More and more SaaS companies are experimenting with usage-based pricing instead of the standard seat-based approach. The basic idea is simple, customers pay only for what they use. For the customers, that’s appealing. For the company, the challenge is to determine what features are most valuable for the customer, perhaps to price accordingly. Do you know which features of your product are most valuable to your customers? Do you know how valuable those features are? Can you construct a ranked catalogue of outcomes and values for your product from the customers’ point of view?
Value and the Feature Set
A given SaaS application has a variety of features to offer to customers. How many of them ever get used? What percentage of the feature set is used by the average customer? That question has been around for years and years, and the consistent estimation is that the average user only taps 10% of a product’s power — at best. Power users might go as high as 20%. The rest of those features, (possibly put in at the insistence of the sales department to hopefully close a deal?) remain untouched. What does that mean to a company considering actual usage pricing?
Case Study: The Customer Success Association Website
I closely monitor the activity here on the Customer Success Association’s website every day. For our purposes, the “feature set” is the knowledge content. The first challenge (as with every other website) is to make the visitor aware of what’s on offer. The next is to try to track what they access and in what order so as to possibly identify what brought them there. While it would be really valuable to know the exact search string used, the search engine isn’t going to reveal that data. My monitor tells me where the visitor came from (a search engine? Direct link? ChatGPT or Claude ai, etc? Other referrer?) and sometimes who the visitor is. That’s of less interest to me than what it doesn’t tell me (without a lot of extra work), which is the category of visitor. Which segment of our customer base are they a member of? Is it a VP of Customer Success? Director? Head of? Manager of? VenCap partner? CxO? A CSM thinking of becoming an executive leader?
What did they read? What did they download from the Library? Where did they go afterward — did they click on an outbound link from a page in The Customer Success Directory or a Case Study? I want to know the category of the visitor and what they’re reading as the first step in creating a catalog of outcomes — and values. What can I offer that will bring them back?
Creating and Using the Catalogue of Outcomes and Values
The challenge of creating the catalogue begins with solid knowledge of the product’s feature set. Next, you need to know the usage data and what it means. In-depth knowledge of the customers and their business is an absolute requirement for estimating the value of each item. With that in place, making effective use of the catalogue of outcomes and values is what Customer Success is all about.
Do you agree? Join us in The Customer Success Forum on LinkedIn for the discussion.
Recommended Reading
Customer Realized Value: A New Metric For Customer Success Teams
Do You Know What Your Customers Are Doing With Your Application’s Feature Set?
