Monetization Models in Innovation: Critical Touchpoints

Monetization models are directly tied to the company’s business model. As the foundation of the business’ logic, the business model’s building blocks support the ideation, development, delivery, and evaluation of the monetization model in the pursuit of continuous improvement. Without the business model, the monetization model’s sustainability is threatened.

The business model includes the eight building blocks identified in the image above. The monetization model is most often affiliated with the model’s channels, cost structure, value proposition, and revenue streams.

The remaining building blocks (key partners, activities, customer resources, and customer segments) represent the targeted market/industry and product/service development network & activities that produce the value proposition.

Each internal touchpoint (input) is responsible for supporting and delivering the external touchpoints (output) that represent the customer’s value proposition and the company’s monetization model.

Each component of both models is implemented together in delivering the value proposition. The customer is purchasing the solution explained by the company’s product/ service value proposition with both depending on the business model in order to ensure it is:

• Consistent 
• Qualitative
• Relevant, &
• Effective

The solution offered by the company’s product/service offering is often not perceived unless the value proposition meets the criterion identified above. The marketing of the value proposition is often delivered through the customer acquisition funnel (or marketing funnel).

The customer acquisition funnel represents a series of products, services, and steps/ strategies deployed from the business model with the sole purpose of increasing customer interest. The structure, and elements, of the customer acquisition funnel, will depend on the company’s industry, markets targeted, and customer demographics.

The marketing funnel is delivered by the business model components that make up the monetization model and are dependent on the foundation established by the remaining four components (activities, segments, partners, and resources) to sustain quality. The resulting relationship between the first half of the business model, and the second half that represents the monetization model, is symbiotic. Sustainable revenue cannot exist without it.

The following spreadsheet depicts how each of the models overlap: Business, Monetization, and Customer Acquisition Funnel.

A simplified monetization model may look at sustainability from the following touchpoints:

• I sold a product
• How do I sell more product
• What is my profit?

But………without considering:

• Activities: What activites were needed to develop this product?
• Partners: What partners were needed to build and deliver this product?
• Customers: What customers are served with this solution?
• Resources: What resources are needed? Budget?
• Cost: What is the cost structure for this product? How can we make this profitable?
• Revenue: What revenue streams are available? What channels will be used to promote/market/sell this product?
• Value: What problem is being solved? (What customers?)

The business model’s components do not work in isolation. Supporting ongoing integration of efforts requires a leader, and continuous improvement. The value proposition is not a ‘one size fits all’ solution.

Effective monetization models need to be able to respond to changing customer needs, project requirements, and the environment’s impact on how the problem is defined. Successfully selling a product once does not guarantee a second sale. An adaptive, and informed business model is required. Scalable and modularised solutions are a popular strategy to support business model agility.

Revenue does not occur in a vacuum.

Sustainable revenue is dependent on a thoughtfully constructed business and monetization model architecture that is aligned with the company’s value proposition, product/ service offerings, and customer demographics. The visible, and often final, touchpoint between the business and the customer (B2C) represents only a fraction of what it takes for a business to be successful.