Ultimate Guide API Products: How to Transform Your APIs Into Revenue
How can your API drive revenue for your business? Turn it into a product. This guide will explain everything you need to know to transform your APIs into API Products.
What is an API?
If you use the internet, a smartphone, or any piece of technology - you interact with APIs daily. But you may not realize it because APIs exist to make our lives easier and are essentially designed to be unnoticed.
An API, or Application Programming Interface, is a program that facilitates communication between programs and users. Once it retrieves the requested data, it presents the information to your consumers.
Think of it as a server at a restaurant. They take your order, pass it along to the chef to prepare your food, and hand it back to the server - who then brings it back to you, thus ensuring a pleasant dining experience.
APIs act the same way, taking a request from you to perform a specific function, passing it along to the platform that has the data you want, and executing it without you having to do the heavy lifting.
A clear example of this is with platforms like Zelle. If you want to send $10 to your friend, Zelle's API takes your request, then sends it directly to a bank like Chase, which sends the money through Zelle, directly to your friend - in seconds.
What Is an API Product?
What makes an API an API Product? How it is packaged, managed, and marketed.
From a structural standpoint, an API product is a collection of related APIs and rate plans for APIs.
An API product entails putting resources towards productizing and supporting your API as a marketable solution and actively helping companies innovate through your API.
When you put business logic behind APIs to package them into a solution with a robust product-market fit that solves a problem for someone, they stop being just a collection of APIs and become an API product.
An API provides access to a set of data, while an API product offers a clearly communicated solution to other companies - be it providing traffic information for ridesharing apps to improve their service or licensing candidate contact data for a recruiting provider.
A great example of a company leveraging the power of API productization is Allstate Roadside Services, offering more than 20 white-label applications to their partners.
With API calls representing 83% of all web traffic, API products are a critical fixture in the digital world- and those businesses that fail to adapt may find themselves falling behind the competition that embraced this aspect of digital transformation.
Creating an API Ecosystem to Expand Your Business
Whether you are in the process of API development for your business or have APIs already established, you should consider adding API products to your business model.
To help you better understand the role API products play in the modern digital economy, let's go back to our hypothetical restaurant.
Almost no restaurants grow their food to serve their customers. Instead, the owners rely on multiple suppliers to stock up on the groceries needed for the chefs to cook your food.
As a result, our hypothetical restaurant is not an isolated, self-reliant entity but an ecosystem of partners and suppliers that keep the business running.
The same approach applies to the modern API market. No company - even some of the world's largest corporations - builds their entire platform internally nowadays.
Instead, they create an ecosystem of API products packaged together to build an entirely new product.
It's important to note that they're not simply re-selling APIs in this case - they combine third-party API products with internal developments to create something new.
That way, by adding business logic to your APIs, you can productize them for other organizations to use as part of their day-to-day operations or even core services.
How Your Business Can Benefit From API Productization
API productization is a conceptually different approach to APIs that brings with it a wide range of unique benefits for your business:
1. Expand Your Business Through Your Partner Network or Ecosystem
API products make it easy for developers and non-technical users to integrate your APIs into their workflows.
This increases your adoption rates and popularizes your company among your target customer base.
As your API consumers become more dependent on your products, creating an ecosystem for API products builds a strong rapport with your potential customers, making it easier to turn them into paying customers or upsell additional services.
If your partners have better access to your data which helps them sell more, you can leverage that to forge strong relationships and win more customers in the long run.
Another significant way for businesses to expand their ecosystem is by making their API products accessible to citizen developers.
Citizen development - business users with no technical skills building IT products - is the new trend rapidly changing the face of the API market.
According to Gartner, citizen developers are projected to outnumber professional coders 4 to 1, resulting in a growing need for accessible development tools and products.
Non-technical users don't have the time or patience to read through heaps of documentation or get through a lengthy onboarding process - they need something accessible and digestible to get started right away.
Turning an API into an API product helps bridge that gap, opening your products to an entirely new market segment.
By bundling a set of APIs that are commonly used together into a single product, you provide streamlined access to essential information without excessive clutter to help the developer quickly implement an application.
2. Build Additional Streams of Revenue
In the last 18 months, companies have been actively seeking product managers to look at APIs as products to go and help other organizations figure out how to use their data instead of just making it available.
This reflects a major paradigm shift in how companies start treating their APIs as tools for improving business outcomes and increasing the value of corporate assets.
As part of this trend, companies start charging their users for access to their APIs - for instance, Salesforce.com generates 50% of its revenue through APIs.
As for now, few companies are actively adopting API monetization as part of their business model, but that's about to change as APIs continue to permeate every aspect of our lives.
