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Time is money. And in today’s world, data is just every bit as valuable as time. When you use it in the right way, data can lead to actionable insights, improvements in operations, and an increase in revenue.
If you run a SaaS business, collecting data and monetizing it can benefit your business internally by improving your operations and externally, by helping you earn extra revenue from your customers.
Don’t know how to get started? Let’s help you out.
Data monetization is a process where a company uses the data they generated themselves to attain some financial gain. If a company is already data driven and collects vast amounts of data sets, turning it into revenue is a logical next step.
Note that monetization does not have to entail selling. You could also use the data you generate internally to improve your systems and create a competitive advantage for your business.
Besides the obvious reason that is more money, there are other practical benefits of data monetization.
In short, collecting and monetizing data as a SaaS business makes a lot of sense from every aspect of management, marketing, sales, and business operations.
There is more than one way that you can get revenue from your data. The main distinction is between internal and external data monetization. Here is how those processes differ and what you can do with each.
With internal data monetization, you take the readily available data you have to refine and optimize your processes and eventually, earn more revenue. For SaaS businesses concerned with internal data management and focusing on data quality, there are two
Let’s say you do an audit of your inbound marketing data and tally up your spending and overall return on investment. You compare data from various sources, such as:
Once the data is in one place, you can use analytics tools to find conclusions. For example, you may spend the most on PPC as a channel but it gives you customers with the lowest lifetime value.
In this case, data monetization means taking the data that already exists and using the conclusion to reduce unnecessary costs and invest in smarter channels for growth.
As an agency for B2B marketing, data monetization should be a key focus for you. By leveraging the data to optimize your client's marketing efforts, you can help them achieve better ROI and drive growth for their business.
Say that you have a SaaS for accounting used by small to mid-size companies. You want to get into data science and forecasting, so you take a look at your existing customer base to make some conclusions.
After taking a look at your data platform, you realize that the majority of your most valuable customers come from the legal sector. In other words, you could niche down on the lawyers who use accounting software and earn more revenue.
By looking inward, you can collect effective data and not only streamline your operations but also find out the most profitable channels for making new revenue.
If your business generates a lot of data, there is a good chance that your customers find that data valuable. In this data monetization model, you sell access to data to your customers for a certain fee.
There are two paths you can take.
If your product has an ecosystem offering valuable data to your customers, you can sell that data at a cost. For example, if you sell a SaaS for video hosting, you could charge the customers to give them data about things such as…
This type of data monetization can work well if you have a vast amount of data that you know for certain your customers will find useful.
You don’t have to create new products to add value - you can add an embedded analytics dashboard to your existing product. The data is already there and your customers may have access to it already.
At this point, they have access to raw data, but giving them access to real-time visualization of their data can help with decision-making and realizing how much value your product provides.
Typically, creating an embedded analytics dashboard would require plenty of resources and mixing different data products. You need to connect the data sources, choose the right types of visualizations, and find a way to share them.
But it doesn’t have to be that way. With Luzmo, you can create and connect a dashboard to your SaaS product in a matter of just a few hours. You can then offer these dashboards as a part of a higher pricing plan or sell them as an add-on - but more on that later.
Today, we’re going to mostly focus on external data monetization. For SaaS apps, there are quite a few use cases for making money from your data assets and offering additional value to your stakeholders.
The SaaS business model is most often based on different tiers. Depending on how many features you offer, you give different pricing points and plans to your customers. To get some economic benefit from your data collection, you can offer an additional plan where you give access to customer data for a fee.
Here’s an example of one of these initiatives. Let’s say you sell an email marketing tool that lets customers send out email campaigns and newsletters. You can offer three plans:
Plan 1: $50 - for email marketing
Plan 2: $80 - for email marketing + customizable templates + white labeling
Plan 3: $120 - everything in Plan 2 + embedded dashboards that show users’ data (e.g. their email marketing metrics)
By adding an embedded dashboard to the most expensive plan, you’re creating extra value through data monetization. You’re collecting data on behalf of your product users anyway.
The only difference is that in the most expensive tier, you give users access to that data in the actionable form of embedded analytics.
Based on your business performance and company data, you may not want to add a new pricing tier to your product. Instead, you can keep the same pricing plans and offer add-ons.
