WEBINAR WILL BEGIN SHORTLY

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1 Desktop Software Subscription Analysis Webinar November 21, 2014 Data at a Glance: - 80,000 total customers - Divided into 8 cohorts randomly selected by first purchase date - 5 years of Heartbeat data - Indicates software activation, use, and renewal information - Purchase history - Contains all licensed products for every year of observation window - Free trial conversions and channel source included WEBINAR WILL BEGIN SHORTLY Presentation recording and slide deck will be made available on the WCAI website by Monday, November 24. Submit your proposal by Monday, December 8, Learn more at wcai.wharton.upenn.edu/research. KNOWLEDGE FOR ACTION

2 DESKTOP SOFTWARE SUBSCRIPTION ANALYSIS A WCAI Research Opportunity sponsored by a Fortune 500 Software Company November 21, 2014 KNOWLEDGE FOR ACTION

3 Introductions Data Sponsor Team WCAI Team Mike Charles Vince Ben Adams Melissa Hartz Colleen O Neill Ningwei KNOWLEDGE FOR ACTION 2

4 Sponsor Overview This research opportunity is sponsored by a Fortune 500 Software Company. - The company is based in the United States, and has been in business for over 25 years. - They sell to businesses and consumers in 20+ countries around the world. - The company offers software in 14 product families, as well as professional services to support their software. - Company sells through a variety of channels, including resellers and their own website. There are more than 100 resellers. KNOWLEDGE FOR ACTION 4

5 Research Areas from the Sponsor The Data Sponsor is open to proposals and projects exploring any of the following themes: Evolution of product portfolio Detecting and forecasting which customers are most likely to renew Effect of auto-renewal on customer behavior & purchasing Purchase channel effect on behavior Predicting customer churn Analysis of customers use of the software and how it relates to retention Uncovering specific patterns in how people migrate between channels, e.g., from offline to online KNOWLEDGE FOR ACTION 5

6 How is the data collected? Customers acquire a product through one of three channels: - Software comes pre-installed by a hardware manufacturer - Product is purchased on the Data Sponsor s website - Product is purchased from a partner retailer Sometimes, the customer is offered a free trial, but ultimately, the product must be registered and licensed. Licenses are typically valid for one year, and must be renewed directly through the software company. KNOWLEDGE FOR ACTION 6

7 How is the data collected? Customers acquire a product through one of three channels: - Software comes pre-installed by a hardware manufacturer - Product is purchased on the Data Sponsor s website - Product is purchased from a partner retailer Sometimes, the customer is offered a free trial, but ultimately, the product must be registered and licensed. Licenses are typically valid for one year, and must be renewed directly through the software company. Registering the product generates a unique Product Serial Number that allows it to be tracked over time. KNOWLEDGE FOR ACTION 7

8 An Example Customer - Chris In 2006, Chris purchases a product from a partner retailer KNOWLEDGE FOR ACTION 8

9 An Example Customer - Chris 365 days later, Chris renews his subscription to the product directly through the software company KNOWLEDGE FOR ACTION 9

10 An Example Customer - Chris Chris renews his subscription annually until 2013, the end of the observation window KNOWLEDGE FOR ACTION 10

11 An Example Customer - Chris Chris renews his subscription annually until 2013, the end of the observation window In addition to renewing his product, Chris makes several configuration changes to his software between renewals, such as activating the software and switching from a free trial to a paid subscription. KNOWLEDGE FOR ACTION 11

12 An Example Customer - Sarah In 2007, Sarah purchases a product from the software company s website KNOWLEDGE FOR ACTION 12

13 An Example Customer - Sarah She renews the product in 2008, but does not renew in KNOWLEDGE FOR ACTION 13

14 An Example Customer - Sarah In 2012, Sarah purchases a completely different product KNOWLEDGE FOR ACTION 14

15 An Example Customer - Sarah In 2012, Sarah purchases a completely different product Generally, products are licensed for 365 days, with a small window of opportunity to renew. Once the license expires, it is no longer eligible for renewal, and the customer must purchase a new product. KNOWLEDGE FOR ACTION 15

16 Data Structure Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 16

17 Data Structure Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 17

18 Accounts A total of 80,000 customers are divided into 8 cohorts of 10,000 each. Each cohort consists of a random sample of customers who made a first purchase in each calendar year from The account data includes: - creation date and date account was last modified - geographic data, such as city, country, and postal code - billing information including payment and credit card type - whether the account is for business or personal use KNOWLEDGE FOR ACTION 18