There are plenty of monetization models for productizing your APIs that will drive ROI - regardless of size or lifecycle stage.
Businesses can offer API products as:
a complete package, where consumers, or more often - select approved partners, have unlimited access to the API resources.
a targeted "plan," where customers have limited access to the services provided. Bundling API products into smaller "plans" allows you to control access to the API resources.
Offering multiple packages makes your API product more appealing to a broader market. Even if your business does not exclusively create APIs, you can still market API products.
3. Expand & Better Understand Your User Base to Drive Better Business Decisions and Promote Innovation
To develop purposeful API products, you have to ask yourself: Who is this serving? And what is it offering?
Once you start to expand and understand the needs of your user base, you can configure your API to catch the eye of developers, and other businesses that deem them valuable can help grow the audience even more.
Monitoring how consumers use your products is crucial to understanding what they want, and API portals give you the analytics data to monitor usage on a granular level.
Creating a clearer picture of how your API is used enables your team to build a full API ecosystem around your products that will encourage innovation from your product and dev teams - as they will be forced to evolve the product to meet the consumer’s demand.
As you collect data and understand your user base more, your understanding of your business will evolve.
You will be able to make intelligent and practical decisions about the products you offer because you will have a mountain of data to support your choices, allowing your products to stand out against competitors.
You will find ways to simplify processes for your customers, allowing you to hit the marketing gold mine–the ability to promise and deliver on a product.
APIs give you the ability to listen to your customers and evaluate the underlying cause of pain. Then, you can build API products that anticipate your customer's needs, driving your business to new heights through the introduction of new ideas, builds, or even entirely new products into your ecosystem. Utilizing the data provided by API products will reduce resources allocated to R&D and increase the adoption rate of new releases.
Common Pitfalls to Avoid When Building an API Product
While API products can help scale your business, if they aren't developed and managed properly, they can cause users to avoid them and ultimately negatively affect the organization.
These are some of the most common pitfalls made when building API products:
1. Inability to Manage Your API Products
Building outstanding APIs is the first step in expanding the impact beyond internal use cases. APIs require a place to go where they can be accessed by technical (developers) and non-technical people alike, from senior management and product owners to HR specialists and marketers.
An API portal is a tool that organizations can use to productize their APIs and increase adoption rates–similar to an app store for your smart device where customers can search for and download products.
API portals serve as bridges between providers and consumers, giving them easy access to your brilliant API products.
Without a robust API portal in place, it isn't easy to effectively manage your API products development, marketing, and security.
2. Failure to Estimate Resources Required to Manage APIs
As organizations grow, so does the need for a robust API ecosystem that allows managing a rapidly increasing number of API assets in a scalable way.
Productizing your APIs means they will be under more stress and require additional maintenance.
API portals can help scale your API products by gathering all corporate API assets in one place, making it easier to manage them systematically.
When paired with your API gateway, you can centralize control to ensure high performance and enforce security measures.
The most consumed APIs are easily discoverable have required documentation and transparency, making API portals an essential tool to oversee the entire API ecosystem for your business.
It's critical to be proactive when considering all logistics and confirm that you are ready to accept this challenge or need to add more internal resources first.
3. Serving API Products Only For Developers
With the digital landscape transformation, API products are no longer developer exclusive. Zeroing in only on developers while building out an API product is like arbitrarily restricting certain groups of people from going to your restaurant.
Citizen developers in the form of marketers, C-suite players, and other key stakeholders are all finding ways to utilize APIs as part of your API ecosystem to drive innovation, revenue, and collaboration.
It would be best if you approached API productization as a way for you to reach and serve businesses that can benefit from your API products.
With proper management, you can still allow your developers to your API products while simultaneously packaging "plans” for other businesses.
Start Productizing Your APIs with Achieve Internet
Just like no restaurant can function without suppliers, no company can build great products at scale without API products in the modern technological landscape.
Transforming your APIs into a solid revenue stream requires attention to detail and patience. You cannot build a successful API product overnight, but you can make a product that will transcend your customer's expectations and meet their growing needs.
Remember APIs are put in place to understand your user base better, anticipate their desires, and build products that meet those demands.
Many businesses are turning to platforms like Apiboost to help them build a powerful API Portal to transform their APIs into API Products.
Achieve Internet is Apiboost's premier agency partner, which has vast experience implementing Apiboost and building bespoke developer portals and API portals using Apiboost as a foundation.
Apiboost is a true extension of that expertise - not just an add-on. This, along with our partnership with API management vendors like Apigee, makes Apiboost a superior alternative to others on the market.
Ready to take on the digital transformation of your APIs? Reach out to us today for a free consultation.