Knowing What’s Knowable

Posted by: Pete Horadan

So what is knowable? The health of the recurring-revenue business really revolves around a full understanding of customer demand, so the critical metric needed is a measure of that demand, or a demand rate. There are three, interrelated components of demand—usage (session data), contract data (terms of the customer relationship) and firmographics (the demographics of an organization.)

Usage data, in the subscription world, describes what is consumed and happens over time. It’s not about a single user visit, but about aggregated groups of users on different devices, at different locations. It’s a highly dynamic longitudinal view of the customer, so logging and measuring it is tricky.

Contract data is the information about the business relationship—what licenses were purchased, when. It includes information regarding the number of users that are licensed, the cost of those licenses and the time period that is covered.

The final component—firmographics—is what is knowable about your customer. Information such as the size, growth and location of the company are all included in this realm. Firmographic information come from public sources such as corporate websites, private sources such as Hoovers, and is increasingly available from social networking sites such as LinkedIn.

Combining these three sources of data is where things get powerful. Using firmographic data to create segmentation and creating a ratio of actual to contracted usage, a customer demand rating can be established. As discussed by Matt in his Moving Target series and according to a new Forrester survey, determining a willingness to purchase is becoming a critical key to success for content providers. With a quantifiable, comparable measure for fulfillment of customer demand organizations can produce an actionable, revenue opportunity for each customer. But that’s a topic for another entry.