What makes the most successful Internet companies so successful?  They understand that the Internet is much more than a delivery channel – it is a customer feedback channel.  So they get smarter every day, and improve constantly.  Software companies have yet to capture this opportunity – today the Internet is reduced to the conduit for ESD (Electronic Software Distribution), or the live application (Cloud).

The success and the approach of leading Internet companies is known to everyone: Most e-commerce sites, like hotel booking sites, change the colour, font, alignment and location of text and visuals constantly, monitor results, and refine their offering instantly. And they capture data on their users, their usage, and what they are interested in, in order to provide them targeted offerings.  Amazon, iTunes and Google have been leading the way, and many retailers as well as social networking sites have applied those principles.

Software vendors still have to capture this potential.  Of course it starts with knowing your end customers and their entitlements, easily accomplished by online registrations.  Now, if your end customer continues to be online, at least occasionally, the journey continues:  Anonymized usage data lets you refine your products.  Rarely used features are not relevant to much of your customer base, or they are not easily accessible or well enough advertised.  Features that are used initially but then abandoned over time don’t deliver on customer expectations.  And features that are used constantly are core to your offering and deserve continuous investment.

At the same time you will be able to see your customer’s individual needs more clearly.  Someone who does not activate your trial license is unlikely to buy soon.  If they trial but abandon quickly, the wrong product or feature set may have been offered.  Once a customer, you can monitor their usage and foresee when additional licenses are likely to be required.  If usage goes down you may face a competitor in the account, or a substitute technology.  And if a basic feature is used intensely, an upgrade offer to a premium feature might be well received.

These insights will allow software vendors to behave more like successful e-commerce or social networking companies.  The good news is that the required data can be captured regardless whether the software offering is delivered via the cloud, or in a traditional on-premise fashion.  As long as the customer is online at least occasionally, licensing and usage tracking can be implemented in the online world, and put Internet speed of innovation into the hands of any software vendor out there.