Why Are You Measuring That? A Guide to Consumption Analytics

Why Are You Measuring That? A Guide to Consumption Analytics

A common question I receive from TSIA member companies is, “What consumption metrics are people measuring?” While I could give generic examples, they likely won’t apply to every individual case. Here are a few ways the emerging new area of consumption analytics can help you identify the right metrics you should be tracking in order to receive the most valuable insights into your operation.

About Consumption Analytics

The standard train of thought is that businesses just want to know what other businesses are measuring. The logic behind this is that if others are measuring it, they must be getting value, and if they are, then we will too! This assumption is particularly dangerous in the emerging area of consumption analytics.

Consumption analytics is still an emerging area, in that while companies are capturing a lot of different clicks and data, they have yet to figure out the most valuable insights. Second, the nature of consumption is different across technologies. Productivity software is consumed differently than architectural design software, and both are consumed differently than medical imaging equipment, for example.

Lastly, the most valuable insight of tracking consumption arises when you link this information to the outcomes achieved by your customers. What are your customers creating with your technology? How well did they leverage your technology to achieve these milestones? The answers to these questions will not only differ across technologies, but also across your customer base and verticals.

What Consumption Metrics Are People Measuring?

To complement our growing documentation of consumption analytics on a case by case basis, in the winter of 2014, TSIA launched its first annual “Consumption, Adoption, and Outcome Metrics Survey.” The survey asked three basic questions:

  1. Are you measuring?
  2. What are you measuring?
  3. How are you leveraging the data?

These questions were asked across four types of data streams: purchase, installation, consumption, and outcomes. We will present the complete results at our upcoming May conference, TSW 2015 Best Practices, but here is a snapshot of key insights we’ll be covering.

The Leverage Gap

There is a leverage gap with easy to reach data. Even though 94% of service organizations have access to purchase data, 50% of these organizations do not leverage this data to improve services.

While this is a shocking result, it also implies that there is a lot of low hanging fruit. Are there trends in service purchases? Do professional service projects affect renewal? What are the low/normal/high purchase paths? All you need is purchase data to answer these questions and the value of the insights is clear.

The Measurement Gap

There is also a measurement gap in this data. For example, while only 50% of companies capture outcomes in some systematic fashion, 95% of these companies are leveraging the information.

consumption analytics
The Leverage Gap and the Measurement Gap.

This implies that outcome data is valuable and easy to use. Respondents indicated that they captured simple lists of desired outcomes by customers, have systematic ways of capturing success stories, and even have access to customer financial information.

User-level and Feature Specific Data is Valuable

Across the four different data streams, while the percent of respondents that capture user-level data ranges from 10% to 25%, the vast majority of these respondents indicated that this data was invaluable as a leading indicator of renewal and revenue growth.

While these two were the most commonly cited in comments, consumption data in general is proving to impact several key performance metrics. In our leverage questions, we asked respondents to indicate which of their internal KPIs were affected by or related to consumption data. While only 37% of respondents have done this validation, the results below are intuitive.

consumption analytics
The Leverage Gap and the Measurement Gap.

Here's a visual representation of some of our survey results.

What This Means For Your Metrics

So, why should you measure consumption or specific consumption metrics? You should measure consumption because it helps you better understand how your customers are using your platform. With this understanding, you can improve your services and help customers achieve success. Once you combine that with outcome data streams, you’ll know how to optimize your customer’s consumption of your products and services to most efficiently achieve their desired outcomes.