19 Geographic Distribution of Accounts by Cohort *circle size represents number of accounts KNOWLEDGE FOR ACTION 19

20 Sneak Peek: Accounts KNOWLEDGE FOR ACTION 20

21 Questions? Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 21

22 Data Structure Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 22

23 Subscriptions The Data Sponsor offers 24 products in 14 product families. Customers own, on average, 1.27 products. Subscription data includes: - SKU and product version - date the product was first installed and detected by the software company s central database - subscription start and end dates - flags designating whether the product is set up to auto-renew - when the product was licensed, if at all - whether or not the customer opted into auto-renewal KNOWLEDGE FOR ACTION 23

24 Subscription Start Dates Over Time KNOWLEDGE FOR ACTION 24

25 Subscription Start Dates Over Time by Cohort KNOWLEDGE FOR ACTION 25

26 Subscriptions - Auto-Renewal The Data Sponsor offers an auto-renewal program that allows customers to choose, at signup, to have their subscription renewed and their credit card charged automatically. Customers can actively or passively opt-in to auto-renewal. For example, customers who actively opt-in make the choice at registration to enroll in auto-renewal, while those who passively opt-in have purchased a product where auto-renewal is the default setting. KNOWLEDGE FOR ACTION 26

27 Subscriptions - Auto-Renewal The Data Sponsor offers an auto-renewal program that allows customers to choose, at signup, to have their subscription renewed and their credit card charged automatically. Customers can actively or passively opt-in to auto-renewal. For example, customers who actively opt-in make the choice at registration to enroll in auto-renewal, while those who passively opt-in have purchased a product where auto-renewal is the default setting. Currently, ~65% of subscriptions renew each year, including auto-renewal. Decision Process Active Passive Decision Result Opt-In Opt-Out 1,847 58,966 44, ,528 KNOWLEDGE FOR ACTION 27

28 Auto Renew Type by Product *products masked for anonymity ~40% of all Active Opt-Out decisions are made when purchasing Product A. KNOWLEDGE FOR ACTION 28

29 Sneak Peek: Subscriptions KNOWLEDGE FOR ACTION 29

30 Questions? Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 30

31 Data Structure Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 31

32 Coupons Customers can extend the length of the subscription by redeeming coupons. Coupons can add anywhere from a few days to over two years to the subscription. Coupons are usually acquired when customers purchase a device that comes with the software pre-installed. KNOWLEDGE FOR ACTION 32

33 Coupons Customers can extend the length of the subscription by redeeming coupons. Coupons can add anywhere from a few days to over two years to the subscription. Coupons are usually acquired when customers purchase a device that comes with the software pre-installed. This data includes: - vendor from which the coupon was acquired - product to which the coupon was applied - redemption date - number of days added to the subscription NOTE: Only redeemed coupons appear in this data. Coupons that were offered but not redeemed are not included in this dataset. KNOWLEDGE FOR ACTION 33

34 Coupon Redemptions Over Time KNOWLEDGE FOR ACTION 34

35 Redemptions Over Time by Coupon Value KNOWLEDGE FOR ACTION 35

36 Sneak Peek: Coupons KNOWLEDGE FOR ACTION 36

37 Free Trials Similar to coupons, free trials are usually included when a customer purchases a device with software pre-installed. Customers can operate software on a free trial from single day to about three months before they must purchase a subscription to the product. KNOWLEDGE FOR ACTION 37

38 Free Trials Similar to coupons, free trials are usually included when a customer purchases a device with software pre-installed. Customers can operate software on a free trial from single day to about three months before they must purchase a subscription to the product. Free trial data includes: - whether or not the free trial came with purchase of a device - number of days included in the trial - the date on which the customer switched from a free trial to a subscription KNOWLEDGE FOR ACTION 38

39 Free Trials Over Time KNOWLEDGE FOR ACTION 39

40 Free Trials Over Time by Cohort KNOWLEDGE FOR ACTION 40

41 Sneak Peek: Free Trial Conversion KNOWLEDGE FOR ACTION 41

42 Sneak Peek: Free Trial Conversion, One Customer KNOWLEDGE FOR ACTION 42

43 Questions? Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 43

44 Data Structure Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 44

45 Heartbeat Each product communicates back to the central servers via a process called Heartbeat. This function provides updates regarding various aspects of the software, such as activation or subscription status. I haven t been activated yet! I m expired! KNOWLEDGE FOR ACTION 45

46 Heartbeat Each product communicates back to the central servers via a process called Heartbeat. This function provides updates regarding various aspects of the software, such as activation or subscription status. Heartbeat data is available beginning in 2008, and is particularly useful for monitoring free trials, where activation might be low. I haven t been activated yet! I m expired! KNOWLEDGE FOR ACTION 46

