In the world of B2B SaaS, making sure that customers get the most out of their contracts is the best way to keep them and grow your business. However, a common problem comes up when an Enterprise customer doesn't use their contract benefits enough. This could be because their use case doesn't need a lot of consumption or their business model limits their demand.

When customers underutilize their entitlements, it’s not a signal to shrink the partnership, it’s an invitation to reframe value, uncover hidden opportunities, and strengthen the relationship beyond usage metrics.

This situation is risky because if the customer thinks their contract is too much for their needs, they might ask for a downgrade at renewal, which would hurt Annual Recurring Revenue (ARR).

So, how do you deal with a customer who isn't using your service enough while still keeping them happy and the ARR steady?

Understanding the Root Cause of Underutilization

It's important to know why the customer isn't fully using their contract rights before doing anything. Most of the time, it comes down to:

• The contract was based on assumptions that didn't turn out to be true, so it doesn't match the actual needs.

• Limited application scope: The customer's specific business model means they will use it less.

• Not knowing all the benefits: The customer may not know all the ways they could use the product.

Let’s take an example:

Case Study: An Enterprise Customer with Low Usage

Picture an Enterprise SaaS company that sells a platform for processing data in the cloud. The customer, a big financial services company, signed a contract that says they can process 100TB of data per month.

But after six months, they only use about 30TB per month, and it's clear that their application (which is focused on lightweight analytics) will never need a lot more usage.

The customer is asking why they should keep paying for 100TB when they only use about a third of that space.

How do you deal with this without putting your ARR at risk?

Strategies to Retain Value Without Encouraging Downgrades

1. Shift the Conversation from Usage to Business Value

Instead of talking about usage as the most important measure, talk about the value the platform brings.

• Highlight Business Outcomes: Focus on Business Outcomes: Show how the platform improves security, reliability, compliance, or operational efficiency.

• Demonstrate ROI: Focus on the money saved on infrastructure, staff, or development costs that would have been needed otherwise.

• Benchmark Against Industry Peers: Show how other companies in the same field use the platform and get value from it, which will help you keep the contract.

Example:

Instead of saying, "You're only using 30TB, let's rightsize your contract," say it like this:

"Your team is getting real-time financial information with very little delay, making sure they follow the rules, and not needing to build expensive on-premise infrastructure." These benefits go beyond just using data.

2. Expand Usage via Adjacent Use Cases

If the current workload doesn't require full use, look into other departments or use cases within the customer's organization.

• Internal Advocacy: Find other teams, like marketing, compliance, or risk management, that could use the platform.

• Cross-Departmental Expansion: Give other business units proof-of-concept trials.

• Feature Utilization Campaigns: Show off product features that aren't being used enough but that fit with the customer's bigger goals.

Example:

"We've seen banks and other financial institutions use the same platform for fraud detection, regulatory reporting, and even customer analytics." Would you be willing to have a discovery session with those groups?

This changes the topic from cutting back to finding ways to use the product more that fit with the customer's business.

3. Offer Value-Added Services Instead of Discounts

If the customer doesn't want to expand, don't lower the price right away. Instead, offer services that add value to their experience.

Consider:

• Exclusive access to premium features:  (e.g., advanced analytics, security enhancements).

• Enhanced support or consulting to optimize their setup.

• Training or workshops to maximize value from the platform.

Example:

"We're adding a dedicated solutions architect for quarterly strategy sessions at no extra cost to help your team get even more out of the platform."

This method keeps revenue steady while making customers more loyal.

4. Future-Proof the Contract with Flexibility

If the customer is still unsure about keeping their full commitment, offer structured flexibility instead of just cutting back.

Options include:

• Usage-Based Scaling: Let the customer move unused capacity to different workloads over time.

• Carry-Forward Credits: Allow them to use benefits that they didn't use in the past.

• Tiered Growth Plans: Keep their current prices, but offer small increases based on set events.

Example:

"We can change your contract so that unused capacity can be used for new projects in the next fiscal year. This will give you more freedom."

This method keeps the ARR commitment while making the contract more appealing.

5. Strengthen the Partnership Narrative

Finally, framing the relationship as a strategic partnership instead of just a vendor-customer transaction can make keeping the contract seem more important.

• Executive Alignment: Set up quarterly business reviews (QBRs) with top management to talk about long-term goals.

• Co-Innovation Opportunities: Offer to work together on pilots, beta tests, or research in your field.

• Customer Success Roadmap: Create a plan that is specific to them to help them reach their business goals.

Example:

“We see this as a long-term partnership that will help your company come up with new ideas in financial analytics. Let's agree on a plan that will keep both sides happy.”

Final Thoughts: Win-Win Engagement Without ARR Reduction

If customers don't use their entitlements enough, the first thing you might want to do is offer them a downgrade, but that usually leads to a loss of revenue. Instead, you can keep the customer and protect (or even grow) ARR by focusing on value, growth opportunities, extra services, contract flexibility, and strategic alignment.

The most important thing is to change the conversation from how much they're using to how much value they're getting, and to find ways to get them more involved instead of less committed.

Image by Dimitris Vetsikas from Pixabay