Online services now generate more than $110B in revenue from subscriptions. This number is poised for growth as fueled by the move toward software-as-a-service delivery models, the limitations of ad-only revenue models, and increasing demand for content via mobile devices. The SaaS and information providers that will thrive in this market are those that can maximize the profitability of each subscriber by lowering acquisition costs, eliminating unlicensed use, preventing churn and growing revenues from up-sells. And while there are a broad set of tools focused on acquiring new subscribers, online services overlook billions in untapped revenue because they lack the tools to monetize demand within their existing subscribers.

Understanding Your Customer
The first step to maximizing revenue is having detailed insight into each subscriber’s behavior, usage patterns and preferences. Vendors must know: What content has the most up-sell potential to whom? Is there unlicensed use? Which subscribers show low usage and are at risk of churn?

The good news is that online services are especially well-suited for aggregating, analyzing, and acting on usage data in real-time to optimize revenues. Ironically, however, content and service provider companies historically haven’t made use of the data flowing through their networks: when faced with having to choose between investments in value-added services to subscribers vs. internal analytical tools, the internal tools typically lose.

Sales and marketing teams are still relying on cumbersome, legacy approaches to data analysis such as monthly e-mails containing spreadsheets of unprocessed usage data. Today instinct and intuition—rather than evidence—are the basis for answering business-critical questions such as:

Optimizing Revenue Potential
Subscription analytics is an emerging category of solutions that maximizes the lifetime value of a subscriber by providing deep insight to access and use of a service. By proactively aggregating and analyzing data from a subscriber’s session over time, companies can customize offerings, identify at-risk subscribers, and fully maximize the revenue potential of every subscriber. Subscription analytics can provide a breakdown revenue opportunities by company, by type (e.g., unlicensed use), and by estimated value. Armed with such actionable information, sales productivity has increased 15% or more among companies using subscription analytics.

The screen shot above provides a detailed view of shared account activity

Until recently, online services have had few options on how to tackle the trade-offs between the expense of subscription analytics and investing in the service itself. At one end of the spectrum, the Internet has spawned a broad range of web analytics products, and at the other end of the spectrum, business intelligence platforms have created many advances in slicing, dicing, and visualizing data. Both approaches employ generalized tools that require significant customization and on-going administration. With the evolution of the subscription business model, there is a new breed of analytic solutions emerging specifically designed for online services. Because the new subscription analytics solutions are domain-specific, hosted, and subscription-based themselves, they have a real potential to monetize the billions of untapped revenue that exist in today’s subscribers.

By Matt Shanahan, senior vice president of strategy at Scout Analytics

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