees might cost more money, but partners are paid a bonus in data.
On an organisational level, flexibility is the key. Not only because lean development of products and services are state-of-the-art today. There will be stress fields between customer-centric and content-centric approaches to certain customer demands, too. An active community is key to balance this out. If you listen to your community and if you analyse their behaviour, you will be able to identify their needs. And you will be able to test new products and services quickly with the members of your community. Game developers have already been doing this for years – successfully. The key is to communicate frequently and rapidly.
But the lowest hanging fruit of them all is to create newsletters. The content is already there, the format is highly flexible, the costs of trial-and-error are comparatively low and most of the needed tools are already in use. They are easy to tailor to the needs of a particular target group and are useful in promoting other products and services. They could be subscription based only or financed by advertisement only and you could even do both at the same time. If you direct readers to landing pages, you will also get behavioural data with which you can improve your content, its presentation and whom to target with it.
Customer Monetisation isn’t for big publishers only, but a way to make smaller audiences more profitable. The road is still bumpy, but less steep then you might think.