Four tips from a developer who built a sustainable business on Alexa with In-Skill Purchasing

With twelve years of experience in information technology, Tapan Chauhan and Angadveer Singh have been on the cutting edge of developing new customer experiences. They were intrigued by the possibilities opened up by ambient computing when Amazon introduced Alexa.

At the time, Chauhan and Singh were employed in full-time roles. They began to offer freelance services to help brands build unique voice experiences for their customers. They were encouraged by the positive feedback from clients and prospects. As a result, they decided to quit their jobs in 2020 during the pandemic to start their own firm, Smart Voice Studio.

What started as an agency building voice experiences for clients has now grown to a firm working across a diverse range of sectors from real estate and digital marketing to retail and healthcare. Their agency has now grown to become a five-employee firm that builds its own Alexa skills, in addition to offering consulting services for clients.

Chauhan and Singh attribute this diversification in their business to the increased revenue made possible by In-Skill Purchasing (ISP). ISP enables developers to add value to their customers by offering premium digital content within their Alexa skills for a fee.

"After having built Alexa skills for several clients, we realized that we should work on our own skills as well," says Chauhan. "This was because we knew that we were capable of building experiences that customers love. More importantly, with ISP, we had the belief that we can monetize our Alexa skills."

Today, Alexa Skills developed by Smart Voice Studio contribute to over 40 percent of all the revenue generated by the business. ISP accounts for all of the Alexa-related revenue.

In this article, Chauhan and Singh offer four tips for the Alexa developer community to develop an engaging and potentially lucrative ISP premium experience.

Tip #1: Create a differentiated yet simple premium experience

Smart Voice Studio’s two most popular Alexa skills are Sleep sounds of Wind and Sleep sounds of Thunderstorm. The skills offer customers a premium experience – the inspiration for which came while Chauhan and Singh were helping a client build a meditation skill for children. The skill offered children the ability to mix sounds – for example, that of a particular voiceover artist and a particular ambient sound.

"At that time, we thought – yeah, it sounds really good when we mix ambient sounds with some kind of voiceover or background track - a violin or piano or any other instrument," says Singh.

They began to research the Alexa Skills store to see if such premium experiences existed in the ambient sounds space. They found that most ambient sounds skills offered premium content that either had an expanded library of single sound options or played the same sound for a longer duration than the free version.

"This was our aha moment," says Singh.

The developers decided to mix their base ambient sounds with those from different instruments and offer that as the premium content for their customers. This helped differentiate their Alexa skills from other ambient skills. They saw an overwhelmingly positive response from customers with 90% of those who started a free trial going on to becoming paying subscribers.

Singh suggests that developers look around corners and spend time conducting basic research to determine what premium content will help them differentiate themselves in their category.

Tip #2: Present friendly upsells early to new customers

Chauhan also recommends that developers should not be too aggressive in their upsells. Looking back at their initial upsell messaging and frequency, he believes they might have been too pushy. The examples below highlight the contrast between their initial and refined upsell messaging.

Initial upsell message: With a Premium Subscription, enjoy limitless access to our distinct sounds blended with the ambiance of the wind to help alleviate stress. Would you like to try?

Refined upsell message: Sleep Sounds of Wind. Immerse yourself in a calming ambient soundscape of wind designed to help alleviate stress. In addition to that, access our week-long free trial, which offers the ability to play our distinct sounds blended with the ambiance of the wind. Would you like to try that out?

The first message, while shorter, didn't offer the opportunity for consumers to experience the premium content for free. In addition, it did not contrast the premium content versus the free content in a clear way. The updated message, though longer, is friendlier, welcoming, offers a free trial, and highlights differences between the free and premium experience. The developers have seen a 25 percent improvement in the offer acceptance rate since they made this change.

The upsell message is only one element of the offer strategy. Another key factor is the timing of the upsell message.

"Initially, we were very aggressive as we presented the upsell the very first time a customer engaged with our skill. We quickly learned that customers did not like it," says Chauhan.

They tested multiple options such as upselling the first, second, or the third time a new customer engaged with their skills. They found that the first time was too soon, as customers did not have the chance to evaluate the free content. The third time was too late as the skill might have lost out on potential premium customers. The developers landed on the second session because they felt that if new customers were willing to engage with their skill again, they would see some value and will be receptive to hearing about premium content options.

Tip #3: Refine the upsell interval by studying customer behavior

The upsell interval is also a key factor in keeping customers engaged. Singh suggests that developers carefully study customer behavior to dynamically determine the optimal upsell interval.

"If new customers say 'No' when the upsell is presented during their second skill session, it is a signal that they would like to experience the free content for more time. So, we don't upsell to such customers in the very next session. We let them take the time with our skill," says Singh.

Singh suggests extending the upsell interval depending on how many times a customer says "No." The more the number of 'Nos', the longer the interval between upsells. For example, if customers do not sign up for a free trial in the second session, the next time they receive an upsell would be after four more sessions. If they still say 'No' after four more sessions, the next time they get an upsell will be six sessions after that – the developers wait for a longer interval before presenting the next upsell.

Because the skills play ambient sounds, Chauhan and Singh present the upsell at the beginning of a session. This way, customers are not interrupted with an upsell message after they have fallen asleep listening to ambient sounds.

Tip #4: Conduct research to determine the price of your premium content

As can be observed from the prior three tips, Chauhan and Singh firmly believe in conducting research, running experiments, and studying customer behavior before landing on an optimal strategy. Pricing is no different.

"We looked at skills on the Alexa Skills Store with greater than 1,000 reviews and researched how they were pricing their premium content," says Chauhan.

They typically found three subscription price points that were common based on their research – $0.99/month, $1.49/month, and $1.99/month. Chauhan and Singh decided to price their premium offerings in the range of $0.99 to $1.99 per month.

Alexa continues to show increased momentum – today, there are over 500 million Alexa-enabled devices across the world. This growing pool of customers motivates Chauhan and Singh to continue to build engaging experiences for their clients and for their customers. In addition to building their consulting business through word-of-mouth feedback from their clients, they are also tapping into other channels such as partnering with digital marketing agencies to help their clients build engaging voice experiences.

"ISP has been a game-changer," says Chauhan. "It has changed the way we think about our business. It helps us invest in building our own Alexa skills so that we can add value to our growing base of Alexa customers. Support from the Alexa Skills Insights team has also been phenomenal as they offer customized recommendations to maximize the revenue potential of our Alexa skill(s)."

Get started with ISP by reviewing this technical document and design an optimal ISP experience by reviewing the Alexa Design Guide.