SaaS Consumption Gap: What is it and How to Close it?
Are you wondering what the SaaS consumption gap is and how it affects your product?
You’ve come to the right place.
We discuss the SaaS consumption gap in this article, including what it means, why it occurs, and how it can you bridge the consumption gap by driving product adoption. Let’s dive right in.
TL;DR
- The consumption gap is the difference between your entire product functionality and what customers are actually using.
- SaaS consumption gaps are the result of various factors, including poor onboarding, bad user experience, lack of educational resources, and ineffective marketing efforts.
- A consumption gap is not the same as a value gap. The value gap occurs when there is a disparity between what your customers expect and what your product offers, while the consumption gap is when users don’t utilize the full capabilities of the product they paid for.
- There are two main ways to identify the consumption gap in your product:
- Using product usage analytics to spot the product features that are being neglected.
- Implementing VoC programs and identifying customer need and wants.
- Personalized customer education helps different customer segments to get familiar with your product, leading to higher product engagement and adoption rates.
- Don’t stop at primary onboarding. Also, provide secondary onboarding to guide users as they advance through the customer journey.
- Use interactive walkthroughs, modals, and tooltips to guide users through existing and new features. These are also effective for contextually educating users on your products and driving them to their activation points.
- SaaS companies should always be promoting product features relevant to their user segments rather than hoping users find those features themselves.
- Having an in-app knowledge base with various resources such as video content and support documentation is a step forward toward bridging the SaaS consumption gap.
What is the SaaS consumption gap?
A consumption gap happens when a company’s customers don’t use the product to its full potential. The customers do not get the maximum return on investment because they do not make use of all the features that the app has to offer.
Initially, this might appear to be the loss of a customer, but in fact, it is the loss of the company because when customers don’t get a satisfactory return on investment, they are more likely to cancel their subscription.
What causes the consumption gap in SaaS?
In a nutshell, a SaaS consumption gap is the result of inadequate customer education and friction when using certain features. There are several factors contributing to the consumption gaps, with poor onboarding being the biggest one. Other factors include a lack of self-help support, a poor marketing strategy, and a bad user experience.
Ineffective onboarding
Onboarding is the most important part of the customer journey as it allows you to unlock the inherent value of your product. The onboarding phase is your opportunity to introduce the user properly to your product, showing them what each feature does and how your app helps them to accomplish their goals.
Without continuous onboarding, users will only learn to use the core features, thus missing out on the value they could have gotten from secondary features. In addition, make sure to launch onboarding flows when launching new features.
Poor user experience
Nothing puts people off a product like a poor user experience. When customers encounter friction while using your tool, they are more likely to stop or reduce their use of certain features, resulting in decreased product engagement and ultimately a consumption gap.
You are likely to encounter this issue when your SaaS customer is left to figure the tool out on their own, so don’t be one of the companies that do that.
Use multiple UI elements to guide users through your features contextually. Make their first win quick and easy and motivate them to further explore the app. Implementing these steps will lead to improved adoption and product engagement rates.
You can take this a notch higher by regularly analyzing user behavior to find ways you can further improve customer experience.
The absence of self-help educational resources
Customers appreciate the possibility of learning on their own rather than having to contact support every time they have a question about a feature.
How are your customers supposed to learn about your product’s functionalities and uses if you don’t have sufficient self-help educational resources? This means they would never be able to discover new possibilities, so they will stick to just one or two core features and never get to experience the rest.
SaaS consumption gap vs. value gap
A value gap is a difference between promised value and experienced value. This often results from exaggerated marketing campaigns or targeting the wrong audience.
On the other hand, the consumption gap happens when customers don’t experience the full functionality of your product. Not because the functionalities don’t exist, but because users just aren’t harnessing the product’s full potential for the reasons discussed above.
For example, it’s a consumption gap if your product has ten features that can get three types of jobs done, but your customers mostly use only three features to get one job done. A value gap is when users come to the product expecting it will help them get three jobs done, but the product is actually designed to do only one or two.
How can customer success managers identify the SaaS consumption gap?
