For every dollar a company spends, the return on investment has become the inevitable follow-up question. Business owners are focused on making the right investments for long-term business growth. So before any CEO or product owner would even consider a client-facing analytics offering, also called embedded analytics, for their product, there is one question they want to see answered. “What is the ROI of embedded analytics?”
In this article, we will dive deeper into how analytics adds overall value to your platform, how to monetize your data, and some other unconventional ways to measure return on investment of a customer-facing analytics platform.
But before diving into the benefits, let’s look at the potential threats if you ignore analytics:
What if you don’t invest in embedded analytics?
As it typically involves some start-up costs, it’s tempting to treat analytics as an expense. And typically, the return on investment shows on the long term. Unsurprisingly, with only costs on your balance, your ROI will be seemingly low. So, should you not spend the money then? Well in theory, that is an option. But think for a minute.
What if you looked at it from a different perspective? What would be the cost of NOT adding embedded analytics to your SaaS product?
Let’s see. We know for a fact that:
Data has become a commodity, and users take for granted that reporting is built into any modern technology they adopt;
Users love data, and use these insights to gain more value out of the software platforms they use;
Managers need metrics to prove the ROI of your platform and take faster and better business decisions;
And some – if not all – of your competitors are already offering analytics.
What would happen, knowing all of this? Most likely, you’re losing sales and seeing churn to your competitors who pick up the baton where you drop it.
So, the expense of not investing in analytics is a real threat. And potentially a much bigger one than the initial startup expenses that you fear will not generate immediate return.
Once you start to consider embedded analytics as an asset to your business, your ROI will sky-rocket.
How to measure the ROI of Embedded Analytics
The data industry is growing at an even faster pace than the tech industry. Needless to say, data monetization is your golden ticket to accelerating your business.
Once you start valorizing data towards your users, you will see how embedded analytics drives ROI in 3 obvious areas:
1. How to maximize customer lifetime value & reduce client churn
When you embed analytics in existing business processes, it drastically improves your client’s experience. Your customers no longer need to manually process data themselves. Instead, they get instant insights, right within their natural business workflow.
Simply put, a good embedded analytics solution will tell your user the best thing to do next. And what more would a user want? It unlocks deep insights about their business, without having to cut through the ‘data noise’. Instead, your users can focus on prioritizing what’s most important and take action on the insights immediately.
Moreover, a visual dashboard will help that same user to prove the value of your software platform to all their internal stakeholders. Even the ones that don’t necessarily use your platform. Thanks to collaboration and sharing of data, you can cast a wider net and make your product irreplaceable in the minds of the entire organization. And the stickier your product, the lower the risk for churn.
2. How to monetize data analytics & generate new revenue streams
Keeping your customers satisfied is a crucial step to keep your status quo. But surely, you want to beat your status quo and further grow your software company’s revenue too, right?
So you might wonder, how do companies monetize data? There are multiple ways to generate new revenue off your analytics offering, such as:
Offering dashboards in higher pricing tiers;
Offering dashboards as an add-on in your pricing;
Customized dashboards as an upsell;
White-label analytics for customers to build their own reports;
No software company wants to hear they lost a strategic account to their competitor, just because they had better reporting. So don’t let it happen to you. Remember, users love data these days, so let that work in your advantage.
Stunning in-product dashboards increase the appeal and stickiness of a product. Many of your competitors probably already have analytics, but you can beat them in the game:
More collaborative analytics that are easy to share;
Stunning-looking dashboards that seamlessly match your platform’s style make your product look sexy, users will perceive your brand as innovative & future-proof;
Highly actionable analytics, allowing your users to set up alerts or take immediately with a single click.
Unconventional methods to measure ROI
The success areas mentioned above are typical ways to measure return on investment: new ARR, churn, upsell, and the likes. But apart from measuring direct add-on revenue, you may want to think of other metrics aligned to your company’s big picture vision & objectives. Surely also in your organization, there are other ways to look at the value of embedded analytics. They might be more unconventional, but equally important measures of success.
Below are just a couple of examples, but this is by no means an exhaustive list. Think of your own company’s success metrics and how you could tie these to your analytics-based offering.
1. Activation of users
How many prospects can you effectively activate during a trial or PoC because of your analytics offering? You can measure dashboard usage compared to the usage of other features to understand how it impacts activation.
2. Stickiness of your dashboards (to increase LTV)
A good dashboard is sticky by nature, and will increase adoption of your users. Just like in soccer, a dashboard works like a personal scoreboard. Your entire organization looks at it to measure performance, and it creates a healthy competition between users. By measuring dashboard usage, you’ll understand how your dashboard sticks with your users.
3. Boost product usage
Don’t just measure dashboard usage, but also look for uptakes in overall product usage once you introduce dashboards. Sticky dashboards boost the overall usage of your product. The more interactive and the more actionable the insights in your platform are offered, the more value a user will get out of your full software package.
4. Happiness of your engineering team
This may seem far-fetched at first, but think about it. Do you think it makes your engineering team happy to get side-tracked by analytics, which causes spending less time on the core product? Engineers get satisfaction from working with modern tools that help uplift the heavy work. Embedded analytics saves your development team time, and lets them focus on productizing data in your full stack product, and ultimately improve your overall product offering.
Tip: this ROI calculator will give you a rough indication of how you’ll save time & money with embedded analytics versus building an analytics solution in-house.
5. Employee retention
Research has shown that innovation is closely linked to employee retention. And it is no secret that data & analytics offer numerous opportunities for organizations to innovate in this digital era. Linked to the above, your engineering team will get satisfaction from working on new & innovative analytics features. Yet, they will also appreciate if the groundwork has already been done. Embedded analytics offers an easy framework they can build upon, without having to start from scratch.
6. Importance of a good look & feel in brand perception
Just think about typical consumer products like shampoo, or snacks. Would you buy a product with an ugly packaging? No. So why would your users accept ugly dashboards?
Beautiful, good-looking dashboards can be employed as a unique selling point when closing a new business deal. Do it well, and you will outsmart competition.
7. Regulatory, non-compliance requirements
If you’re considering to add analytics to your platform, privacy and security requirements will eventually arise. Compliance with CCPA and GDPR guidelines are a must in this day and age. Choosing for a vendor with the right security labels will save you the trouble and headache of figuring out compliance on your own.
And even more importantly, what if your customers are obliged to capture and report on certain data for regulatory reasons in their industry? Embedded analytics could offer a fast & painless way to offer those reports to your customers.
What’s the ROI of embedded analytics for your SaaS users?
We’ve mainly highlighted embedded analytics as a good investment for your SaaS business. But keep in mind, your SaaS product users are also making an investment when they purchase your software, including its analytics capabilities. Inevitably, they will also measure their ROI of embedded analytics. So make sure your platform proves the value of analyticsacross all levels of your customers’ organization:
With critical KPIs & success metrics available in a blink of an eye for C-level executives;
With zero effort in creating dashboards for business users, on top of data within their workflow;
Have all your functionality centralized in only 1 client-facing application;
By implementing scalable reports, automatically adapted to your customers’ business needs;
When embedding data analytics & dashboards properly into your SaaS product, online platform or IoT service, your end-users will consider it a true asset with a good value for money.
Interested to make analytics a meaningful investment for your product and its users? Book a discovery call with one of our product experts, and get a live demo of how Cumul.io can help you achieve growth.