Usage data is the foundation of profitable customer relationships

In recurring revenue business models, the most critical customer relationship question shifts from, “Was the product shipped?” to, “How is the service providing value?”

This shift creates a critical gap in your customer intelligence. The ability to monitor how your customer is actually using your services becomes essential to proving your service’s value.

Customer Activity Data

• Unit of measure
• Data and time of usage
• Quantity of use
• (ex. duration or count)
• Attribution to product or service
• Classification

This customer intelligence is called: Usage Data.

In a product-based business, product shipping and receiving is the fulfillment process for a customer relationship. However, 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 how end-users are utilizing your products and services.” 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 is not a factor as additional customer revenue comes from add-on sales. These businesses are able to take a “sell it and forget it” approach. But with the shift to services, service providers need to meter and understand consumption, feature utilization and patterns of use.

Companies that make usage data easily accessible by internal customer facing teams, their channel and their clients can easily demonstrate value. Demonstrating value is key to renewals and impacts customer lifetime value and profitability.

What new customer intelligence does usage data provide?

  • Sales Intelligence
    Trials that are most likely to close Best up-sell opportunities based on demand Where is the customer getting the most value to facilitate renewal Best cross-sell opportunities Which existing customer discounts should be phased out
  • Customer Success Intelligence
    Which customers need adoption assistance Which users are active and which ones need additional assistance Is the customer using the entire service, or only specific features Churn risks based on low demand and adoption
  • Product Management Intelligence
    Does rate plan pricing match customer usage Which rate plans best monetize usage Which service features are used Who should be surveyed for feedback
  • Lead Generation Intelligence
    Which training or events should be promoted to which users Which offers are most relevant to which customers
  • Marketing Intelligence
    Which customers should be included in marketing campaigns Customer reference identification
  • Finance IntelligenceWhich usage charges exist for which customers

Consequently, usage data is an important KPI 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.

Why care about usage data?

Usage data provides the most leverage in measuring customer relationships in recurring revenue businesses. By harnessing usage data, companies have a new profit pivot; enabling customer success monitoring, early churn detection, improved renewal yields, more trial conversions and more cross-sells.