Blog Entry

Sep 27

Software Licensing Satisfaction: The 4 Building Blocks to a Positive Customer Experience

A topic I enjoy talking about is end customer experience. This is still a very much overlooked aspect of software licensing. We spend a lot of time talking about security and piracy protection, and we talk much less about how that security impacts the end customers, especially the legitimate ones!

Why is it such an important topic? Well, quite simply, the end customer is a much more powerful and influential entity than they used to be. Many vendors are finding it challenging to maintain a technological advantage over their competitors and this has dramatically increased the focus on reputation and customer experience. This has gotten to the point that in many market segments of the software industry, a positive end customer experience is the main competitive differentiator. It is not uncommon to find senior roles within larger organizations whose prime responsibility is to focus on the customer experience aspects of their product offerings. I own a decent collection of business cards with job titles such as “VP of Customer Experience” and “Director of Customer Satisfaction” proudly stamped upon them.

This has created a shift in the balance of power between the licensees and the licensors. When it comes to software licensing, it is a common belief within end customer circles that license enforcement can have a negative impact on the overall user experience of a software application. This power shift has resulted in end customers demanding more involvement in the decisions around their software licenses, and needing more ownership and governance on how they want to purchase, consume, and deploy the software. And as with most things, the more power you have, the more you want, and the power shift continues to accelerate towards the end customer.

So, the stage is set.

What I really want to talk about here is how software licensing, when used properly, can enhance the customer experience, not harm it.

Let’s first talk about product versatility. So many people think this is a simple no-brainer, which in my experience is the biggest reason why this is also one of the most overlooked areas. Product versatility is split into two parts.

The first part is all about slicing up product functionality into separate licensable components, and using feature based licensing to enable to disable certain application functionality. This allows a common software platform to go out to every customer, yet each customer will have access only the components they need. This reinforces the perception of value, since a customer that is provided with more functionality than they asked for normally feels that they have also had to pay for all that extra unused stuff.

The second part of this covers the back office aspects. Product and pricing structures should be simplified with flexible product catalogue definitions, avoiding the need to have an endless list of SKU’s and product codes. The right amount of catalogue flexibility will allow products to be bundled and sold the way the customer wants, even when each customer wants their own bespoke pricing formula to be applied.

This leads on to license model flexibility. When application features are licensed separately, it means that each feature can have its own independent license metrics applied to it allowing a different combination of license terms can be applied to each deployment. For example, customer ‘A’ wants to purchase a core module on a subscription based term, and but fixed number of seats for various add-ons. Whereas customer ‘B’ wants to buy the same core module on a pay-per-use basis, but use the add-ons on a subscription basis. The combinations are endless: seat based, concurrent, pay per use, volume, trial, and so on. Yet all the while, it is still the same product being sent out to everyone. The same concepts can be applied to a security policy. The ‘VIP’s’ can have the privilege of soft enforcement policies, whilst tighter restrictions can be applied to regions where piracy is a greater concern. Yet all the while, it is still the same product being sent out to everyone.

I could write a whole blog just on the topic of product and license model flexibility (and maybe I will do next!) but I also want to cover a couple of other important points today. But the bottom line is that your organization should have the ability to address the pricing model that the customer wants, especially when you can do it and your competitors can’t.

A different, but also extremely important building block for creating a positive end customer experience is usage transparency. I remember reading an industry analyst report a while ago that stated that more than 60% of software end users believed that they had purchased more software licenses than they needed. What stood out in the report was that when these same end users later performed audits, the reality was most of them had an optimal number of licenses. This is exactly the sort of thing which happens when usage transparency is missing. It is important that your end customers have access to the real-time and historical data when they need it. It allows them to determine how many licenses have been purchased, versus how many have been activated. How many seats are being used, how many are being refused, and how many are surplus. Which site is over licensed, and which is under licensed, and so on. They should be able to slide and dice the information any way they need to.

This leads on to the final piece – self service. This ties back in to the start if this blog when I was talking about the shift in power and how end customers are demanding more control and governance. The best way to empower your customers is to provide them with self service capabilities through licensing dashboards or end user portals. Self service capabilities should allow them to control when and where licenses are deployed, all on their own schedule. They can divide their entitlements out to the sites that need them most, and manage returns and redeployment as demands change. Self-service also of course includes self-auditing, which leads back to the previous topic around usage transparency.

So, always keep in mind these 4 building blocks: versatility, flexibility, usage transparency, and self-service.  Doing this right means that your customers are happier, and they can lose those traditional license enforcement ‘handcuffs’. It’s not a pipe dream to have customers who actually praise your software licensing policy rather than balk at it….

I’ll be at LicensingLive! next week in Cupertino speaking on the topic of end user experience.  Hope you can join me there.