You’ve Opened APIs...Now What?
Open application programming interfaces (APIs) create digital interfaces that allow third-party businesses to integrate with digital financial services (DFS) providers, such as banks and telcos, to build solutions for low-income households and others. Services like payments can generate new product and revenue streams for DFS providers while enabling third-party developers to innovate for the poor. But once a DFS provider creates open APIs, how does it get its APIs into the hands of developers who can build new solutions?
DFS providers should not fall into a “build it and they will come” mindset when opening APIs. In my experience at Simple, BBVA and now at Sila, where I build developer tools for creators, I have seen many providers fall into this trap. Often, after launching their open APIs, they are left scratching their heads and wondering why local developers are not flocking to their APIs. They know their open APIs would add value for third-party developers. So why don’t the developers realize it?
The answer is that, like any product, open APIs need to be marketed. Before launching open APIs, a well-defined go-to-market (GTM) strategy can help DFS providers establish targets, promote uptake for immediate use, cultivate partnerships with the builders of tomorrow and help collect data to map progress and incremental successes. Here’s how to get started with a GTM strategy for your open APIs.
1. Segment your target markets
Start by looking at the target markets you identified for your open APIs when you started developing them. What assumptions did you make about the types of solutions they would want to build? What capabilities are they currently using to build those solutions? How is your API a better alternative? What avenues can you use to reach each of your segments? Start by asking these questions and grouping your target developers into a few segments.
2. Build a go-to-market strategy for each segment
Most DFS providers will have at least two customer segments for their open APIs. First are the early-stage fintech entrepreneurs who may be looking for partners to help them build and launch new business ideas. Second are existing businesses that have an immediate integration need. Each requires a different GTM strategy.
Fintech start-ups often value self-guided documentation, sandboxes that allow them to try APIs before paying for them and events where they can meet potential business partners and learn about new APIs. Self-service is key.
Large tech companies are more likely to be searching for alternatives to their existing API solutions, may require more specialized content and may require more targeted interventions, with sales teams and events like chief technology officer dinners on the back of tech events.
Below are some of the different approaches commonly used in GTM strategies.
Whether you are doing direct or content marketing, test out different channels. For example, I have found that engaging with developers on Reddit and Twitter tends to be more effective than doing so on Facebook and Instagram. And the more actionable the content marketing, the better.
3. Be patient and stick with it
Some target markets will take longer to adopt APIs than others, which means DFS providers should know that they will not see increased revenue right away. For example, a merchant who wants to increase his or her payments functionality might start using an API right away. However, a fintech that is creating a savings app will need to integrate the API, finish building its app and devise a GTM strategy of its own before it can build a customer base and start generating revenue.
Given customers’ different time horizons, it is important to remind internal stakeholders that open APIs are a medium-term strategy. Many of the revenue and business opportunities require time to mature before they start paying returns on investment. These timelines also have implications for your GTM strategy. You may have one approach to promote rapid adoption by segments that can use your APIs right away. But you may need a longer-term strategy for other segments.
Getting involved in the drivers of the local developer innovation ecosystem — accelerators, universities, developer academies and boot camps — can be an effective part of a long-term strategy, which you can start doing early on. Consider hosting hackathons or a weeklong sprint, and make your API developer support team available during these events. Accelerators like to host this type of activity every six months and are often open to being your partner in creating a pathway into your ecosystem. Also, developers at universities or boot camps often end up bringing the APIs they have tried at these events into the larger businesses they end up working with at the end of their studies.
4. Be wary of big fish
It is very easy to focus on the big customers in a market and devote all your energy to selling to them. International customers such as WhatsApp, Amazon, Google and even big local start-ups can be compelling targets. One or two deals can get your platform to scale and profitability.
Tempting as it can be to go after these big fish, doing so frequently leads to a failed GTM strategy. Larger customers are adept at using their market power to extract the best terms from their partners. They also have a regional or global scale and frequently view local DFS providers as interchangeable components rather than as equal partners. They also tend to have precise requirements, and providers risk building a platform that is optimized for a single customer rather than a broad segment of customers. Finally, these customers can change strategy and switch geographies and partners quickly, leaving providers with a gaping hole in their finances.
A good GTM strategy will target a large customer segment and build a steady pipeline of customers who onboard regularly and have fairly similar needs. It may not rapidly lead to huge scale, but it will lead to a more stable customer base and, eventually, a healthier business.
5. Measure what matters
Establish a few metrics that match the business goals of your APIs, and track your progress. For example, you may have opened APIs to strengthen existing customer relationships by allowing third parties to create more digital products and services for your customer base. If that’s the case, track the number of products available, the verticals covered (like loans or deposits) and the number of customers using each product. If your goal is to grow your API business, you will want to measure the number of registered developers, the number of production applications, the uptime of your APIs and the number of calls made to your sandbox and to your production APIs. Over time, you can start to measure revenue generated from each product.
Ask developers how likely they are to recommend your open APIs to their colleagues, and use this information to measure your net promoter score (NPS) — a gauge of customer loyalty. If your developer partners are making apps for your end-customers, consider including in the partnership agreement that they should report their end-product NPS to you. This will allow you to check whether customers who are using third-party apps through your APIs have a higher or lower NPS than the rest of your customers, helping you to identify potential reputational risks.
Tailor your go-to-market strategy
Once you have identified the business goals for your open APIs, and once you understand your developer segments, defining and implementing a clear GTM strategy increases your chance of success and helps you to grow new business models. Start broad, test multiple approaches, but quickly focus on what works. A clear GTM strategy is a crucial part of the open API investment you have already made.
Shamir Karkal is co-founder and CEO of Sila.