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  • Writer's pictureGeoff Galat

Think usage-based isn’t for you? Think again.

I recently spoke with MGI’s Andrew Dailey about usage-based models on our Monetization Masters Podcast. As we discussed, not every company will embrace an entirely usage-based future, but virtually every company will be using usage-based in some capacity or another. The benefits are just too good to pass up. Here are a few that I think make moving to a usage-based model a no-brainer:

Your CX improves

When you aren’t clear on usage, you don’t know how satisfied your customers are. That means your customer success team is trying to navigate their customer relationships but relying on anecdotes vs. insights – which isn’t a great place to be. When they have visibility into who is using the product, for how long, and in what way, their ability to support their customers effectively shoots way up.

By enabling customers to pay only for what they use, usage-based models offer transparency and accuracy that subscription-based models simply can’t match. They also enable you to monetize user behaviors and create hybrid pricing packages that combine the best aspects of subscription-based models with metered consumption. This approach provides customers with more choices and enhances their overall experience.

Your business gets smarter

Usage-based billing allows you to gather rich data on users’ engagement with your products and services - How are they using them? When? For how long? How much? In what scenarios? This rich usage data empowers you to improve your current offerings, identify and define new offerings, deliver differentiated customer experiences, and make data-driven decisions. Not all companies tracking this type of data will turn on monetization today, but as they come to rely more on these insights, usage-based monetization becomes more likely.

Furthermore, by leveraging the insights from usage data you can design and price your products strategically to maximize market acceptance and revenue generation. This flexibility also enables you to streamline pricing and billing processes, reduce manual tasks, and accelerate revenue generation through automation.

Your Sales and Customer Success Teams are more effective

Customers often prefer the transparency of consumption-based modeling and the ability to only pay for what they consume. In fact, some customers are starting to demand it. As you can imagine, this makes usage-based modeling a critical sales tool. As with any competitive offering, if you can’t accommodate that requirement, one of your competitors surely will.

With access to usage data and insights integrated with CRM and other systems, sales, and marketing teams can engage customers better, offer highly targeted promotions, and deliver more personalized support. Usage-based tracking enables sales and customer success teams to understand better how customers use their products and services, when, how much, and in what scenarios.

The TL;DR? Usage-based billing is a game-changer for businesses. It ensures customer satisfaction and loyalty and enables companies to leverage data for better decision-making, personalized offerings, and increased revenue. By embracing usage-based models, businesses can break free from traditional billing constraints and stay ahead in the dynamic market landscape.

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