Data Monetization: The Definitive Guide for SaaS Businesses

SaaS Growth and Trends
Nov 17, 2023
Data Monetization: The Definitive Guide for SaaS Businesses

Time is money. And in today’s world, data is just as 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.

What is data monetization?

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.

Why monetize your data

Besides the obvious reason that is more money, there are other practical benefits of data monetization.

  • Expansion revenue - by offering users paid access to their own data, you can provide additional value from your product and create opportunities for cross-selling and upselling
  • Refine your operations and remove bottlenecks - you can learn what is halting your sales, customer experience, marketing, or general business operations and use that data to make your business leaner and more efficient.
  • An additional revenue stream - most SaaS businesses earn revenue from subscriptions; selling data could be an additional way to create new revenue streams without investing significant time and money in new development.
  • Strategic partnerships - you could share relevant data with non-competing businesses and partner up. For example, a meeting booking SaaS could share data with a subscription company, creating a way to charge people for meeting sessions
  • Complying with the law - depending on what kind of industry you’re in, collecting data for monetization purposes can have a nice side effect of complying with existing regulations in your area.
  • Improved marketing and sales operations - which traditionally cost a lot of money and where ROI is crucial. When collecting data effectively, you can see opportunities for quick wins and discontinue strategies that don’t make any profit

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.

What are different data monetization strategies?

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.

Internal data monetization

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 

Cost reduction

Let’s say you do an audit of your inbound marketing data and tally up your spendings and overall return on investment. You compare data from various sources, such as:

  • Organic traffic
  • Social media marketing
  • Paid social
  • PPC ads
  • Influencer marketing
  • And others

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 cost 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.

New revenue channels

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 inwards, you can collect effective data and not only streamline your operations but also find out the most profitable channels for making new revenue.

External data monetization

If your business generates a lot of data, there is a good chance that your customers find that data valuable. In this model of data monetization, you sell access to data to your customers for a certain fee.

There are two paths you can go.

Selling access to proprietary data

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…

  • Most played sections of videos
  • The parts of the video with the most engagement
  • The videos and parts of videos that drive the most conversions
  • And more

This type of data monetization can work really well if you have a vast amount of data that you know for certain your customers will find useful.

Adding embedded analytics to your product to upsell your customers

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.

external data monetization - embedded dashboard

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 as an add-on - but more on that later.

Tips to get started with data monetization

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.

Create pricing tiers

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.

pricing tiers in saas

Here’s an example of one of these intiatives. 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.

Create product add-ons

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.

Create custom dashboards

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.

custom dashboards for saas

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.

Wrapping up

Data monetization is no longer something that is nice to have for SaaS companies. It is becoming a necessity as it not only allows you to earn more revenue but also provide 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.

Build your first embedded dashboard in less than 15 min

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.