Growing CLV with Embedded BI
The fact that adding business intelligence software to an application can increase that application's customer lifetime value (CLV) hardly qualifies as surprising. In fact, it’s rather obvious. The addition of literally any feature that even remotely meets a market need is bound to help a SaaS company acquire, retain, and monetize customers, if even just a little.
Sure, that’s a given. But the key word there is “little.”
Introducing third-party software can utterly transform the host application from the consumer’s point of view. Major enhancements such as these introduce higher risk and so must be scrutinized more carefully. That they will grow CLV is assumed, but how they will is worth investigating, since no two solutions are alike and you’ll want to maximize their potential. Some application specs lend themselves to growth more than others, so it’s important to examine the details before investing.
Before we do that, though, let’s remind ourselves of why we pay attention to CLV in the first place. As a measure of the revenue a single client generates from the time they begin paying for service to the time they stop, CLV best determines the overall health and sustainability of client relationships. If annual revenue represents your bottom line, then CLV measures the reliability of that line. A robust CLV forecasts accelerated growth, indicating the likelihood that your customer base will propel you through the next fiscal year and beyond.
Embedded BI and CLV
Companies improve their CLV by acquiring, retaining, and monetizing customers, so we’ll first take a look at how business intelligence software at large purports to do that. First, it’s worth acknowledging that the business intelligence industry is undergoing a growth spurt. Experts at Gartner say the industry will hit $18.3 billion this year, and a recent study by Research and Markets predict it will soar to $26.8 billion by 2021. Growth at the macro level suggests that an industry delivers on its promises. When it comes to embedded BI, the implied promise is that SaaS companies will gain a competitive advantage, enhanced staying power, and cause to charge more for their product.
It goes without saying that companies would prefer to have more insight into their data than less, so it stands to reason that adopting an embedded BI solution will put you ahead of those competitors who do not. Embedded BI is designed to integrate seamlessly into your own application, so neither your clients nor your competitors need know you’ve added third-party software to your system. Eckerson Group calls embedded analytics “the future of business intelligence” for this very reason: innovations in integration technology have made reporting, dashboarding, and analytics tools that much more accessible.
But there’s an even bigger advantage to be had for those SaaS applications with metadata monitoring. If you’re collecting non-identifying information about how users interact with your software and think it would be of interest to your clients, embedded BI can become the vehicle for disseminating that information to them. For example, a safety management solution might provide its clients with a means of logging work-related injuries — the type of injury and its circumstances. Such details (excluding, of course, the names and id numbers of the companies and people involved in the accident) could shed light on industry-wide workplace injury trends, potentially motivating client companies to pay for that added insight. This process of data monetization turns information usually reserved for internal use into a revenue stream. In this case, adopting a BI tool would help your clients to report not just on their data, but on yours as well.
Once companies start using a BI tool, it requires a lot of effort to switch to a new one — and that’s by necessity. Developers have written integration code, and employees have grown accustomed to interacting with the software. They know where everything is, have built up a repository of reports and dashboards, and may have even added custom content to their environments. Transitioning to a different solution would require that all those reports be made compatible with the new application. Exago BI includes such a converter for legacy reports, but not all solutions do. For this and other reasons, it’s generally easier for companies to stay with the original tool and its host application, working with development and support to make improvements where necessary.
The other source of BI solutions’ “stickiness” arises from their core function: to provide business insights. Companies refer to their operational data in order to maximize their efficiency and stimulate growth, so in offering embedded BI, an application that might otherwise be considered part of the company’s cost center instead starts looking like part of the profit center. Even if this is just a perceptual shift, it’s a powerful one that will make clients reluctant to leave the analytics hub they’ve come to rely on.
Embedded BI Features for Optimized CLV
Although BI encourages CLV growth, not all applications do it to the same degree. Certain features lend themselves to sustained customer relationships more than others. From UI and API to price plan and company culture, which BI provider you choose can go a long way to optimizing your CLV.
There are three dimensions of scalability to be concerned with here: a payment plan that will encourage you and your customers to grow, an application that will easily scale horizontally to allow for increased load, and a configurable architecture conducive to a scalable pricing structure.
