In the current climate, many organizations are looking at ways to diversify their revenue as a way to ensure business continuity, growth, and agility as the market fluctuates wildly. That has led many business leaders to wonder how to create another revenue stream that aligns with their existing product or service. A key way to drive new revenue is through monetizing an online community of your existing customers, prospects, and others in your network.
What is monetization?
Monetization describes the action or process of earning revenue from an asset, such as an online community. An organization might look at monetizing its community as an extra revenue source. To create a more agile business model that can respond to change. However, not all online communities need to be monetized — the decision is as unique as your business goals and strategy.
Additional benefits of adding revenue streams
Apart from creating additional revenue and a more agile business model, having more products and services can help you increase the value experienced by your members. Products and services that complement each other, such as events, premium content, and consulting services will encourage members to continue spending with your brand. You can also respond to needs more readily and introduce a product or service to address challenges your members express.
Having a diverse product portfolio can reach a wider audience as well, if your chosen product or service targets a different audience than your core market.
Moreover, releasing products and services in response to member needs can help them feel like they matter to your organization and their views are heard. It can help your organization appear more innovative and clued into market needs. In challenging times, brands that continue to innovate grow seven times faster than their competitors
How to find new revenue streams
There are many places to look at when you’re finding new revenue options in your community. The most obvious place would be the current market, such as spotting any gaps in the market and assessing what competitors are doing. New developments or trends might create the perfect opportunity to create a new revenue stream (such is the case with Google phasing out cookies, paving the way for publishers to generate data that delivers greater value for sponsors). Certain parts of the economy will always be growing no matter the climate. Look at where people are spending money and then see if there’s alignment with a new product or service your community can deliver.
You can also turn to your existing customers (and community members) to gather feedback on any products or services they find most helpful. You can analyze the usage of your existing product and see if customers will benefit from any add-ons. And you can speak to those in your wider product ecosystem, such as partners and sponsors, to gauge their appetite and need for an increased product portfolio.
The community will also be a rich source of insights into customer needs and challenges. You can look at discussion threads to see where a new revenue idea can solve a recurring challenge, or you can ask your community members directly.
How to build revenue streams
Once you have decided to create additional revenue, there are five steps that you can take to make this plan a reality.
1. Run your plans past your members
First and foremost, your online community needs to be a trusted space where people feel they can have authentic conversations and meaningful relationships. Your monetization cannot get in the way of this otherwise your engagement and retention will suffer (and revenue alongside it).
Therefore, run any plans past your members, either as a whole group or a core group of your most engaged members. They can give you feedback on what they think, if your product messaging and positioning is hitting the right spot, and where improvements can be made. They might also help to build hype around a new product launch — particularly to other community members who might not have seen the new product yet. It can be worth creating a special area in your community for beta testers so you can return to them for future product tests.
It’s also worth noting that upselling to your existing members will be a key go-to-market strategy for your new product and service offerings. Your loyal customers are more likely to purchase add-ons and additional products over time, helping your business grow. It’s more cost-effective to upsell to current customers than to go hunting for new ones. Letting them feedback in the early stages of your monetization strategy will gain their buy-in from the start.
2. Gain internal insights and buy-in
As well as members, your colleagues and senior leadership team will have important views and insights into creating new revenue models. The customer success team, for example, might have valuable insights into current customer challenges that your existing products and services don’t address. Likewise, sales might tell you about common questions that come up consistently in the pitch process.
3. Brainstorm your revenue options
Once your current customers and internal stakeholders have weighed in, and after you’ve researched the market, you may have a good idea of the different revenue options that’ll suit your business. For an online community, you might want to consider:
- Private rooms
- Sponsored content and brand placement
- Subscription & Membership tiers
- Advertising on platform
- Community lifetime access option
- Selling merchandise
- Affiliate marketing
You don’t have to do all of these different revenue ideas and to begin with, I’d recommend focusing on one or two monetization tactics to gauge your members’ response and the impact of the new revenue stream on your business growth.
As Phil Garner, Managing Director at Future Science Group explains about its monetization strategy, “Thanks to our communities, a significant proportion of our revenue is now coming from advertising and sponsored thought leadership.”
Find out more about new revenue streams in our Smarter Sponsorship guide.
4. Understand additional resources
Once you’ve decided on your new revenue model, you need to look at what resources it needs to get off the ground. For example, sponsored content and events will benefit greatly from first-party data. Everything you need to sell products normally will apply to your new revenue stream. So don’t forget to set aside time and budget for marketing efforts, product development, and market research.
5. Choose the right technology
To monetize your online community, you need a community platform that can support your plans. If you need to generate first-party data, the business network platform must be able to do this, if you want to offer tiered membership, the community technology must have flexible access rights.
How to get multiple revenue streams
The process for introducing multiple revenue streams to your membership is much the same as developing one new product or service. With a major caveat — don’t be tempted to do too much, too soon, as you may find your resources are spread too thin to give each new product the effort and time it needs to be successful. You also risk cannibalizing your sales (where one product competes with another in your portfolio and impacts its sales).
Creating new revenue streams is as involved as developing a new product — but you’re not starting from scratch. With a community, you have an engaged, readily available customer base who you can upsell to and gather feedback from. Developing a new revenue stream is an effective way to boost your organization’s longevity and innovation, while delivering more value to your members.