The Open Source Business Metrics Guide 2024
The Open Source Business Metrics Guide 2024
Today, the most commonly accepted metrics for open source adoption and growth are heavily focused on the contributors and community (the idea is healthy contributions should equate to healthy adoption). While these are useful metrics, they are only part of the picture.
Many projects have small contributor bases but are widely adopted and considered commercial successes, while the inverse is also true with projects having large contributor bases and limited commercial success. This guide is built for those at open-source-based companies who are responsible for growth and adoption.
Although giving away software may seem counterintuitive from a business perspective, it serves as an effective top-of-funnel strategy for building a loyal, passionate customer base.
The question comes down to how to convert free users to paying customers, and the answer may appear more straightforward than you realize: Offer a product that is valuable enough to pay for.
The success of any business model around open source relies on driving users from a free to a paid relationship, a journey outlined by the open source funnel.
The open source funnel differs from the classic marketing funnel, which looks something like this:
With the traditional funnel, you want to generate inquiries and grow your digital traffic and engagement so that eventually, those who interact with your site become a lead or contact. After a specific threshold of interactions, whether clicking on a webpage, registering for a webinar, opening up an email, or watching a video, the lead eventually qualifies as a marketing qualified lead (MQL). The MQL becomes a sales accepted lead (SAL) once the lead is ready for the sales team’s follow-up, then a sales qualified lead (SQL) once the lead has advanced through the sales pipeline. SQLs will likely become customers and either become close-lost deals or closed-won.
In contrast, the open source funnel looks something like this:
With more interest comes more downloads, which becomes more usage, production deployments, and ultimately users who are willing to pay for something of additional value. Dropoff will occur at each stage, and those dropoff points become your job to optimize. Open source provides the advantage of a larger-than-normal pool of users, which can very nicely set up the rest of the funnel for maximal conversion.
An increasing number of open source projects are becoming commercially viable. Companies looking to scale these projects must rely on growth metrics for a variety of reasons. First, investors seek indicators that businesses formed around projects will deliver a suitable return on their investment. A thriving user base indicates a growing potential customer base. Understanding that potential customer pool is vital to understanding how to build and structure your business. Finally, the right set of growth metrics also provides insight into what is not working and what adjustments need to be made.
When we talk about growing an open source project, we often refer to growing its adoption and usage. A burgeoning user base yields a cascading impact on the rest of the project, often leading to more contributors, more community engagement, more funding opportunities, more potential sales, and more downstream effects. Tracking adoption, however, in the open source space is historically difficult. Ideally, you would be able to count the actual number of people using your software, but in reality, that is not an option—users value their privacy, downloads come from third-party repositories, and people build from source code. In an effort to try and understand the adoption cycle, you are usually left examining a series of metrics that reflect and indicate interest, awareness, downloads, and contributions but that don’t fully match true usage.
Open source has largely been tracked via contributor and GitHub activity metrics for project health, adoption, and growth. While that might show interest in the project, to build a commercial business, you need to know about any interest from businesses, which has a broader surface area.
Growth of uniques to any of your content over time shows increasing interest in your open source project, such as viewing your documentation, README, or website. Pay attention to total traffic volume, unique sources of traffic, and the number of companies represented in that traffic.
Any package download activity or sufficient consumption of your web content by a company shows that enough interest has occurred for you to suspect the user/organization is actively investigating your OSS. This stage includes the occurrence of multiple events, such as at least one package download with multiple views of documentation, or at least two weeks of consecutive views of your content.
Pay close attention to the conversion rates from documentation views to the number of downloads that yields, and how that differs across various acquisition channels.
Once an organization has assessed your OSS may indeed solve a problem they are experiencing, they’ll start to dive into testing it. They might use your project to build a new prototype, or use it for internal tooling. This is the point where they can be considered an Open Source Qualified Lead (OQL), and can be passed to your marketing team. Pay attention to the growth rate of unique users from a single company that are downloading the project, as this is your time foster internal adoption and solidify your foothold at the company, before they find another solution, or decide they’ll never need your paid product because your OSS is “good enough”.
