Andy Bovingdon ‘How to generate revenue from a developer program?’ presentation
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Presentation by Andy Bovingdon, VP Product Marketing at Bango, given at Mobile World Congress 2011. Topics covered: Why conversion rates are important * Direct billing * cross operator billing platforms * Payout rates and marketing
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Andy Bovingdon ‘How to generate revenue from a developer program?’ presentation
- 1. How to generate revenue from a developer program?Mobile billing advice to maximize revenues for all Andy BovingdonVP Product Marketing
- 2. The best developer program deliversmaximum earnings for minimum effort
- 3. Ways to make money 3 Indirect Advertising Direct Payments CreditCards Banner Ads AffiliateMarketing PayPal,Google Checkout, Amazon Payment OperatorBilling SearchMarketing
- 4. Mobile billing recommendation #1 4 Focus on conversion rates Higher conversion rates mean higher earnings Give the consumer a clear and simple experience Show clear payment terms Minimize the number of payment steps Ensure most subscribers can pay with one click Operator billing delivers the highest conversions ~7% is typical credit card conversion rate ~60% is typical for traditional operator billing
- 6. Further boosting conversion rates Consistent carrier billing over WiFi Over 50% of connections are now via WiFi http://news.bango.com/ Optimal one-click payment experience Avoid registration, logins, extra confirmation pages Identification and the network effect Remember people & preferences across merchants Failover to credit cards or PayPal Funds unavailable, monthly or daily limits reached No identity, operator billing down, 6
- 7. Mobile billing recommendation #2 7 Use direct billing – not premium SMS Direct billing provides Immediate response with detailed status Full granularity of price points Credit card like capabilities Problems with premium SMS include Delays and message loss Lack of status Restricted price points
- 10. Minimum effort
- 12. New work each time
- 14. Higher earnings drives increased marketingMobile billing recommendation #4 9 Sales Earnings Marketing
- 16. Information, information, information Relate payments to marketing, websites and app use Mobile billing recommendation #5 11
- 17. Questions? Andy Bovingdonandy@bango.com web: bango.comwhite papers: bango.com/wptwitter: @bangodotcom 12
Editor's Notes
- The best solution for developers is one that delivers the maximum earnings from the minimum effortDevelopers are in the business of creating great content, building applications that entertain, educate or enable productivityThey are targeting a wide range of smartphones, tablets and beyondThey want simple access to a viable market that will allow them to make moneyThey don’t want to spend weeks integrating specific operator APIs in order to reach the subscribers. And once they are making money, everyone in the chain is making money
- So how can developers make money from an operator network?Indirectly fund apps or content by displaying advertisingThis has been the Google Android model so farDirectly get customers to pay through app stores, on websites or in-appThis has been more successful for Apple to dateAdvertising is pretty well sorted – lots of great solutions like Amobee, Millennial, Admob…Lets focus on direct payments within this presentation – it’s the biggest messBut don’t forget about advertising – it will come up laterSo what comes to mind when we talk about mobile billing – we have app stores focused on credit card while PayPal, Google Checkout and Amazon Payments try to unify card payments between online and mobile …and then we have operator billing…
- The most important thing with payment is earnings, so lets start by looking at how to maximize earnings. How do you get the most customers paying – so recommendation number 1 is to focus on conversion ratesThe conversion rate is the percentage of consumer that select to buy that actually succeed in doing soSo you want to make sure the most number of people who start to pay actually succeed – aim for 100%Credit cards typically give around 7% conversion rate - by the time you have entered the card number and CV2 code. Even with Bango optimizations we typically get between 10 and 15 percent for new credit card customersBut we do remember customers and deliver one-click purchases the second time giving much higher conversionsIn comparison, operator billing typically delivers in excess of 60% conversion rate – on the first purchaseAnd some platforms like Bango can see in excess of 80% - but more on that in a momentSo what does that really mean?
