We increasingly see that businesses and customers alike are recognizing the appeal of billing options including subscription and consumption-based models that were previously largely the domain of specific industries like communications and media and entertainment. However, the adoption of these new models can come with many challenges, from the unpredictability of revenue to potentially overwhelming influxes of data. Of course, these issues only escalate for businesses that bring their own complexities of product, international dealings, and more. To give us some insight into how such companies can take on these new billing models successfully, we invited Marni Burger to speak with MGI Research analyst Andrew Dailey at the 2021 Monetize Forum. Marni is the Vice President of Marketing at Gotransverse, provider of a cloud-based software designed to facilitate sophisticated monetization across a range of industries.
Key Issues
How is usage now being employed in industries not traditionally associated with it?
How can companies tackle unpredictability in usage-based models?
What capabilities should large, complex enterprises look for when assessing different usage solutions?
Guest Profile
Marni is the Vice President of Marketing at Gotransverse, whose cloud-based software enables companies to operate as a subscription business model, including the often-challenging aspects of usage-based pricing and monetization at internet scale. Marni is a proven marketing leader with over 15 years of experience in B2B software and SaaS marketing, marketing to a variety of different types of buyers across a range of industries.
Andrew Dailey
Hi, everyone. This is Andrew Dailey of MGI Research, and welcome to our next session, “Sophisticated Monetization: Planning for the Future.” People often think of something like subscription or usage billing as a relatively modest-sized project or a project for modest-sized businesses, but there’s a lot more to it. To get into what it really takes to be successful in a large, complex, sophisticated environment, whether that’s for a mid-sized company or a very large company, I’m delighted to be joined by Marni Burger, the Vice President of Marketing from Gotransverse. Marni, welcome to the Monetize Forum.
Marni Burger
Thanks for having me, Andrew. Hey, everybody.
Andrew Dailey
To start, just give us a little sense of the size, scope, and background of Gotransverse.
Marni Burger
Great. At Gotransverse, we enable global, multinational B2B, B2C, and B2B2C businesses to drive new revenue, bring new offerings to market faster, and improve cash flow with our cloud-based, order-to-cash billing platform designed for innovative monetization models at scale. We really focus in on those complex monetization challenges, and we’re pretty uniquely positioned in the market between the numerous simple subscription billing providers and those legacy complex billing providers.
Andrew Dailey
One of the themes running through the Monetize Forum is the rise of the so-called usage economy. Where does your organization fit into that trend? How do you see that evolving?
Marni Burger
We’ve really been involved with usage-based and consumption-based billing since the beginning, 12 years ago. We saw industries needing those types of models, besides just telco which had it at the time. Additionally, we certainly saw the value in the cloud as well. Our customers are doing some of the most complex usage in the world across industries like communications, media and entertainment, SaaS, and more. We have B2B telco customers that are doing monthly invoices based on lookups of rates for country and city codes around the world, while also looking at what types of services are being used—call, data, SMS, et cetera. They have millions of entries in the lookup tables with different rate cards based on country or city. We also work with a mortgaging company that resells mortgages with different terms. Each line item can determine the rate in the lookup table. They can have 30 to 50 rules per customer with many different lookup tables and values. A lot of billing solutions talk about how they have usage, but they can’t always handle the complexities and volumes that come with that.
Andrew Dailey
What are some of the changes you’ve seen as the usage and consumption models have gained more traction here, even just in the last 12 months? What are you seeing out there?
Marni Burger
There are certainly industries that have always used these models. Examples include communications as well as media and entertainment, but in the last few years, we’ve really seen other industries take on new technology and really adopt these new types of models. We work with a logistics company that, of course, has been really successful over the last year. They’re working with warehouses and merchants to bill based on how much space is getting used and the number of orders coming in and out of the warehouse. We work with an energy company that bills businesses based on consumption of services that help reduce utilities, waste, and telco expenses. We also work with an airport that’s moving to usage-driven businesses. It charges airlines, enterprises, and other businesses based on airport charges like the time of day a plane takes off and lands, staff parking options, and telematics (which is basically just internet). These are just some of the examples that we’ve seen, and we’re seeing more and more each year.
Andrew Dailey
You have a wide range of industries. One of the benefits of a recurring revenue business is the predictability. It gives predictability to the customers, and it gives predictability for the seller to model their business and forecast revenues. When you get into a usage-based model, you then have to try to forecast revenues and model your business based off of consumption by your customers that may or may not take place. What are the ways in which companies solve that inherent problem in a usage or consumption model?