47 Heartbeat Heartbeat data includes: - flags signaling the current status of the product, such as: - activated - expired - in trial period - violated - auto-renewal enabled/disabled - license type, such as retail, trial, or unlicensed - number of days remaining in a trial or subscription KNOWLEDGE FOR ACTION 47

48 Heartbeat Activity Over Time KNOWLEDGE FOR ACTION 48

49 Number of Heartbeats Heartbeat Activity Over Time by Cohort KNOWLEDGE FOR ACTION 49

50 Number of Heartbeats Heartbeat Activity Over Time by Product Family KNOWLEDGE FOR ACTION 50

51 Sneak Peek: Heartbeat Note: This table contains 90+ variables KNOWLEDGE FOR ACTION 51

52 Sneak Peek: Heartbeat, One Customer Note: This table contains 90+ variables KNOWLEDGE FOR ACTION 52

53 Questions? Account Subscription Additional Subscription Features Heartbeat KNOWLEDGE FOR ACTION 53

54 Research Areas from the Sponsor The Data Sponsor is open to proposals and projects exploring any of the following themes: Evolution of product portfolio Detecting and forecasting which customers are most likely to renew Effect of auto-renewal on customer behavior & purchasing Purchase channel effect on behavior Predicting customer churn Analysis of customers use of the software and how it relates to retention Uncovering specific patterns in how people migrate between channels, e.g., from offline to online KNOWLEDGE FOR ACTION 54

55 Benefits of Participating in a WCAI Research Opportunity Access to unique data Assistance with data cleaning, preparation, and processing at any point during the Research Opportunity Teleconference Q&A sessions with the research sponsor Opportunity to present findings to the Corporate Sponsor at the closing symposium, to be held at Wharton San Francisco one year from now (note: attendance by at least one member from each team required) Potential for additional PR for your research Promotion of your research paper through the WCAI SSRN Research Paper Series KNOWLEDGE FOR ACTION 55

56 A Few Operational Notes This webinar is intended for researchers & scholars. It should not be published or presented without permission from WCAI. Questions on program: Press contacts: To get access to the data, research teams should submit a proposal to WCAI and the sponsor for approval. Please note that the data sponsor cannot be named in any publication or presentation. KNOWLEDGE FOR ACTION 56

57 Proposal Format Proposals should be in PDF format, no more than 2,000 words, and include the following information: Title Author(s) name, title, affiliation and address: Please designate a corresponding author. Summary information: a single slide that visually summarizes team & project. Abstract Introduction: Describe expected contribution(s), covering both the academic and practical aspects. Please keep it concise, and cite relevant work as necessary to explain your academic contribution. There is no need to include a lengthy literature review. Detailed project proposal: Please include enough detail that we can assess the feasibility & merit of the proposed approach. For example, modeling projects should include at least a sketch of the model. In addition, include a rough estimate of how long the project will take. Also include the business relevance of your research and the impact for the sponsor as well. Data Needs: Bulleted list of data required for analysis not explicitly mentioned here, i.e., account creation date or store open/close date. While we can t guarantee the inclusion of these items, we are happy to investigate the availability. Biographies: Include up to a paragraph-long biography highlighting what each team member will contribute to the project. KNOWLEDGE FOR ACTION 57

58 Proposal Submission Process Read more about the proposal format at Submit proposals at no later than Monday, December 8, 2014, 12 noon US Eastern. Proposals will only be accepted online. A single PDF combining the written portion and the single slide. Proposals will be evaluated both on academic contribution and potential to significantly improve the research sponsor s marketing practice. Michael Braun (Southern Methodist University), Aurelie Lemmens (Tilburg University), Elea Feit (Drexel University), Eric Bradlow (WCAI), Pete Fader (WCAI), and representatives from the Research Sponsor. Contact wcai-research@wharton.upenn.edu, if you have questions prior to submitting your proposal. KNOWLEDGE FOR ACTION 58

59 Other WCAI Opportunities for Researchers If you registered for this webinar, you will receive regular announcements regarding: Research Opportunities like this one Corporate Boards, Network Analysis, and Executive Analytics 2-3 more Research Opportunities in the Spring Also find us at: SSRN Research Paper series: Announcements: KNOWLEDGE FOR ACTION 59

60 KNOWLEDGE FOR ACTION TRANSFORMING BUSINESS THROUGH CUSTOMER DATA 60