Every product will have a feature or set of features that correlate with retention and successful adoption. Or conversely, every product will have usage metrics that are leading indicators of churn.
Understanding what those features and metrics are will help you better equip your CSMs to identify which customers are at risk and which customers need to be prioritized.
How to Monitor Product Usage to Inform Customer Success
When determining what aspects of product usage to monitor to inform your customer success strategy, you need to be able to look beyond your bias about the product.
“Product managers can be so in love with their product that they have a blinder and say ‘if we want to be monitoring our product for customer success or health, then this shiny new feature we built six months ago that was based on all this customer research should be what we’re monitoring,’” says Luke Owen, Principal Outcomes Manager at SaaSWorks. “The problem with that mindset is that thinking about usage in the context of product health is not thinking about the problem you’re trying to tackle as a customer success person.”
Product health is looking at whether product features are retaining users or if users are just trying out things and then leaving. Product health can also include understanding how thoroughly users are leveraging and engaging with a solution. But, customer success teams need to know leading indicators of renewal and churn. Whether or not a single feature provides value to the user may or may not be an indicator of overall retention.
“All you’re looking for are signals in the usage that give you clear separation when you’re looking at historical renewal rates and retention rates of your customers,” Luke says.
The feature providing those signals might not be the current focus of your product development or what you want to focus on moving forward.
How to identify significant usage behaviors for customer success
Start by collecting all the customer data you have available over a long enough time period that you can see cancelations (for example, if you require annual contracts, you’d need more than a year of data). Before you can start to gain insights from analyzing this data, you need enough customers to have chosen to both renew and cancel that you can draw conclusions about leading indicators of each behavior.
Once you have enough data accessible, look at what usage events have the most activity for customers. Then segment those usage events by retained customers and churned customers. What product usage trends separate the two groups over time?
Generally, the most used feature among your retained customers is the one you want your CSMs to start running playbooks around — however, in determining that, you may need to disregard logins. The feature you operationalize around should be something within the product itself.
Once you’ve identified your power feature, analyze your customer’s usage levels so that you can break out your customers into health scores and help CSMs prioritize outreach.
For example, if you find that customers who use a feature 1–5 times a month renew at a 50% rate, you might make that a red score. Then customers who used it 6–10 times a month renewed at 60%, so that usage level indicates an orange score. Customers who used it 11–15 times renewed at a 70% rate, so that would trigger a yellow score. Finally, customers who used your power feature 16 times or more a month renewed at an 80% rate, so that usage level would indicate a green score.
“All that we’re trying to do at the end of the day is give some perspective that if you start to see usage of this feature at these levels, your retention likelihood becomes X,” Luke says.
Shifts from one health score to another can be a flag for CSMs to prioritize an account. Similarly, if CSMs are just combing through their accounts to determine who to conduct some proactive outreach with, they can easily prioritize red or orange accounts above green.
To get more specific actionable health scores, you can also break product usage trends down further by segment. A healthy level of usage for one portion of your customer base might be higher than you can expect from a different segment. So, you can have the usage levels determining health scores varying from segment to segment.
Once you have a product-usage-informed health score, the goal for CSMs is to get customers up to green. That process will vary from customer to customer, so successfully acting upon that data still requires your team to understand each customer’s needs and goals.
Why is Monitoring product usage important?
“It’s good to be aware of product usage for purposes of understanding what is the likelihood of customers staying with you long-term,” Luke says. “Customers who stick around have a certain behavior.”
Knowing what that behavior is can help you accurately forecast your retention rates and revenue. You will want to update and review the analysis every quarter as it is possible for this to change if customers start to prioritize their usage around a new power feature.
Additionally, monitoring product usage helps you tie the value the customer is seeking to the reality of how they can obtain that — enabling you to service and support them better.
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