When a company becomes an ongoing user, they are relying on your software, and make for a great target to upsell your paid offerings. There are a few metrics to identify OQLs at this stage. Sustained activity over a 90-day period is a good starting point. These leads will continue downloading regularly, and referring back to your documentation, reference material, and other content. Continue paying attention to new companies as they enter (or leave) this phase, as well as their upgrade patterns as you release new versions of your software. Maybe they are stuck on an old version and need some help! Maybe they are upgrading quickly and are more engaged than you thought.
Not every department or team will value all of the above metrics the same, but these metrics as a whole do track the various stages of the user and customer lifecycle in open source. Based on these metrics, you can gauge the overall interest in an open source project and determine if your decisions result in further adoption. Marketing and sales can ensure a growing funnel and close more deals.
Even though open source has existed for a while, the playbook for commercial open source done right is still in the making. There is no single best path for the open source business, tet the need to account for growth, as with any company, still applies.
You can read more about this in The Open Source Business Metrics Guide from Scarf. Understandably, setting up the metrics essential to achieving this can feel cumbersome and time-consuming. If you are serious about sustaining the growth of your open source business and want help with measuring the metrics discussed in this paper and more, you can check out Scarf. The tools created by Scarf make it easy to track downloads and gain visibility into the user lifecycle.
Get started with Scarf today or feel free to contact us if you have any questions.
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Published
November 21, 2024
This article was originally posted on
Hackernoon
Today, the most commonly accepted metrics for open source adoption and growth are heavily focused on the contributors and community (the idea is healthy contributions should equate to healthy adoption). While these are useful metrics, they are only part of the picture.
Many projects have small contributor bases but are widely adopted and considered commercial successes, while the inverse is also true with projects having large contributor bases and limited commercial success. This guide is built for those at open-source-based companies who are responsible for growth and adoption.
Although giving away software may seem counterintuitive from a business perspective, it serves as an effective top-of-funnel strategy for building a loyal, passionate customer base.
The question comes down to how to convert free users to paying customers, and the answer may appear more straightforward than you realize: Offer a product that is valuable enough to pay for.
The success of any business model around open source relies on driving users from a free to a paid relationship, a journey outlined by the open source funnel.
The open source funnel differs from the classic marketing funnel, which looks something like this:
With the traditional funnel, you want to generate inquiries and grow your digital traffic and engagement so that eventually, those who interact with your site become a lead or contact. After a specific threshold of interactions, whether clicking on a webpage, registering for a webinar, opening up an email, or watching a video, the lead eventually qualifies as a marketing qualified lead (MQL). The MQL becomes a sales accepted lead (SAL) once the lead is ready for the sales team’s follow-up, then a sales qualified lead (SQL) once the lead has advanced through the sales pipeline. SQLs will likely become customers and either become close-lost deals or closed-won.
In contrast, the open source funnel looks something like this:
With more interest comes more downloads, which becomes more usage, production deployments, and ultimately users who are willing to pay for something of additional value. Dropoff will occur at each stage, and those dropoff points become your job to optimize. Open source provides the advantage of a larger-than-normal pool of users, which can very nicely set up the rest of the funnel for maximal conversion.
An increasing number of open source projects are becoming commercially viable. Companies looking to scale these projects must rely on growth metrics for a variety of reasons. First, investors seek indicators that businesses formed around projects will deliver a suitable return on their investment. A thriving user base indicates a growing potential customer base. Understanding that potential customer pool is vital to understanding how to build and structure your business. Finally, the right set of growth metrics also provides insight into what is not working and what adjustments need to be made.
When we talk about growing an open source project, we often refer to growing its adoption and usage. A burgeoning user base yields a cascading impact on the rest of the project, often leading to more contributors, more community engagement, more funding opportunities, more potential sales, and more downstream effects. Tracking adoption, however, in the open source space is historically difficult. Ideally, you would be able to count the actual number of people using your software, but in reality, that is not an option—users value their privacy, downloads come from third-party repositories, and people build from source code. In an effort to try and understand the adoption cycle, you are usually left examining a series of metrics that reflect and indicate interest, awareness, downloads, and contributions but that don’t fully match true usage.
