Get Clear on Revenue Drivers to Increase Digital Product Success

Your revenue drivers and user needs are multipliers of each other

By Greg Calacouris

Today, in a period where securing funding has become harder and expectations for profitability have risen, there is more pressure than ever for digital products to show return on investment. Focusing on how a product makes money can feel like the antithesis of designing for what users want —but it doesn’t need to be. Revenue drivers and user needs are multipliers of each other, and finding the right balance can lead to unique and innovative solutions.

Working with clients across multiple industries, I’ve seen common pitfalls where the two become disconnected:

• Focus only on revenue: The priority is to optimize for acquisition, and engagement, and conversion - all at the same time. Typically happens when there is pressure to show results for quarterly earnings. The product then doesn’t solve a user need and lacks customers, or has dark patterns tricking existing consumers to do things they don’t want to, driving them away.
• Misunderstanding of relationship between revenue and user needs: One team wants to solve a user need, but doesn’t understand the revenue drivers another team is responsible for. Typically happens in larger companies where internal departments aren’t aligned. This leads to a company shipping their org chart.
• Focus only on customer experience: It starts with great intentions to be user-centric, but it’s never the only goal. Typically happens when creating a new product or a redesign of an existing one. The design becomes compromised later when revenue drivers are bolted on, making the experience feel impossible to use.

Not striking the right balance between your revenue drivers and user needs risks trading short-term gains for the erosion of long-term trust with your users. Getting it right is a win-win scenario.

In this article, we’ll cover three key areas of consideration:

• Why being clear on business objectives allows you to focus on the right user need
• How different revenue drivers shape your product
• Finding the right balance between revenue and user experience

Why being clear on business objectives allows you to focus on the right user need

Having a clear understanding of what your business objectives are shows what the right user problem is to solve.

Take TechCrunch as an example. As an advertising-based business the most obvious tactic would be to insert more ads on every page. But that approach could drive users away in frustration. Several years ago, when TechCrunch sought to redesign its experience, Work & Co focused on an approach to seamlessly bring people back to the top stories once they have finished reading an article, so they can continue reading. This gives users more of what they want–top-notch reporting on the business of the tech industry–as a way to serve more ads.

When I worked with a financial services client they came to us with a challenge: they needed to grow their engaged digital users, because they knew people who did were more valuable customers. With that focus, we turned to their customer’s needs: they wanted more from their credit card rewards. The solution: provide proactive, contextually-aware widgets that help users discover what rewards they haven’t taken advantage of. This helps customers get more value from their cards, and keep them engaged regularly.

Knowing how different parts of your product make money can shortcut design decisions and tie them closely to business objectives. If your goal is retention, you might prioritize features that add more value to users each month. If your goal is acquisition, you might emphasize educating users during onboarding.

How different revenue drivers shape your product

Your business objectives inevitably make their way into the product in the form of what is needed to drive revenue. Different revenue drivers impact a product in different ways.

Typically there are five different revenue drivers for a digital product:

1. Sales: When a company primarily sells a product or service to customers. Typical for eCommerce or two-sided marketplaces.
2. Retention: When the product must engage existing customers on a regular basis. Typical for subscription services or free to play games.
3. Usage: When a specific behavior drives the most value. Typical for advertising-based companies (more views) or when a specific, high-value interaction has measurable impact.
4. Customer acquisition: When getting new customers is more valuable than increased engagement from existing users. Typical for growth-stage companies, or products with a freemium model.
5. Data collection: When data provides valuable insights that a company would otherwise be without or need to purchase from a 3rd party.

What’s notably absent is customer experience metrics —such as CSAT or NPS. In addition to revenue drivers you still need to measure your customer experience too. If you have no users then you won’t make money, no matter what your revenue model is. A great product experience is a strong indicator for how successful your product can be.

Finding the right balance between revenue and user experience

A product’s revenue drivers derive from a wider business strategy. But, they need to be fine tuned to fit the product you’re creating. I think about it by asking: “What do we need customers to do, to achieve the business objectives?” It may be general (“as long as they keep coming back each month”) or something specific (“Record a run at least 3 times”). With the benefit of extensive analytics, you can become more specific about what those behaviors are.

Deciding how you achieve your business objectives is where your revenue drivers and user needs can be multipliers of each other. Centering on customer needs is fundamental in product design, and the same principle applies here.

By understanding the common patterns that come with different revenue models, you can begin to see where your customer needs and revenue can overlap - and ultimately what your product might look like. Exploring where it’s beneficial to intentionally deviate from them can create unique experiences.

The more your revenue model and user needs complement each other, rather than compete, the likelier it is that your product will succeed and cement its place in the market.

About the author

Greg Calacouris is an Associate Director in Work & Co's Strategy practice, with more than a decade of experience. He's passionate about connecting business opportunities with user needs in order to deliver impactful digital products. At Work & Co his clients have included Gatorade, Audacy, Mastercard, and Verizon.