How to Balance Monetization & Growth

Balancing is Challenging

For product managers, this is often difficult to balance between monetization and growth.

If we focus too much on monetization, then we may loose customers. On the other hand, if we focus too much on growth or customer satisfaction, then we may always remain far behind than earning money.

So, how can we ensure monetization without compromising customer satisfaction?

The simple answer is that you can’t. When you are taking money from the customers, this is making them unhappy, they would always prefer a free product or free service.

So, now, let us rephrase the question- how can we ensure monetization without compromising customer satisfaction or growth to a point that your business continues to sustain and grow up to your now updated KPI.

Steps for Balance

When we often talk about monetization and profitability, we often do not deeply realize its impact of potential growth. But anyway, that is a different topic for future discussion. Let us discuss today - yes, we have agreed to curtail our growth to a certain degree in order to gain some monetization (a trade off, product strategy is all about trade offs).

The steps are as follows

* Identify the must-to-have needs

* Identify the good-to-have needs or additional services/features

* Focus on good-to-have needs for monetization

Though identifying “must-to-have” and “good-to-have” may sound simple but this is way more complex than most people think. And this is very rare that a company have properly identified those.

Real-life Example

Now, enough of philosophical talk, let me give a real life example on how to balance the monetization and customer satisfaction.

Recently, I have stayed in many hotels in Vietnam due to my long trip in that beautiful country. What I noticed, there are three different kind of hotels in terms of services

* Offer only basic services like accommodation and associate basic needs like air conditioning, good bed etc

* Offer basic services plus additional services (like cloth washing, coffee machine, water, toiletries etc) for free

* Offer basic services plus additional services at a price similar to or cheaper than the outside market

In this scenario, the basic services are main deciding factors meaning customers take decisions whether or not to take that hotel based on the quality of those basic services. Additional services are not main deciding factors but it enhances customers experience while staying. Additional services of good quality motivate customers to post good reviews (marketing/branding - growth).

Now, can you tell me which hotels are balancing monetization and profit? Let me give you the answer. The third types of hotels that offer additional services at a cheap price.

* They still make some money from selling those additional services

* The customers are still getting some value as those are not pricier than the outside market

* It is a great convenience to get them within the hotel area.

* For example, it felt so good by buying coffee from the hotel provided coffee machine when the weather was not friendly enough to go outside in Hanoi.

The second group of hotels are focusing more on growth. As their customers are getting all additional services at free of cost and so, high chance of getting good online reviews. And of course the first group focuses only on monetization knowingly or unknowingly.

And why play with the additional services mostly? Because as we already discussed above, the basic service is the deciding factor for the customers to choose a hotel. So, here you have to remain competitive about price and quality- not much avenue to play with. After you get the customers with a good basic service, now you can play with additional services.

Continuous Tracking

There is no silver bullet or assurance about ensuring this balance. We need to continuously track the result if the balance is working

• Are we growing
• As we generating revenue
• What is the impact of after implementing new monetization policy
• What's our user base saying
• Is there any way to further optimize it

And etc. We need to check these factors on regular intervals to be sure. Eventually, we will find the balance. Even if we find the balance, please remember that it can be continuously changing- so, monitor and adjust - this will be continuous process.

I hope the concept is clear now. Happy product managing!