Open source has largely been tracked via contributor and GitHub activity metrics for project health, adoption, and growth. While that might show interest in the project, to build a commercial business, you need to know about any interest from businesses, which has a broader surface area.
Growth of uniques to any of your content over time shows increasing interest in your open source project, such as viewing your documentation, README, or website. Pay attention to total traffic volume, unique sources of traffic, and the number of companies represented in that traffic.
Any package download activity or sufficient consumption of your web content by a company shows that enough interest has occurred for you to suspect the user/organization is actively investigating your OSS. This stage includes the occurrence of multiple events, such as at least one package download with multiple views of documentation, or at least two weeks of consecutive views of your content.
Pay close attention to the conversion rates from documentation views to the number of downloads that yields, and how that differs across various acquisition channels.
Once an organization has assessed your OSS may indeed solve a problem they are experiencing, they’ll start to dive into testing it. They might use your project to build a new prototype, or use it for internal tooling. This is the point where they can be considered an Open Source Qualified Lead (OQL), and can be passed to your marketing team. Pay attention to the growth rate of unique users from a single company that are downloading the project, as this is your time foster internal adoption and solidify your foothold at the company, before they find another solution, or decide they’ll never need your paid product because your OSS is “good enough”.
When a company becomes an ongoing user, they are relying on your software, and make for a great target to upsell your paid offerings. There are a few metrics to identify OQLs at this stage. Sustained activity over a 90-day period is a good starting point. These leads will continue downloading regularly, and referring back to your documentation, reference material, and other content. Continue paying attention to new companies as they enter (or leave) this phase, as well as their upgrade patterns as you release new versions of your software. Maybe they are stuck on an old version and need some help! Maybe they are upgrading quickly and are more engaged than you thought.
Not every department or team will value all of the above metrics the same, but these metrics as a whole do track the various stages of the user and customer lifecycle in open source. Based on these metrics, you can gauge the overall interest in an open source project and determine if your decisions result in further adoption. Marketing and sales can ensure a growing funnel and close more deals.
Even though open source has existed for a while, the playbook for commercial open source done right is still in the making. There is no single best path for the open source business, tet the need to account for growth, as with any company, still applies.
You can read more about this in The Open Source Business Metrics Guide from Scarf. Understandably, setting up the metrics essential to achieving this can feel cumbersome and time-consuming. If you are serious about sustaining the growth of your open source business and want help with measuring the metrics discussed in this paper and more, you can check out Scarf. The tools created by Scarf make it easy to track downloads and gain visibility into the user lifecycle.
Get started with Scarf today or feel free to contact us if you have any questions.
Tools and strategies modern teams need to help their companies grow.
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Today, the most commonly accepted metrics for open source adoption and growth are heavily focused on the contributors and community (the idea is healthy contributions should equate to healthy adoption). While these are useful metrics, they are only part of the picture.
Many projects have small contributor bases but are widely adopted and considered commercial successes, while the inverse is also true with projects having large contributor bases and limited commercial success. This guide is built for those at open-source-based companies who are responsible for growth and adoption.
Although giving away software may seem counterintuitive from a business perspective, it serves as an effective top-of-funnel strategy for building a loyal, passionate customer base.
The question comes down to how to convert free users to paying customers, and the answer may appear more straightforward than you realize: Offer a product that is valuable enough to pay for.
The success of any business model around open source relies on driving users from a free to a paid relationship, a journey outlined by the open source funnel.
The open source funnel differs from the classic marketing funnel, which looks something like this:
With the traditional funnel, you want to generate inquiries and grow your digital traffic and engagement so that eventually, those who interact with your site become a lead or contact. After a specific threshold of interactions, whether clicking on a webpage, registering for a webinar, opening up an email, or watching a video, the lead eventually qualifies as a marketing qualified lead (MQL). The MQL becomes a sales accepted lead (SAL) once the lead is ready for the sales team’s follow-up, then a sales qualified lead (SQL) once the lead has advanced through the sales pipeline. SQLs will likely become customers and either become close-lost deals or closed-won.
