Utilization
Utilization tracks how customers use your product relative to their purchased limits (entitlements). It's a key metric for identifying expansion opportunities, churn risks, and customer health.
Types of Utilization
Utilization can be calculated in different ways depending on the product and the business model. Utilization can also be different per customer lifecycle stage. For example an onboarding customer might be under-utilizing their limits.
- Over-utilization: Usage nears or exceeds purchased limits
- Healthy utilization: Usage between e.g. 40-80% of limits
- Under-utilization: Usage below e.g. 40% of purchased limits
Business Signals
1. Over-utilization signals:
- Expansion opportunity
- Upsell readiness
- Risk of service degradation
- Need for capacity planning
Example: A customer using 90% of their storage limit is a prime candidate for an upgrade conversation.
Action Items:
- Over-utilization: Proactive outreach for upselling
- Regular utilization monitoring
- Automated alerts for threshold crossing
2. Under-utilization signals:
- Potential churn risk
- Need for customer enablement
- Product adoption issues
- Possible over-provisioning
Example: A customer using only 20% of their user licenses after 3 months might need training or consideration for downgrades.
Action Items:
- Over-utilization: Proactive outreach for upselling
- Under-utilization: Customer success intervention
- Regular utilization monitoring
- Automated alerts for threshold crossing
Utilization monitoring helps maintain customer health and identify revenue opportunities before they're missed or lost.