Let’s take the same example from above. Plan 1 and Plan 2 remain, but you introduce an add-on that costs $30 per month. Once a user purchases this add-on, they can get insights into their data.
This provides an exciting opportunity for upsells but still keeps your pricing plans affordable for most users. Make sure to highlight the value of data during demos, sales calls, and onboarding so that they know what they can get with add-ons for data visualization and analytics.
The more expensive a product is, and the more enterprise the audience, the more personalized their user experience should be. If your product is high-end, you could let your customers get insights into their use of data with custom dashboards.
It’s simple - instead of creating the same dashboards for everyone, you ask your enterprise accounts if they would like a bespoke, custom dashboard with the right data and metrics they find useful.
For example, Intent Technologies is a proptech company that looked into ways to provide more value and prevent customers from churning. To do this, they harnessed the power of data analytics and visualization - and offered custom dashboards to their most valuable customers.
This functionality lowered churn while increasing customer satisfaction.
Partnering with data marketplaces allows businesses to monetize data by selling access to specific data sets. These platforms act as intermediaries between data providers and buyers, offering various use cases for industries looking to leverage data as a service.
Any SaaS company focused on healthcare can provide anonymized customer data for medical research, which enhances data value while maintaining data governance and data quality. Such a data monetization strategy not only generates additional revenue but also strengthens the company’s position within the ecosystem of data-driven solutions.
Another example could be a company that partners with data marketplaces to allow clients to buy and sell data products. Usually, that is done to create a competitive advantage by enabling real-time data sharing and analysis.
Providing API access enables external data integration, which can be leveraged for data analytics or building new products. Through granting access to raw data, businesses can facilitate seamless data exchange between platforms, aiding in real-world applications like supply chain optimization or business intelligence.
With such an integration capability, businesses receive data-driven insights, allowing stakeholders to enhance their decision-making processes. It’s a practical way to create new revenue streams without compromising the user experience.
For example, Salesforce offers API access to its CRM data, enabling businesses to integrate with other apps and services. The flexibility of these systems supports complex business models by promoting the sharing of data and expanding partnerships.
If you want to unlock extra economic benefits and build partnerships even further, data-sharing agreements might be what’s worth pursuing. By sharing select types of data, companies can co-develop new products or enhance existing offerings.
For instance, sharing machine learning models and big data analytics with a logistics partner can streamline the supply chain, improve profitability, and deliver better customer experience.
A retail company might share purchasing trends and demographic data with a shipping partner. It is therefore possible to reduce costs and improve metrics by optimizing shipping routes and inventory management through this collaboration.
Monetizing anonymized data sets can be particularly lucrative for data providers focusing on industry benchmarking and business intelligence. Through the use of existing data, companies can offer insights into industry standards and performance metrics that can be valuable to others.
This form of data monetization can be particularly appealing to firms looking to validate their own performance against competitors and improve their data strategy.
A well-known Gartner often uses anonymized client data to create industry reports that set benchmarks for various technology sectors. This provides data assets to clients while maintaining anonymity and data privacy.
Creating a freemium model with basic data analytics features can drive user acquisition and engagement. Offering dashboards that provide initial insights from data collection at no cost can entice users to upgrade for more comprehensive analytics and forecasting tools.
Such an approach not only aids in internal data monetization but also builds a loyal user base, enhancing customer experience and increasing the chances of upselling.
For example, a SaaS can offer a free version of its accounting software, allowing users to analyze limited data sources. To access advanced features and more types of data initiatives, users need to purchase a paid plan. Using this strategy, the company maximizes data value while nurturing potential customers into paying customers.
Data monetization is no longer nice to have for SaaS companies. It is becoming a necessity as it not only allows you to earn more revenue but also provides additional value to your customers and stand out against the competition.
The best part is that you no longer need a team of developers to get started with data sharing and business intelligence. With Luzmo, anyone can build an embedded analytics dashboard for a SaaS product or a website. It takes hours - not weeks or days.
Don’t just take our word for it - grab a free trial of Luzmo and see for yourself.
Experience the power of Luzmo. Talk to our product experts for a guided demo or get your hands dirty with a free 10-day trial.
