Time to make your data work for you. In Hacking the Analytic App Economy, we show you how to build a data monetization strategy that leverages your company’s data to open new revenue opportunities, drive value, and help you thrive in the new era of analytic apps.
Adding analytics to your product offerings used to be a great way to differentiate yourself from your competitors, but as more companies jump on the analytics train, your company will have to work harder to prove its worth. Sure, you know that your embedded analytics are a great way for users to get valuable insights, but how can you get the message across to your customers about the significant value they’ll be receiving if they buy your analytic app? Charles Holive, Sisense Managing Director of Data Monetization and Strategy Consulting, walks you through how to build and execute a successful sales strategy for your analytic app.
Identify the ideal customer for your product
Before you embark on a data monetization strategy, a thorough analysis of your market segment can help you pinpoint the best customers to sell your analytic app to — and they may not be who you think they are or whom you’re currently selling to.
Pricing is another important aspect of selling your analytic app. Build your initial pricing model via value-based pricing and create your earliest analytics using the datasets you currently manage. This arrangement is very straightforward, and everyone involved will be able to get behind it.
Here’s where your thinking needs to change: When you develop an analytics app, you are providing users with more valuable insights that open new possibilities for them. For example, an analytic app can offer data visualizations like dashboards that can be delivered in real time and dig much deeper than what customers are currently enjoying. Or if you are currently selling assets, you can start selling an analytics command center to drive asset performance and utilization optimization, hence delivering new value to your ecosystem from existing assets.
All this creates two sales opportunities for you. The first one is your existing customer base. When you add analytics to your product offerings, and attach value-based pricing to them, the revenue opportunities you can generate are limited by the size of each company. The smaller the customer, the less value you are likely to create from them. A 1% improvement can be a substantial revenue jump from an enterprise customer but much less significant for a small customer.
Your second opportunity is the new markets that analytics can allow you to access. Say the data you manage tracks the relationship between the supplier and the buyer. The buyer is your current market, but what about your supplier? Your supplier is probably extremely interested in benchmarking its performance versus the other suppliers, and that information is available as part of those data insights. What about the purchasing behavior of your buyers? With that information, your supplier could offer better prices and better products and eventually increase its win rates in the ecosystem.
That’s all worth money! There are so many ways to turn data into revenue. You just need to get creative.
As you create your analytic app, always think about who else cares about the value you can create from the insights. Because in addition to the buyer, your current customer, you can sell to others in your ecosystem, like the government, a supplier, or anybody else that might be interested in the value you create from that data.Charles Holive, Sisense Managing Director of Data Monetization and Strategy Consulting
Why pay-per-use analytics don’t work
The next challenge in your sales strategy will be choosing a revenue model. Analytics are your once-in-a-lifetime opportunity to sell outcomes and value. So why go with a pay-per-use model? You want people to adopt your system and use it to change the way they work. You want them to start making decisions based on the actionable insights you are providing them.
The best way to do this is to sell outcomes instead of a product. To drive adoption, use incentives for success. The key is to align your incentives with those of your customer. In that respect, value-based pricing is once again the solution. Consider your top- and bottom-line numbers and aim to charge a price that’s around 10%-20% of that. For example, if you’ll provide $1 million of new value, you want to charge about $100,000-$200,000 for your analytic app.
The more value you can create for your customer, the more you can charge for your analytic app.Charles Holive, Sisense Managing Director of Data Monetization and Strategy Consulting
To make money, talk about money
The easiest way to describe business is as an exchange of perceived value. “You pay us X in order to get Y back over a certain period of time.” Analytics sell something exceptional: You can quantify this value very explicitly because you’re able to measure and articulate the actual outcome you’re going to generate, thanks to your analytic application. It’s a pure return on investment; it’s the ability to sell financial outcomes.
When you build your analytic app, and the value proposition around it, it’s absolutely critical to speak about financial outcomes. The only way to consistently sell your analytic application is if you can convince your customer that this app is going to deliver outcomes around its top line (more revenue) or bottom line (cost savings).
To effectively sell your analytics app, it’s absolutely critical to talk about your customer’s financial outcomes. To make money, you have to talk about money.Charles Holive, Sisense Managing Director of Data Monetization and Strategy Consulting
Go all-in on selling your analytic app
You’ve invested in the development of your analytic app. It’s a valuable extension of your product and will provide real value to the major players in your industry — and will help increase their revenue as well. Now, armed with this advice from Charles on how to frame the conversation, you’re ready to go all-in on selling this value-add to your existing customers and look for new ones on the horizon.
Jack Cieslak is a 10-year veteran of the tech world. He’s written for Amazon, CB Insights, and others, on topics ranging from ecommerce and VC investments to crazy product launches and top-secret startup projects.