Marni Burger
We certainly have customers that are 100% usage or consumption-based, but a lot of our customers actually decide that they want to do a combination. They may have some usage or consumption-based pricing, but they also have subscription or recurring pricing and then one-time pricing or fees associated with that. What they’ll do is use that combination and maybe make the subscription the baseline. Subscription may be what people do the most, and then, they’ll have an addition of that usage-based or consumption-based pricing. That way, you’ll have that baseline, but you’ll be able to get additional revenue as people are using these additional offerings.
In talking to the customers that do have 100% usage, you’ll start to see trends. It’s not like users are going to be all over the map with your product. Typically, the users themselves are going to have trends, and then your customer base will have trends as well. So, you can use that to help in predicting out the revenue that you’re going to be seeing from those different products and services.
Andrew Dailey
Got it. One of the challenges of real usage billing is the issue of data mediation, which is a term that comes out of the telco space, and the telco world understands it very well. It’s the issue of how you take different data types and data sources and normalize that data, standardize it, sometimes enhance it, curate it, and then feed it to the appropriate systems in different time intervals as necessary. First of all, for the layperson, what is mediation, and why is it such a critical and necessary component to a real usage-based model?
Marni Burger
We’ve found mediation to be, like you said, critical if you’re adopting a usage or consumption-based model. Basically, what happens is that usage events will come in a wide variety of formats. Mediation makes sure that they get digested quickly and properly to be rated by the rating engine. So, good mediation solutions, as you said, will have these business rules that can be added on top. For example, if you need to aggregate the events or if you have missing data and need to do data enrichment with a lookup table, you can do that to ensure that you have good data coming into your system.
We have customers with a wide variety of applications that have usage data from different types of source data systems with different data formats. Two common examples that we see are hosting services like AWS, Azure, and Google Cloud and application services like mail servers, web services, et cetera. As you can imagine, the formats of those data sources are going to be very different, and you need to put them into a certain format in order to be digested properly into your billing solution.
So, without mediation, you would need to do some sort of data transformation through programming, maybe ESB, or external mediation solution. That’s just not going to be as good as if you can have it directly in with the billing itself.
Andrew Dailey
You mentioned one of the airports that you’re working with, and you also mentioned these complex models where you have subscriptions, usage, ramp deals…a lot of complexity. Talk to us about this airport. How many different billing use cases does one organization have, and is that common across what you see in large, sophisticated businesses?
Marni Burger
The airport is a really interesting scenario because, if you think about airports and other industries like that, they have industry-specific software that can accommodate their complexity. But what’s kind of unique to this airport is that they’re looking at all the activities that happen at the airport as usage events. By doing that, they’re able to adopt a more common kind of SaaS usage-based solution.
It’s interesting because there are all of these different types of airport charges that you can have. As I mentioned, time of day at which the plane takes off is one, but you also have baggage handling and all of these different activities that are part of the charges as different usage events that take place. Staff parking options is another one. Maybe staff have a badge that gets them discounted parking, and they may be charged per time that they come in. Then internet—as you know, there are lots of different ways that you can charge for internet too, so being able to aggregate all of that is key. The airport situation that we work with is a B2B, so they’re not working with consumers, but they’re working with other airlines and with enterprises. You can imagine the different variables that might come into charging that airline every month or that business that’s using the airport as well. So, it’s just really interesting—all the different variables that come with that. By thinking of them as usage events, like I said, they can adopt a more standard SaaS application as opposed to having to go to some of these niche solutions that are in place as well.
Andrew Dailey
I want to go back to one of your earlier comments. You talked about how in usage models, you very quickly start to see trends in consumption patterns. Talk to me a little bit about the importance of data and analytics and how the use of that changes when you go from a relatively static model to a more dynamic or kinetic model like usage-based.
Marni Burger
As you might expect with usage data, you can see how people are using your product. And that gives you insight for forecasting, a lot more insight than if you had a one-time fee or a monthly subscription. You get to see variables of how people are using your product. Maybe they’re trailing off, maybe they’re ramping up. There are opportunities, of course, for cross-selling and upsells as part of that.
But one of the things that we’re really focusing on is that it’s not just the usage data. It’s how to combine that with the mediated data and the rating data. That really gives you some rich insights into how people are buying your products and services, as opposed to just how they’re using them. A thing to take into consideration with that (and really all usage data you’re dealing with) is that there are going to be large data volumes with usage data that you don’t get with other types of pricing models. That means you’ll need fast access and fast query capabilities as part of that. Another thing that we really like to talk about with data is that it doesn’t happen in a vacuum that’s just billing. We really talk with our customers about combining the billing data with other data sets and putting it in a preferred reporting or analytics tool. That’s how you can really drive these unique business insights to help with those real-time business decisions.
