It's all about Usage

When you ask SaaS companies’ leaders, even in companies that invested a lot in the Product Led Growth (PLG) model, a simple question - what do they sell? - you will be surprised to find that there is no clear answer. You will get many various vague answers. Some of them will try to describe the solution they provide, others their product features and others still will try to identify the so-called values of the product.?

They are all wrong.

What you do sell as a SaaS company is usage.?

Think about it. As a SaaS company, you provide a service, not a product - it’s right there in the name. If your users are not using your service, you are a dead company.??

Gone are the days when you sold software. In those days software = product and you built a product software that you can sell. That sales motion was mainly based on building relationships with customers and an aggressive high-touch sales approach. Usage was important but more important was the close relationship with the customer, as a prospect before the sales and as a paying customer. The customer could use your product very little or not use the product at all, but since it was usually a perpetual lifetime license you did not care about it too much.

Nowadays, selling is a struggle. Every quarter, every month, every week, and even every day. You need your users to keep using your product, you need to sell every day. Usage is your company. Your company is all about usage.?

Do SaaS companies understand how vital usage is for their success??

Most do, and that’s great news. SaaS companies invest a lot of time and effort trying to encourage users to use their service. They try to build great self-serve solutions, invest in onboarding tools, track user journeys, add online chat support, online documentation, recorded tutorials, and videos. And that’s great.

However, these very great companies are failing in the most important factor when it comes to usage - understanding it. They don’t really know how much the users are using their service. It’s almost hard to believe but most SaaS companies fail to answer the most simple straight usage questions e.g. how many active users do you have? How different is it from last week, how much has this feature been consumed compared to other features, who are the users that made the biggest usage jump? What are the usage trends in the last few weeks? etc. They do not have clear answers. They may give you some gut feelings, not precise data.?

Why do so many SaaS companies fail to track and measure usage accurately? They fail because tracking usage is not that easy. To begin with, there is no common ground for usage definition in the organization. Each team defines usage differently. Sales team needs to know how usage can help convert users, the product team needs to know which features are being used, customer success needs to know where there are usage-based expansion opportunities, finance needs to know how to bill users based on their usage, and so on. Furthermore, all the teams depend on the Engineering team to provide them with the specific usage they need for their own purpose. Engineering is struggling to supply all these ongoing requests.?

How can SaaS companies close this gap? First, they need to collaborate, define and agree about all usage parameters, and then centralize all usage data into one place. Then the Engineering team needs to come with a solution that centralizes all usage data. This comprehensive database should include all usage data events, then to implement all aggregated counting scenarios (absolute numbers, accumulated numbers, concurrency, multiple variables, etc), sum the numbers using all relevant usage events. Then you need to make it accessible to other teams in your organization so everyone can now take better usage-based actions.

I can promise you one thing, it's not an easy task. It will take you much effort and time to build it correctly. But you must fully understand your usage metrics completely. No guesses, no gut feelings but real aggregated data using one single source of usage data truth. You should numerate your usage all the way. And yes, it's an engineering task as usage tracking should be part of your code. It's all about usage.