Nicola Erbacci was a high school student when he dabbled with building Alexa skills for fun and learning. He was motivated to compete in various contests and hackathons run by Alexa to encourage developers like him to build innovative voice experiences. He started building simple skills, but over time recognized the value of 'voice' and started focusing on experiences that customers love. He zeroed in on audio skills as his specialty, and there has been no looking back.
His most popular Alexa skills, such as Fart Noise (plays funny sounds), Fan Noise (plays Relaxing Sounds), and Obbligo o Verità (game popular with teenagers), have at least half a million active customers each month, with 10 thousand of them paying for the premium experience within those skills.
Fast forward four years, he is now the founder and Chief Executive Officer (CEO) of 'Smart Skills,' which has four employees and has built more than 1000 skills. Erbacci attributes his company’s success to 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.
"What ISP has given us is freedom – both professionally and personally. It has given us the flexibility to build voice experiences our customers love and not compromise on quality," says Erbacci. "It has also enabled me and my team to work remotely, travel the world, and have fun."
Erbacci offers the below tips to maximize the revenue potential of Alexa skills.
Tip #1: Focus on improving the core experience in your skill and discoverability first
"A skill that is sub-optimal to begin and has little traffic is not monetizable. So, first, do what you can to improve the quality of your skill and boost engagement," says Erbacci.
Erbacci incorporates recommendations from the Alexa Skills Insights team to improve the quality of his skills and takes the time to attend 1:1 consultations with that team for a deeper dive. Through such consultations, he has included prompts within his skill encouraging customers to make it part of their daily routines.
This way, his relaxing sounds skill becomes part of customers' daily sleep routine, boosting customer retention. In addition, Erbacci ensures the invocation for his skills is simple, and icons for multi-modal devices are attractive to drive discoverability.
Tip #2: Invest time and effort to refine and augment premium content
"Offering premium content is not a one and done deal. To maximize success, developers need to update content at least every three months," advises Erbacci.
In the premium version of his Fan Noise skill, Erbacci offers access to a larger catalog of high-quality relaxing sounds. In his gaming skills, he offers new game maps and paths. The key, he says, is that customers should perceive the premium content as a value-add rather than asking why it is not part of their free experience. If customers perceive incremental value, they will pay. And to retain them as paying customers, Erbacci puts in the effort to augment the content.
"We are actually in Costa Rica right now, recording new relaxing sounds for our audio skills," says Erbacci.
He reviews the usage of his soundtracks within the premium experience every month and determines what to replace or augment. His team also diligently evaluates customer reviews and addresses them in their monthly review cycle.
The result is that 90% of the customers who enroll in a free trial for his premium subscription go on to become paying customers.
Tip #3: Design the upsell to raise curiosity and not with the intent to make money
"We advise other developers not to force too much with the ISP; the user experience is more important than the sale. If the user is happy with the skill, there will certainly be many more chances," advises Erbacci.
Erbacci designed his upsell to raise customer interest in his premium content rather than with the intent of making money. He believes if his content is good and the upsell is compelling, the money will follow. He suggests experimenting with different upsell messages and using the Offer Acceptance Rate (# of offers accepted/# of offers presented) on the Alexa Developer Console to choose the optimal one. Interestingly, Erbacci doesn't reveal the price in his initial upsell offer. He prefers keeping the upsell message short and concise and offers a free trial. He initially started with keeping the message vague but quickly pivoted to a two-step upsell. The first upsell message is short. If customers respond with a 'Yes,' he then offers specifics on the free trial. He believes that the first message piques the interest of customers and doesn't give them a reason to say 'No' as he doesn't introduce the monetary component. Once they say 'Yes' to the first message, he finds that the conversion to a free trial with the second message is higher.
Initial upsell message on the Fan Noise skill: "A premium trial audio track is waiting for you, for free. Would you like to know more?"
Improved two-step upsell message: Step 1: "A premium trial audio track is waiting for you. You can have a 14-day free trial with no obligation. Would you like to know more?" Step 2: The premium tracks allow you to listen to extremely higher quality audio non-stop for up to 8 hours and without limits. You can have a 14-day free trial with no obligation. Would you like to sign up?
He landed on a 14-day free trial to be optimal after he had tested a 30-day one. That offers customers sufficient time to experience the premium experience within his skill without the stress of paying. At the same time, he doesn't want to make the free trial too long, so as to make customers wonder why they need to pay for it.
He also presents the upsell to new customers in their second or third session with his skill and at the beginning of such a skill session when customers pay the most attention.
Tip #4: Test and optimize pricing to boost revenue
The subscription price on Erbacci's Fan Noise skill is $2.29. He landed on this option after testing other pricing options he found for similar skills: $0.99, $1.99, and $2.99. He has found that his customers are fairly price-insensitive within the above range for the quality of content he offers.
Buoyed by the success of the skills he has built, Erbacci is now starting to diversify by building voice experiences for clients. He is specializing in building skills for radio stations. While a vast majority of the company's revenue still comes from ISP within its skills, Erbacci believes he can leverage learnings to help build engaging and potentially monetizing experiences for his clients.
With 500 million Alexa-enabled devices globally, he is convinced about Alexa's potential as a medium to serve engaging voice experiences to customers.
"Our company is focused solely on building engaging experiences on Alexa. So, ISP is essential to running and growing our business. We have managed to grow our revenue 200% year-over-year for each of the past three years. We have only started developing applications for other companies since this year and hope to grow that portion of our business as well," shares Erbacci