In contrast, the open source funnel looks something like this:
With more interest comes more downloads, which becomes more usage, production deployments, and ultimately users who are willing to pay for something of additional value. Dropoff will occur at each stage, and those dropoff points become your job to optimize. Open source provides the advantage of a larger-than-normal pool of users, which can very nicely set up the rest of the funnel for maximal conversion.
An increasing number of open source projects are becoming commercially viable. Companies looking to scale these projects must rely on growth metrics for a variety of reasons. First, investors seek indicators that businesses formed around projects will deliver a suitable return on their investment. A thriving user base indicates a growing potential customer base. Understanding that potential customer pool is vital to understanding how to build and structure your business. Finally, the right set of growth metrics also provides insight into what is not working and what adjustments need to be made.
When we talk about growing an open source project, we often refer to growing its adoption and usage. A burgeoning user base yields a cascading impact on the rest of the project, often leading to more contributors, more community engagement, more funding opportunities, more potential sales, and more downstream effects. Tracking adoption, however, in the open source space is historically difficult. Ideally, you would be able to count the actual number of people using your software, but in reality, that is not an option—users value their privacy, downloads come from third-party repositories, and people build from source code. In an effort to try and understand the adoption cycle, you are usually left examining a series of metrics that reflect and indicate interest, awareness, downloads, and contributions but that don’t fully match true usage.
Open source has largely been tracked via contributor and GitHub activity metrics for project health, adoption, and growth. While that might show interest in the project, to build a commercial business, you need to know about any interest from businesses, which has a broader surface area.
Growth of uniques to any of your content over time shows increasing interest in your open source project, such as viewing your documentation, README, or website. Pay attention to total traffic volume, unique sources of traffic, and the number of companies represented in that traffic.
Any package download activity or sufficient consumption of your web content by a company shows that enough interest has occurred for you to suspect the user/organization is actively investigating your OSS. This stage includes the occurrence of multiple events, such as at least one package download with multiple views of documentation, or at least two weeks of consecutive views of your content.
Pay close attention to the conversion rates from documentation views to the number of downloads that yields, and how that differs across various acquisition channels.
Once an organization has assessed your OSS may indeed solve a problem they are experiencing, they’ll start to dive into testing it. They might use your project to build a new prototype, or use it for internal tooling. This is the point where they can be considered an Open Source Qualified Lead (OQL), and can be passed to your marketing team. Pay attention to the growth rate of unique users from a single company that are downloading the project, as this is your time foster internal adoption and solidify your foothold at the company, before they find another solution, or decide they’ll never need your paid product because your OSS is “good enough”.
When a company becomes an ongoing user, they are relying on your software, and make for a great target to upsell your paid offerings. There are a few metrics to identify OQLs at this stage. Sustained activity over a 90-day period is a good starting point. These leads will continue downloading regularly, and referring back to your documentation, reference material, and other content. Continue paying attention to new companies as they enter (or leave) this phase, as well as their upgrade patterns as you release new versions of your software. Maybe they are stuck on an old version and need some help! Maybe they are upgrading quickly and are more engaged than you thought.
Not every department or team will value all of the above metrics the same, but these metrics as a whole do track the various stages of the user and customer lifecycle in open source. Based on these metrics, you can gauge the overall interest in an open source project and determine if your decisions result in further adoption. Marketing and sales can ensure a growing funnel and close more deals.
Even though open source has existed for a while, the playbook for commercial open source done right is still in the making. There is no single best path for the open source business, tet the need to account for growth, as with any company, still applies.
You can read more about this in The Open Source Business Metrics Guide from Scarf. Understandably, setting up the metrics essential to achieving this can feel cumbersome and time-consuming. If you are serious about sustaining the growth of your open source business and want help with measuring the metrics discussed in this paper and more, you can check out Scarf. The tools created by Scarf make it easy to track downloads and gain visibility into the user lifecycle.
Get started with Scarf today or feel free to contact us if you have any questions.
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