In consultation with our clients, one of the most common questions is how to identify and prioritize opportunities for direct external API productization (and, ultimately, monetization). It is also quite common that projects like this remain deprioritized on the backlog because they lack a plan for getting started.
The problem with this strategy is that not every company is leaving it on the backlog! We frequently see how API-only product offerings from new market entrants are disrupting traditional businesses. This leaves traditional enterprises having to play catchup to ensure they remain competitive and retain their existing customers. Below are a few of the most common areas to investigate to jump-start your plans for API monetization & productization.
First, Look Internally (it’s easier):
As any product manager knows, customers surface their complaints or desires to all areas of the organization, and it is no different from the case for API monetization.
💡 In our experience, outside of product management, your sales, customer success, and customer support teams will be the top internal indicators as to whether there is an opportunity for API monetization in your business.
However, it’s important to phrase your questions to these teams broadly to ensure you expose API-centric opportunities even if the customer has never said, “I could really use an API to solve this problem.” (if only life were so easy!)
Below is a short list of questions that will uncover and guide opportunities as well as real-world examples we’ve run into that will help provide more context to the opportunities these questions help to uncover.
Q1: Have customers asked us if there is a way for us to export our data into a different system they use as a part of their regular workflow?
Q2 & Q3: Have customers asked us to sell a single part of our overall solution on its own? Have we lost customers to competitors selling cheaper/simpler versions of our product?
Q4: Do you have open or free APIs published today and do you know they are being used?
💡 One of the first pieces of advice we generally offer to clients considering releasing external APIs (even if free) is to do so only within some set of usage constraints.
So what happens if you’ve checked all of these sources and turned up nothing? Two possibilities exist: 1) there truly is no opportunity among your current customers to release API-based products, or 2) you have a chance to be first and be the disruptor in your space as opposed to being disrupted.
Lastly, if you have already identified an opportunity, this article discusses how to get your monetized API to market as quickly and as low-risk as possible.
‼️ Unfortunately, we tend to deal with more clients operating off their back foot (i.e., losing business to API-first competitors) than the front foot (being first to market) because this type of disruption occurs across industries. However, if you are lucky enough to have the first-mover advantage still, we recommend you capitalize on this as quickly as possible.