Pirated Software Use and the Customer Lifecycle

I had the privilege of attending the cleverbridge Networking Event in Edinburgh, Scotland last week. I spoke on the topic of software piracy (“Ignore It or Make Money from It”) and how software usage intelligence uncovers a hidden and untapped channel of new license revenue. The concept was not necessarily new to attendees (who focus primarily on ecommerce, marketing and sales) since cleverbridge has blogged about software piracy as a revenue source. What was more eye-opening for them, though, was the strategy of using software usage intelligence to identify unpaid use and dynamic in-application messaging for conversion.

Since the event, I have been thinking a lot about a presentation on Successfully Managing the Customer Lifecycle by cleverbridge CTO and co-founder Martin Trzaskalik.

Martin Trzaskalik - cleverbridge CTO at CNE Edinburgh
Martin Trzaskalik, cleverbridge CTO, presenting on “Successfully Managing the Customer Lifecycle” at CNE Edinburgh

One of the things Martin suggested was to “work with channels you may not even be aware of” and (naturally) I thought of unpaid use as one of those channels. Martin talked about the four stages of how a customer moves through your sales funnel:

  1. Attract & Engage
  2. Acquire
  3. Satisfy & Grow
  4. Retain

Looking at Martin’s Customer Lifecycle diagram, what really stood out to me was this: if you are converting unpaid use into paying customers, you are already past the point of attracting and engaging, and right on the cusp of customer acquisition and ready to maximize lifetime customer value. Despite the fact that these users have not paid for the software (yet), they are using your software for legitimate business and profiting from it.

If your application is being pirated and used, it means that people find your software valuable. It helps them achieve something that they could not do without the benefit of your application.

This is not just an optimistic way of viewing piracy: it’s based on the economic realities of supply and demand. Think about it. There are thousands of pirated applications available and people and organizations have chosen your application to meet their needs.

These unlicensed users fall into three categories:

  • Those who will never pay
  • Those who want the best deal
  • Those who don’t know they are using pirated software

Based on our experience converting unpaid use globally, we know that 60 percent of all pirates are those that want the best deal or don’t know that the application they are using is pirated – and they will pay for that software when they are identified and approached.

Now you can work to satisfy and grow the relationship. They can receive regular upgrades, support, training and input into future versions of your application. By focusing on unpaid use you can jumpstart the customer lifecycle and move right into customer satisfaction, growth and retention, meeting Martin’s goal of moving the customer through the cycle again and again.

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