- Why are conversion rates so important - lets take a simple exampleTake 1000 customers each buying a $10 itemConsider credit card with a high 98% payout rate (2% fee) and operator billing with a low 60% payout (40% fee)But the credit card delivers 10% conversion rate (which is generous) compared to 60% for operator billing (which is low)In this example operator billing gives over 3.5x higher earnings than credit cardIn fact everyone involved makes a lot more money from operator billingThe only way credit card can come close to operator billing is if you force the consumer to register the card up front This is what Apple has managed to do quite wellBut not everyone has a credit card, but they do have a phone that has a billing agreement with their operator
- The higher you can get the conversion rate, the higher the earnings for everyone involved. A few percent extra conversion rate makes much more impact than a few extra percent on the payout rate.So where are mobile sales lost today? How can we further boost conversion rates? Here are a few things that Bango Payment does that makes a big difference:Firstly – Bango is now recording around 50% of all connections via WiFi. It’s no good having one click operator billing if it only works half the timeUse a payment platform that can present the same consistent billing experience on all connectionsSecondly – in Bango we have what we call Walkers Law – this says that each additional step or page presented to the consumer will lose around 50% of the customersSo avoid forcing people to register first, or enter payment details every time – this is why credit cards and PayPal deliver so much lower earningsClearly present the payment terms – the cost, frequency, refund policy and so onThat also helps reduce customer careBut once they click to buy – that’s it. Don’t insist on presenting yet another “are you really sure” confirmation page.Consumers are familiar paying via Amazon, PayPal or cards – don’t throw them weird surprises.Payment is about two things – authenticating the identity and processing the transaction. Remember mobile has identity. For example, Bango works with operators to get identity from gateways.Once you have identity single click payment is simple with operator billing, cards etcIf you cannot get identity from the operator or device there are a range of other methods – like sending a one-time textOnce we have authenticated identity we can use it across all connections and merchants – like a payment networkEven customers new to a merchant are likely to be known by Bango – so we can present the optimal payment experience.Lastly there are a range of things that can stop operator billing from succeedingThe customer may be out of funds, reached their spend limit or the billing system may be offline. In this case an alternative payment method should be used
- When you talk about operator billing many people immediately assume Premium SMS, aggregators and WAP billing… all that is legacy and its not doing the industry any favours. So my second mobile billing recommendation is simple – Operator billing needs to be direct API into the billing system and not PSMSSMS is great for messaging and it actually helps with user authenticationBut it sucks at paymentsIt introduces delays and is prone to message lossIt has little if any status reports and only allows a limited set of price pointsFor example, if I bill via PSMS, how long do I wait for confirmation? How do I know the charge succeeded? This all results in high refundsAnd increased customer care costsDirect billing needs to take money from the subscriber and also refund money back – focus on the core parts
- Once you have direct billing the developers need to be able to use it with minimum effort – keep it simple and don’t reinvent the wheel.Support the existing payment platforms that top developers already depend on, don’t introduce new onesThere are a few of these - companies like Bango do all the work to integrate directly with each operatorPayment platforms like Bango also take care of complexities likeDeveloper on-boarding and unified out payment, Operator rules and regulations, tax handling and currency conversionDevelopers get one API with consistent error status, customer care tools, reporting and out paymentsIt lets everyone focus on what they do best…Developers can build great apps and services without additional per operator effortThey get new operators and consumers through their existing billing integrations in existing live appsOperators can focus on real differentiation and value added services
- While conversion rates make the biggest difference – don’t ignore payout rates you need to keep competitive.By all means retain a good premium over typical credit card fees – the conversion rate allows thatBut keeping much more than 10% - 20% these days is not viable or competitive in the longer termEncourage special rates for specific developers or productsLike music or books where royalties do not permit high feesGood payment platforms like Bango easily copes with negotiated ratesDon’t think of payment in isolationDevelopers that get higher earnings from an operator will spend more of that money with the operator on advertisingMarketing drives further sales and more revenue for everyone - which in turn drives even more marketing spend
- Lastly, your payment platform could have the best conversion rates and highest payout rates, but without great reporting all those benefits are invisible to developers and impossible to measure. It is really important to – get really clear and detailed reportsAccurate information about each transaction is key to fine tuning sales and further increasing those conversion ratesWhat sells best – refine your sales offer and measure the resultsWhat price works best – try a few and measure
- And again, don’t forget all the bits that surround the payment -Like the marketing that drives the salesThe user experience and flow across any websites into an app store Or the usage within an appGet accurate information that links payments directly to marketing and user experienceThis makes it possible to adjust campaigns, websites or applications to maximize revenues