Event data is the future of billing, but very few B2B SaaS businesses today have the structures in place to analyze and take action on it. This leads them to miss out on a significant chunk of potential revenue.
Whether your organization is just beginning to explore the power of event data, or if you already have the tools in place, let’s take a closer look at how your company can use this granular data to drive customer engagement and rapidly increase revenue.
Overcoming the Most Common Event Data Challenges
Your company must have two things to effectively harness event data: infrastructure and strategy.
Building an event data infrastructure.
One of the most challenging aspects of harnessing event data simply comes down to a lack of infrastructure. Feeding event-based metrics requires sending all relevant data to your billing platform in real time without the loss of the valuable attributes that make event data so rich and insightful. From there, you’ll need a way to gather actionable insights from that data.
If this sounds like an enormous undertaking, that’s because it is for many companies. Structuring, understanding, and taking actions based on large amounts of event data—often from legacy systems which have been retooled to support this kind of project—takes massive amounts of human and computing resources.
Industry leaders like AWS and Twilio can dedicate entire teams of developers to creating specialized event data infrastructure and applying it to their billing strategy. But what about everyone else?
That’s where a tool like Maxio comes in. Maxio is the only B2B SaaS billing software to offer event streaming capabilities right out of the box. We provide all the infrastructure SaaS companies need to effectively stream, analyze, and bill on event data for a fraction of the time and effort it would take to build your own event streaming platform.
Building an event data strategy.
The first thing you’ll realize once you begin streaming event data is… there’s a lot of data to wrangle. Without a solid strategy, you risk getting lost in an overwhelming sea of information and never actually making the actionable changes you were hoping to see.
Unfortunately, no blog post could ever offer you a perfect step-by-step plan for building your ideal event data strategy—we don’t know enough about your company’s unique goals. However, what we can provide is a solid starting point.
These four tips will help you leverage event data to increase product adoption and boost revenue.
1. Focus on Customer Engagement
Customer engagement data is key to unlocking the best pricing model and maximizing revenue. Engagement data gives you special insight into customer behavior, revealing important patterns which should inform your overall product roadmap. It will also help you improve retention, and may even inspire a better pricing model.
By tracking the right metrics, you can figure out what your customers truly value, and how your company can best support them. Your revenue-boosting customer engagement metrics will include:
The number or percentage of active users in a given time period. This metric tracks how many unique users signed into their accounts and performed a valuable activity.
The number of active users divided by total users. Your product adoption rate reveals how well you’re engaging new users and converting them into productive customers.
The average time users spend on your platform or in your app. This is an easy-to-track usage metric that can help you understand how users interact with your service. It can be helpful to compare session duration between active users and churned users.
Number of sessions per user:
How often users come back and use your service, tracked as the number of logins or site visits per user. This metric can help you track changes in user activity over time.
Number of user actions per session: The number of user actions divided by the number of sessions in a given time period. With this metric, it is useful to consider how you define and collect actions or event data. The number of events you capture will dictate how useful your event data insights are. Are you only collecting basic activities, such as logging in, or are you collecting data on every user action within your platform?
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2. Incorporate Marketing and Sales Metrics
Marketing, sales, and customer retention data gives you a clearer picture of where your business stands. You’re probably already using these business metrics to dictate operational decisions and your marketing budget, but they can also help guide your billing and pricing decisions.
To gain insights into your billing strategy, pay special attention to fundamental business metrics:
Monthly recurring revenue (MRR):
The total amount of revenue your product or service reliably generates every month. This is the most fundamental of SaaS metrics, as it’s the ultimate measure of your company’s viability and growth.
This metric can have more than one meaning. Customer churn refers to the number of users who canceled their subscriptions, whereas revenue churn refers to the amount of revenue lost due to customer churn.
Customer lifetime value (CLV):
How much revenue a user will generate throughout their relationship with your company. Tracking your CLV will help you understand customer purchasing cycles and develop better
3. Take a Closer Look at Your Heaviest Users
Every customer is different. Some are mature, thriving companies with consistently growing demand, while others are just finding their niche in the market. If your billing model is too rigid, it can be hard to meet the needs of the full continuum of customers while also accurately covering your own costs.
With that in mind, you’ll want to make sure that your power users aren’t under- or over-paying for their subscriptions while smaller customers are still getting the attention that they deserve. This means carefully matching the resources your heaviest users consume to the revenue they generate for your company. When considering which metrics to base your billing on, first focus on your heaviest users’ usage data.
4. Rethink Your Freemium Service or Trial Subscription
The freemium business model has reached near-ubiquity among SaaS companies. If you offer a freemium service, your conversion rate can tell you whether or not your pricing strategy is really working. This also applies to trial subscriptions.
Spotify’s impressive conversion rate of over 26% may not be realistic for every industry. However, you can still learn a great deal by considering how many of your users decide to switch from a free to a paid subscription.
Have you struck the right balance between a useful, free service or product and the promise of more?
Do your users have a strong enough incentive to upgrade?
Do you know what features or services are driving your customers to convert to being a subscriber?
Is your pricing too high, creating a barrier to conversion?
While traditional marketing, sales, and financial data can help to answer some of these questions, granular usage data can inform the decisions your organization makes as it refines its business model to meet true customer demand.
Use Event Data to Evolve Your Approach to Billing
While event data may be the future of billing, it can be hard to implement on your own.
Fortunately, you don’t have to do it alone. With Maxio, you can bill like the industry titans—regardless of your size or resources at hand. We empower B2B SaaS businesses with the tools they need to harness event data and supercharge their billing. Learn more about Maxio’s Events-Based Billing, or talk to a billing expert today.