Andrew Dailey
So, you were one of the first companies to partner with Snowflake. I’m guessing that what you just described is really the key motivation behind that relationship.
Marni Burger
Absolutely. So, we have an offering called Premier Data Access, where we partnered with Snowflake, like you said, and they enable us to use our data sets, merge those with other data sets, and put that in any reporting or analytics tool that you might need. They do it in near real-time, and they enable that fast access that I was talking about as a requirement that comes with these large data volumes.
Andrew Dailey
You were describing this fairly complex airport customer scenario. If I’m a large, multinational business with a dozen or more different types of business models and use cases, what should I be looking at or analyzing when I’m looking at different suppliers? How are their requirements different than, say, a standard SaaS company or something like that?
Marni Burger
So, you might think about currencies and languages, and those are, of course, things you should be looking at. But there are other things that we’ve really learned by working with these global, multinational businesses that you need to take into consideration as well. Thinking about how regions do business is one. Certain regions do business differently than other regions, so typically, you’ll want to look per country or region and create different ways that you’re showing your billing and pricing to your customers. Your product catalog and pricing might be different. For example, you can have a USD price that’s different in the US versus Australia versus Singapore. There are also some other things that you might not be thinking about, like the fact that payment methods, gateways, and processes are different. People in the US like to pay differently than they do in Europe, so you’ll need to take that into consideration when moving into new markets. Also, the display of information on the invoice can vary in more than just language. You might need different types of information on the invoice or in different locations based on what the customers need in that area. User access security and currency conversion needs can be different as well. To me, you have to at each country or region as its own entity and be able to accommodate the unique needs that they have and which the market demands in that area.
Andrew Dailey
Got it. When you’re in a sales cycle, it’s difficult to really provide unvarnished advice to a prospect. As you’re not selling me anything, and I’m not selling you anything, what unvarnished advice would you give to a CFO or CIO who’s going down this path to start looking at usage-based models? What would you want them to know before anything else happens?
Marni Burger
Actually, the first thing that I have for this is something that we do talk about as part of the sales process, and that’s planning for the future, planning for scale. Don’t only think about your needs right now; also think about what your customers and the market are going to demand in the next two, three, and five years and plan for that. You don’t want to put a solution in place now and then have to redo it a few years down the road. The next thing is to really look at the agility of the solution that you’re putting in place. Obviously, 2020 required a lot of changes for businesses and is an example of why you really need to look for a solution that will enable you to test out new pricing, new pricing models, and bring new offerings to market quickly. Agility is really a key part of that. The third thing is that not all usage and consumption-based models are the same. There are a lot of vendors out there who talk about how they do those different types of models, but often, they really just do the basics there. So, if you need more than just the basics, make sure that you’re investigating the different options.
Then finally, I asked the team what their advice would be, and they had a very pragmatic response that I wanted to share: Make sure that the invoice is really easy to read, transparent, and understandable for your customers. When you’re talking about usage and consumption-based business models, it can sometimes be a little more difficult to explain the pricing. Therefore, making sure that you’re very clear on that in your invoices is going to be very important in building that relationship with your customers and helping with long-term tickets and things like that.
Andrew Dailey
Absolutely. No one thinks about it, but your invoice really is your brand. It’s when the rubber meets the road and the customer sees exactly what they’re spending, so hopefully, it’s clear and easy to understand. You don’t want to create any underlying tension or unease when they look at that bill.
Marni Burger
That’s exactly what they were saying, yes.
Andrew Dailey
We’re almost out of time here, but what’s one thing that every CEO or CFO doesn’t know about Gotransverse but should?
Marni Burger
As I’ve mentioned, we really focus in on the complex monetization needs that businesses have, and typically, the challenges associated with those needs are going to involve new processes and new types of roles. At Gotransverse, we really want to partner with our customers. We bring in billing experts to help guide them to find their best solution to help them meet the needs that they have. We have an executive sponsorship throughout the whole process in case you want to talk through what your solution is, and if you need to escalate something, you have somebody to talk to right at the top. We also have a customer success manager that’s involved right from the beginning to make sure that we can find that right solution for you.
Andrew Dailey
Great. That was Marni Burger, Vice President of Marketing at Gotransverse. Marni, thank you very much for your time, and I would like to remind everyone that there’s more information at the Gotransverse booth. Marni will be around for the networking and is a great resource if anyone has any questions. Thanks to everyone for joining us, and enjoy the rest of the Monetize Forum.
Marni Burger
Thanks everyone.