It can be tricky to identify the consumption gap in your product, but this is a necessary step. Without it, you wouldn’t know if there’s a gap and won’t be able to take the necessary steps to close it.
This section shows you three actionable strategies for customer success managers to spot gaps easily.
Use product usage analytics to identify the features that are being neglected
When you analyze product usage, you can identify features that have a low engagement or have little usage. This means that either the user hasn’t used the feature yet, or doesn’t see how it is valuable to them.
After identifying the neglected features, you can develop a strategy to reintroduce these features to relevant users and drive customer engagement for them with contextual in-app prompts.
Start a Voice of the customer (VoC) program
For you to identify the consumption gap, you must understand what the user is trying to accomplish and which features they are using to achieve it.
This will allow you to see if your users are missing other features that may be important to them and help them to get their job done.
VoC is about listening to your customers’ voices, understanding their needs and wants, and acting upon them to improve your product. This program shifts the focus to a more granular level than classic customer feedback.
For your VoC program to be successful, use a combination of relationship and transactional surveys to learn more about users. Relationship surveys aim to determine how the customer feels about your brand in general. NPS surveys are great for this. On the other hand, transactional surveys are used to generate feedback after specific interactions with your tool. Customer satisfaction (CSAT) and customer effort score (CES) surveys come in handy here.
VoC follows the same steps as the customer feedback loop:
It’s all about collecting, analyzing, and acting on feedback while keeping the communication with the customer open.
How to close the consumption gap with customer education
Increasing feature adoption is the most effective way to reduce SaaS consumption gaps, and training customers on how to use new features is the best way to achieve that. Here are six steps to guide you:
Provide a personalized education path to each user segment
Users of your app come from a wide range of backgrounds, are at different stages of their user journey, and use it for a variety of purposes. Thus, one-size-fits-all solutions simply don’t work here. To close the consumption gap, your customer education programs need to provide a personalized educational path to each user cohort that educates them on parts of the product they don’t yet know about.
With a tool like Userpilot, you can segment users based on their various characteristics and direct them to an educational path customized for them.
Continuously onboard and train your customers
Most SaaS companies have primary onboarding flows, but only a handful of them continuously onboard users with secondary onboarding.
At Userpilot, we advocate that companies go beyond this initial phase to provide secondary and tertiary onboarding.
Don’t assume users will discover your secondary features on their own and start utilizing them. Continuous onboarding helps users discover secondary features, adds new use cases, and maximizes the value they get from the product.
Use interactive walkthroughs to drive feature adoption with micro-learning
As already mentioned, feature adoption is the key to closing the consumption gap. Users will miss out on the value you provide if they don’t engage and become experts in your features, so use interactive walkthroughs to grab their attention and teach them by doing.
Use interactive UI elements to announce when major product releases occur
After using your app for a while, customers will develop their patterns for navigating the product. They will adopt the features they need the most and be feature-blind to your app.
These customers won’t go about searching for fresh updates within the app, it’s the responsibility of customer success managers to let them know when there’s a major release.
Modals are great for this. See how Figma used a modal to announce a new update and make sure users won’t miss out the value:
Use contextual tooltips to help users discover new product features
Again, users won’t utilize your app’s full potential if they don’t know how to use your features. This is where tooltips come in.
The primary purpose of a tooltip is to draw the user’s attention toward what they need to do next. Tooltips offer contextual guidance, bridging the SaaS consumption gap by helping users move across the journey and interact seamlessly with new features.
Provide customer education on-demand with an in-app help center
The best way to educate users on your features and encourage them to learn more about your product is to create a comprehensive resource center with multiple content formats including video tutorials, support documentation articles, webinars, and many more.
Conclusion
On the surface, the consumption gaps may appear to affect customers more, but a closer look will show you that the SaaS company takes the most hit. Customers that don’t experience the full power of your SaaS may wrongly assume the tool is not a good fit, leading to churn.
As discussed in this piece, you can close the consumption gaps by educating customers on your features through various resources and driving adoption with contextual in-app guidance.
Userpilot can help you close the consumption gap in your SaaS product. Book a demo with our team to learn how.
