Usage Processing handles the tracking of something measurable. This may be tracking or counting the consumption of something that may or may not have an associated billable component.
When the monetization strategy includes usage as a billable element, usage processing determines when and how much to charge a customer for the units being measured and rated.
There are often situations where services might include a charge for every unit used, or other situations where a certain number of units are included and any additional units have an associated cost based on a pricing structure or other variable factors related to a service or an individual account.
Units that come into the usage processing system should have a defined “unit of measure” or unit type being charged for (i.e. hours, kilowatts, megabytes, minutes, units, tickets). Having a proper unit of measure can be used to determine rates or be used as a label during invoicing, reporting, or presentation to the customer.
Having the ability to monetize services based on usage…drives the customer closer to the intersection between the value received from a service and the amount of money spent to use a service.
Usage processing is completed by one or more supporting systems depending on the complexity of the business case and the capability of the supporting systems. All usage processing will have at a minimum the ability to load usage and assign a currency rate. The actual rating of the usage records may be handled by a rating system, ERP, or billing system.
Usage processing systems can generally handle a wide variety of granularity between usage records being processed. In many cases, each discreet usage event will need to be tracked individually for analytical or rating purposes, but in other cases usage may be aggregated and only sent to rating after the usage has been grouped based on type, date, or some other factor.
Having the ability to monetize services based on usage allows customers to pay for the exact amount of consumption that was used and drives the customer closer to the intersection between the value received from a service and the amount of money spent to use a service. In addition, heavy-use customers can be charged for the additional amount of resources being consumed.
Usage Processing Components
Usage data can come from multiple systems depending on the current Monetization Ecosystem architecture. The data from different systems requires the consolidation or “mediation” of the data into a consistent format to ensure accurate and timely processing. This is where usage may be aggregated or grouped together based on type, date, or some other factor. The level of mediation required for usage data is dependent on multiple factors, primarily the system being used for rating, billing, and invoicing purposes.
Daily Rating is the processing of measured units on a daily cycle, typically by batches.
These batch runs can take place at the end or beginning of a day, or at a selected time, in order to ensure accurate business intelligence and reporting. Rating usage daily is less resource intensive than real-time rating, as the actual rating process is performed once for the day’s aggregate usage across accounts. Similar to all other usage load methodologies, usage can be rated during the mediation process, upon load into the billing system, or at some other point in the usage processing process that makes sense based on an organizations key use cases.
Commonly, cloud billing systems are used to do all rating at load time if the organization is using a standard rate per-tier or flat rate per-tier pricing strategy, and the application rates usage at load time natively.
Repair & Recirculate
Due to the various stages or processes that usage can undergo, from collection to rating and billing, it is critical to create processes to review usage data and ensure accurate processing. This cycle of review is dependent on the rating frequency and bill cycle timing. Capturing errors in mediation, rating, and billing before billing the customer greatly reduces customer dissatisfaction, call center call volumes, and customer churn.
Usage is commonly rated to in real time when an organization has one or more of the following needs:
- CSRs and other users need current usage data when dealing with end customers. This real time data is presented using custom dashboards or real-time reporting mechanisms.
- Customers need real-time notifications about consumption, such as a notification that 100% of free data has been consumed in the current period, and any additional consumption will result in overage charges. Note that these notification thresholds (75% of consumption, 90% of consumption, etc.) can be standard thresholds defined by the organization, or defined by each customer. In other business models, customers may be depleting an allotted amount of resources which do not have an overage component. For example, an online marketing company’s basic plan may offer customers 500 emails per month they can send to leads/opportunities. This organization’s end customer may receive a notification when they’ve sent 450 emails for the period, advising them to choose wisely when targeting their audience for the remainder of the bill period.
- Marketing automation (MA) platforms may also rely on real-time data to launch up-sell/cross-sell campaigns to customers. Similar to the previous bullet, these are end customer notifications sent by the MA platform, but may also require other updates to customer information in CRM, CPQ, entitlements, and billing systems (such as creating a new opportunity or flagging the customer as eligible for a 20% discount through the month of May).
Real-Time Rating can be done in a variety of applications, most notably the aggregation/mediation application or billing system. Again, real-time rating is feasible when customers are charged on a standard or flat rate per tier rate schedule. Volume and high-water pricing can involve mass re-rating if done in real-time, and is more easily handled when rated on bill-day.
Bill Day Rating
Bill Day Rating rates customer usage for the entire arrears period on bill day. This rating strategy is commonly used when a customer’s rate/unit is based on how many units they’ve consumed over the entire period, such as volume or high-water pricing. When rating on bill day, customers are generally not provided any advice of charge, as an account’s actual dollar-figure charge is not known until bill-day rating occurs.
Advice of Charge
Capturing usage in real time can provide Advice of Charge capability. This is the ability to notify customers that they are approaching a predetermined threshold and will be charged more, or allow a customer to upgrade to avoid penalties or fines.
Detailed: People | Process | Technology
Usage Processing draws an organizational crowd. Customer Service and Customer Success are intimately involved with processes inside the domain, while Product, Finance, and Finance-Billing also have a keen interest and clear-cut obligations in customer usage processing.
Biller Connected Key Vendors
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Adjunct Rating Key Vendors
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