First, selecting a CLV-friendly payment plan is paramount, as it will impact all three CLV channels: acquisition, retention, and monetization. Test a BI payment plan by assessing how costs will change as your SaaS company grows and acquires more clients. What happens as those clients grow? BI plans that charge by the number of users, accounts, or installations will burden you with additional costs as you expand. This typically results in increased costs for the client as well, which can strain customer relationships over time and hamper client companies not growing quickly enough to keep pace.
BI vendors that employ a flat-rate pricing model don’t penalize growth. This means that instead of increasing proportionally, the annual BI subscription will become a smaller and smaller percentage of your annual revenue as you acquire new business. These are long-term benefits that you can pass on to your customers as well, lessening the chance that they’ll fail to convert, maintain service, or upgrade on account of finances.
Second, the application itself must allow for the easy addition of new servers to handle processing demands as the volume of data and users increases over time. This horizontal scaling will help prevent performance issues and client frustration.
Lastly, the more configurable an application, the easier it will be to break it into pricing tiers. When reviewing BI solutions, confirm that major areas of the application can be turned on or off depending on the configuration. Maybe your Bronze level only offers canned reports, your Silver level supports ad hoc reports, and your Gold level supports both ad hoc reports and dashboarding. This renders your product more accessible to a broader audience with more diverse needs and encourages upgrades as client businesses grow.
Research suggests that embedded BI, due to its inherent accessibility, helps improve end user adoption. Gartner’s 2017 Magic Quadrant report predicts that “extensibility and embeddability will be key drivers of expanded use and value” in the coming years, but not all embedded BI is created equal.
Some BI platforms are truly integrated into the host application while others are situated outside the host but can be accessed from within it using a portal. This may seem a minor distinction, but a more seamless integration will result in a better user experience.
A much weightier disparity between BI platforms is that some support embedded report designers and others do not. An embedded designer empowers end users to create their own reports, visualizations, and dashboards rather than simply run and manipulate canned reports. This affords clients the freedom to ask unanticipated questions and seek out the answers to those questions without involving a DBA, developer, or administrator. Not only do capabilities of this kind make for a more intimate and lasting relationship with the software, they also do a better job of delivering meaningful insights and, therefore, justifying need for the application in the first place.
Extensibility and Customizability
No company can predict another company’s needs with perfect accuracy, so it’s important that the BI solution you select give you maximum control over the software. Look into the ease and degree to which you can alter their CSS files, as achieving a look and feel that matches your own contributes heavily to user experience. Ask about supported API implementations and look at the documentation for it ahead of time to ensure that you’ll be able to make the dynamic changes you’ll need.
Lastly, find out what extensions the vendor offers, since customizability only carries you so far. You cannot customize a feature that isn’t there, so determine what features you could conceivably build and add on yourself. The ability to code extensions puts you at a significant advantage as far as meeting clients’ needs is concerned because you won’t necessarily have to wait for your BI provider to deliver an enhancement or fix, dramatically improving your turnaround on requests.
When you adopt a BI solution, its support team becomes an extension of your own, and the same CLV impact applies. Great support can attract new customers, turn new ones into diehard fans, and embolden them to raise the commitment level. When people feel supported through a new and potentially complex environment — especially one that impacts their livelihoods — your customer satisfaction and net promoter scores are in for a real boost. Seek out stellar support teams using these metrics as a guide, and pay close attention to customer reviews of the BI tool under consideration.
Partnering with a BI provider that offers client services can dramatically improve the success of your launch. Service teams join your company on site and spend their time helping train your personnel, answer questions, coach your team in best practices, and generally educate you regarding the software. After your initial deployment, they can be brought back for maintenance visits and targeted troubleshooting.
Some BI providers offer services as part of their contract, some charge an additional fee, and others do a mix of the two. Regardless, look for an affordable package that will help you start out on the right foot.
To maximize CLV, the implementation of a BI tool should really be approached as a partnership. Just as the application becomes an extension of your own, the vendor’s business becomes an integral part of your business’s daily operations. Approaching the search for BI from this perspective will help you sift through features and distinguish CLV-friendly providers from the others. Look for greater freedom to control your own pricing, user interface, and application architecture as well as a commitment to support and services. A great embedded BI company will do everything in its power to ensure that your customer relationships last a lifetime.