Click to learn more about author Victor DeMarines.

How are your customers using your software? How effectively are you capturing revenue?

How do you know?

Clear insights about how software is being used can help software suppliers and device manufacturers address the common challenges of how to effectively price, deliver, and monetize their products. Usage data may first come to mind as a requirement for increasingly popular consumption-based monetization models, but it can provide broader insights that are valuable across an entire software company.

Benefits of Usage Data Collection

Software suppliers that prioritize usage data collection and do it very well reflect an organization-wide culture that emphasizes the value of data-driven decisions. Software usage analytics—the process of tracking and analyzing how users engage with software—provides accurate evaluations of consumption that can:

• Inform monetization and business model decisions, supported by specific consumption metrics,
• Help product managers make informed decisions about pricing and bundling,
• Align price (the expense to the customer) and with the value (perceived utility) delivered to customers,
• Ensure license compliance to prevent unauthorized credential sharing or overuse,
• Identify overuse (whether through intentional piracy and/or unintentional causes) and support revenue loss prevention initiatives,
• Guide software engineering, sales and marketing teams with insights about actual engagement with products and features, and
• Support customer success initiatives by providing transparent insights to end users.

Recognizing the importance of accessing usage data, more than half of software suppliers (60 percent) collect usage data today; that number is set to grow to total of more than 75 percent in the next two years, as found in the Monetization Monitor: Software Usage Analytics 2020. Varied methods of collecting customer data—basic telemetry from the product, customer interviews, sales feedback, support calls, email surveys, and advanced product usage analytics—can all provide valuable insights.

Companies with the clearest visibility into how customers use their products are those who already collect usage data. For each of the most commonly measured metrics, suppliers that collect usage data have greater visibility than those that don’t collect usage data including:

• Whether customers are using software (visible by 58 percent of those that collect usage data vs. only 29 percent of those that don’t);
• Which features are being used (56 percent vs. 33 percent);
• If usage is increasing or decreasing (54 percent vs. 27 percent); and
• Which product version a customer is on (54 percent vs. 48 percent).

How to Improve Data Collection Processes

Approaches to data collection vary. About a third (34 percent) of software suppliers build their own solutions, some (19 percent) rely on usage analytics software, deploy a solution built using a packaged third-party tool (9 percent). Some (11 percent) collect telemetry data, but don’t analyze it, with the available insights potentially going to waste.

Procedural inefficiencies and blind spots can impede the ability to implement new models or advance strategic goals. While 32 percent of companies feel that they currently gather product usage data well, almost as many (28 percent) say that their current work requires manual process or engineering.

The benefits of data collection are clear, but many organizations are still working toward the streamlined processes that can accurately inform a data-driven business. To move beyond the stumbling blocks:

• Look beyond yes/no. Usage can provide insights about far more than whether or not a product is being used. Evaluate how customers use software and embedded/IoT devices (including specific products and features, license entitlements, and comparison of use rights vs. actual usage, for example) in order to measure trends and anticipate future usage.
• Visualize. At minimum, a dashboard that measures and displays user engagement can streamline the process of analyzing usage data, thereby making it easier to incorporate tracking, analysis, and actionable insights throughout the organization.
• Automate. Automation of usage data collection can reduce the delays and errors that are inherent to cumbersome manual processes and free up resources to help execute related (and data-driven) business initiatives. Automated usage meters can also help build credibility with customers, offering visibility into usage and aiding in the move to and adoption of usage-based models.
• Provide easy access. Anticipate that multiple roles within an organization will want access to the data over time. Plan to share reports or analytics and to support filtering, in order to allow other internal organizations to consume data without IT or developer effort.

Understanding and tracking how customers are using software can help suppliers not only keep pace with but exceed expectations. Efficient data collection is the first step to an effective software usage analytics program.