Connecting Usage to Revenue
How and Where did you find your top customers?
One of the most utilized metrics in customer success is product usage. Depending on your product or platform this means different things – people generating reports, analyzing complex data, making life easier in their workflow, creating beautiful products, and many more.
Meetings focus on whether usage is up or down for a specific customer – questions like what can we do better to help them get the most out of the product arise to ensure retention. If usage drops noticeably, the top customer success executives arrive to understand the issue and resolve it to keep their metrics up. If problems persist, company management hears about them at monthly or quarterly review meetings.
How Should You Think About Usage?
The act of addressing usage is not the mandate of Connecting the Funnels, rather the focus is how usage numbers affect future sales. Is it possible to tell who will be a power user and who will only use the product for a month based on an analysis of the sales process including messaging frequency, consistency, and job level of the customer? Here are a few scenarios to think about when analyzing the question of usage correlating to the sales process*:
Is a one-call close helpful or detrimental to overall customer / company buy-in and usage in the future? It is great for the sales team, a big win and then a move onto the next call. However, does it limit the expansion into a customer from a single point of contact or the initial group buying your product?
Is focusing on one specific element of your product helpful or harmful to the potential to keep the customer after the first contract? While this may be the main reason for buying, will it hinder the customer success team in their expansion efforts?
Is higher revenue (deal size) a factor of seat licenses (semi-fixed number) or times active on the platform? If the standard is seat licenses, does usage matter to keep the customer at contract expiry or is it more valuable to create a hybrid approach that rewards the most active customers?
* Keep in mind, the goal of sales and customer success differ in that sales is incentivized on getting the first sale while customer success is incentivized to continue to sell the customer. While this is broad and not the case in every situation, for simplicity purposes the assumption is that sales is new business and customer success is retaining customers and expansion into existing customers.
Developing analytics and trend reports around usage is difficult, often left out of to-do lists because some other aspect of a deal or customer is “on fire” and needs immediate attention. Unless you close all your deals at the end of the month and all contract expiration dates line up perfectly, you will be focused on a rolling set of deals with one or two always at the forefront of your mind. If you can keep a deal with a quick phone call, additional incentives, or analytics reason that becomes the most important. Don’t lose the dollars now at the cost of a project that takes time to complete.
What if you found, though, that your medium-tier users (not the most extreme power users and not the ones that signed in once and never again) got the most out of your service? If the mid-level deals brought you most the revenue in a bell-curve like way, would it change your attention from the few largest deals to instead attempt to grow that customer base?
Why Would Sales Care About Usage?
From a sales perspective, it is incredibly helpful to know who uses the platform and who does not. Most salespeople don’t want to just throw contracts over the wall to customer success to let them deal with it – if this is the case your organization needs to look long and hard beyond the usage numbers. The success of the company and themselves personally comes when they sell a deal and the customer stays for life. No more customer acquisition cost, no more wasted hours prospecting, and usually a referral or two to others the customer knows in the business.
Understanding how the latest customer uses the product at day 1, 30, 90, and 180 is key to knowing what to focus on as the next prospect. While it is given that you will not sure exactly how a customer uses the product, ideas and guidance on how to sell the product based on actual usage goes a long way to help clarify sales messaging and strategy.
Getting one group inside a massive Fortune 500 company might be a win for sales, but expanding into all groups is a coup for your company. Sharing amongst teams will allow salespeople to see patterns, identify potential others to bring in to the conversation earlier, and develop champions that will eventually help customers sign contracts faster and more efficiently.
Rather than thinking about customer success as a separate entity from the go-to-market team, include it in your overall strategy and process for revenue. Sales will sell more if they know how customers use their product rather than only knowing the product from a demo they have done repeatedly the same way thousands of times. Customer success will know how to message like a salesperson when it comes time for renewal (not in a cheesy, salesy way but rather in a way that highlights your product and team in the same way that got them to buy in the first place). Marketing will know what is exciting and what has been done outside of a time-consuming case study that may or may not get approval from all parties to publish and share on the website.