Understanding Demand in a Recurring Revenue Business: Part 3 of 3

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 used?” and with this shift usage data and the new analytics associated with it comes to the forefront. This new category of behavioral analytics doesn’t revolve around purchase patterns, but instead determines the demand of the service provided through customer usage patterns. Termed Subscription Analytics, this new set of customer demand metrics gives organizations insight into demand for the service from patterns of use.

Subscription Analytics answers a new set of questions for organizations: How does the size of my customer affect demand? Has demand changed over time? What other customers have similar demand? Is there untapped demand such as shared subscriptions? Where is a subscription underutilized? In danger of churn? With Subscription Analytics, the answers to these mission-critical questions on demand are now knowable.

In today’s service-oriented world, determining demand is no longer as simple as measuring and analyzing purchase data, and success is no longer as good as your crack salespersons intuition. Customer demand is hidden inside the usage data and Subscription Analytics is the new requirement for determining it.