When you’re just starting out, you spend a lot of effort building an awesome product, acquiring customers, and preventing churn. Yet while signing up users is exciting, keeping up the growth cadence requires something more. It requires a monetization strategy. Monetization is by far the most effective way to grow and scale a SaaS business. Monetizing does not require you to constantly acquire more customers. Nor does it mean that you need to build new software features. Instead, monetization increases profits with what you already have. Add a drive to thrive plus a foundation of robust tools and processes, and you’ll create a monetization machine that will help you grow and scale for years to come. In this article, we will go over the 5 keys to SaaS monetization. We’ll also explain why entitlements and entitlement management are inseparable from the monetization equation.
01 Introduce Dynamic Pricing
Think back to the days when you set your pricing strategy. You came up with your product packages and price tiers by gauging your perceived value and your customers’ willingness to pay. But your offering is not the same as it once was. The business — and your customers — have evolved.
To suit your customer’s evolving needs, you need a quick and efficient way to deploy new packages and offers. A rich catalogue of product packages means more opportunity to capture value. Operationally, the key to achieving this is your entitlement system.
Entitlement management provides a modular system for monetizing features and operationalizing new packages. Think of entitlements as easy-to-configure building blocks. Each block is a feature that you’ve chosen to monetize. Stack the entitlement blocks to build lots of new product packages. Then easily connect each package to your ecosystem. Without entitlements, pricing and packaging are left to development teams. Agility suffers. Instead, use entitlement management to get more offers to more customers and achieve sustainable growth.
02 Prioritize Business Agility
In software development, the agile cycle of testing, improving, and developing is a given. But not so in business operations. Monetization, adjusting pricing, and rolling out new packages are not quick and easy processes. That means that business models are not primed for experimentation, learning, and growth.
At least not yet. One of the main reasons for the challenges in creating business agility is that pricing, packaging, and commercialization falls between roles and systems. Should every business change need developers? No!
A dedicated entitlement management system decouples business model changes from engineering. Remove hard-coding from commercial decisions and let your growth teams fly.
03 Automate to Enable Monetization at Scale
We love to hate manual operations. But let’s be real. Doing things manually was probably the best (and only) way to grow your business when you were just starting out. Manual processes work – until they don’t.
As you grow, you have more customers and more complex deals. Setting up users with the software they bought becomes a real challenge. Manual provisioning is incredibly labor-intensive. Engineering teams often need to be involved. They may even need to write new code to enable different functions for different users. It’s time-consuming and error-prone work.
Granted, you might have created a homegrown system to help streamline your operations. But as business booms, homegrown solutions can’t keep up. What you need is a dedicated entitlement system built to automate setting up complex offerings and getting them into the hands of users. It’s a critical tool in the monetization toolbox.
04 Reduce Uncaptured Revenue
No matter what growth looks like for you — closing enterprise-level deals or capturing lots of small deals — one thing is certain: contracts are becoming more complex.
You need to give your customers access to what they’ve paid for, and you need to make sure you’re being paid for what the customer is using. But what was once simple is now tricky. Chances are some of your customers are accessing more of your product than they are entitled to. The best way to make sure your are paid for what your customer is using is a dedicated entitlement management system. Control customer access to paid features. Lock and unlock the features you’ve chosen to monetize per subscription plans. Identify over or under usage, and empower customer success teams to close revenue gaps.
Contract complexity is a part of SaaS growth. But with the right systems and processes, you can blast through blockers and achieve your business goals.
05 Get Accurate Usage Data Into The Right Hands
Who uses what product, service, or feature? When do they use it? How often and for how long? Would you want access to that sort of information?
Of course you would. It’s a goldmine. Usage data is actionable across teams.
- Product teams can use it to guide roadmap decisions.
- Sales teams can monitor the volume of usage to find upsell and cross-sell opportunities.
- Customer Success teams who note low usage can proactively step in to help customers with any challenges.
Clearly usage data is relevant for many functions. But the data it is usually scattered across multiple systems, hard to interpret, and even inaccurate. Without a single source of truth for usage data, you are missing the ability to create experiences that delight your customers.
Entitlement management is the best way to capture accurate product usage and get your teams reliable – and actionable – insights.
What’s Next?
Ask your teams these questions to get you thinking and help drive consensus.
- Have we identified our key value metrics? Are we monetizing them
- How much can we increase NRR with new packaging?
- Can we go to market quicker by repackaging our existing solutions?
- How much faster can we scale with automated provisioning?
- Are we confident that our usage data is accurate and current?
- Am I ready for monetization? How do I start? What should I do first?
Contact us to figure out the best way to start a monetization journey!