Posted by: Matt Shanahan Measuring demand has moved. The broad transition from product offerings to service offerings has driven the need for new means of measurement. In a classic product business, where product delivery is a discrete event, the health of the business can be accurately determined through the analysis of purchase and fulfillment data. But in a service business, with the offering delivered over time and on-demand, it’s not nearly as simple. In a service, the purchase behavior is decoupled from the fulfillment process, introducing a whole new set of longitudinal variables into the equation and making purchase data as the single indicator of customer demand, obsolete. The elemental question shifts from “Was it shipped?” to “How is it […]
Archive | Recurring Revenue Management
Understanding Demand in a Recurring Revenue Business: Part 2 of 3
Posted by: Matt Shanahan Part 1 highlighted that value has switched from product shipment to service usage. Part 2 highlights why the switch occured. The Internet has indeed changed everything. With the switch from analog to digital, came dramatic movement in both supply and demand that has been well documented in books such as The Long-tail, Free, and Customer Revolution. On the supply side, traditional barriers to entry have been systematically knocked down one-by-one—leveling the playing field from a cost, infrastructure and delivery standpoint. From a demand perspective, 24 x 7 accessibility coupled with an explosion in online search sparked a transition from a “push” to “pull” model, dramatically shifting customer expectations and behavior. Today, the new supply curve for digital […]
Scout Analytics is Making Sales More Nimble
Posted by: Matt Shanahan Just finished up at OnDemand Conference 2009. Scout Analytics was asked to present our view on how to create a nimble sales organization. There was a lot of interest in the potential impact of analytics on sales productivity. My presentation focused on how uncertainty about customer demand negatively impacts sales performance. In particular, the presentation focused on why knowing the demand profile of customers is critical to identifying and qualifying revenue opportunities. Two interesting themes emerged from the audience during the Q&A. The first is that while some companies evaluate usage to understand potential churn, very few have looked at how usage to determine up-sells and cross-sells. The second is that most organization do not have a means to measure and track […]
Understanding Demand in a Recurring Revenue Business: Part 1 of 3
Posted by: Matt Shanahan Everything is a service more and more. And no surprise, this new “everything as a service” approach (XaaS) allows organizations to effectively add value to commoditized products where the costs of goods approach zero. The service “wrapper” becomes the new differentiating factor; the demise of the “discrete” product gives rise to the subscription-based business model. This fundamental transition from products to services fuels another change as well—the way we measure demand. Not long ago understanding demand was as simple as tracking orders. A single product was offered, customers acted as a single market, and demand was understood solely through the analysis of purchase data. The product world worked like the sleepy magazine company who upon customer order […]
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