In the subscription economy, the most critical customer relationship question shifts from “Was the product shipped?” to “Was the service used?” With this shift, a metric called usage data comes to the forefront. In a product-based business, product shipment is the fulfillment process for a customer relationship. But in a service-based business, with the offering delivered over time and on-demand, it’s not nearly as simple. A whole new set of questions come into the customer relationship equation; hence the need for usage data to inform critical decisions.
So what is usage data?
Usage data can be defined simply as “data about usage.” As figure 1 illustrates, it is the metered record of customer activity occurring at any given time. For example, usage data can include a page view, a video watched, a song streamed, a call made, or a transaction performed.
In a product business, usage data was not a factor in determining how much value a customer was receiving. But with the shift to digital services, massive volumes of usage data are now being generated daily, and service providers now have the opportunity to meter and understand content consumption, feature utilization, and patterns of use. The companies that make usage data easily accessible by customer success management, product management, marketing and sales provide new insights for answering new questions that impact customer lifetime value and profitability.
And what new questions does usage data answer?
Sales Questions
Which trials are most likely to close?
Is there enough customer demand to do an up-sell?
Where is the customer getting the most value?
What are the best cross-sell opportunities?
Which existing customer discounts should be phased out?
Customer Success Questions
Which customers are slow in adopting the service?
Which users are active? Which ones are not?
Is the customer using the entire service, or only parts?
Which customers are at risk of not renewing?
Product Management Questions
Does rate plan pricing match customer usage?
Which rate plans best monetize usage?
Which service features are used? Which ones are not?
Who should be surveyed for feedback? And about which topics?
Lead Generation Questions
Which training or events should be promoted to which users?
Which offers are most relevant to which customers?
Finance Questions
Which usage charges exist for which customers?
Consequently, usage data is the new fulcrum for managing profitability of customer relationships. It might seem like an obvious statement, but the only way to comprehensively gauge customer satisfaction is based on whether or not customers actually use your service. And without usage data, the lack of visibility into critical areas of the customer lifecycle, such as onboarding, adoption, retention, up-sell, unanticipated churn and customer retention fire-drills become problems too great to ignore.
Usage data provides the most leverage in measuring customer relationships in the subscription economy. By harnessing usage data, companies have a new profit fulcrum, enabling customer success monitoring, early churn detection, improved renewal yields, more trial conversions, and more cross-sells.
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