Driving Growth With Usage-Based Sales

Growth doesn’t happen when a contract is signed. Growth happens when customers actually use what they bought, day after day. We wrap our usage-based sales series by connecting the dots between pricing strategy, operations, and compensation—showing a concrete path from “right to buy” to realized revenue you can bank on.

We start by reframing the sales motion for consumption models. Winning access is only the opening move; the real work is guiding adoption and hitting a clear, data-backed ramp. Rather than forcing usage into traditional opportunities, we walk through why account-level management creates clarity across products, regions, and divisions. From there, we dig into forecasting: finance or a deal desk should own usage predictions with analytics and machine learning, not sellers guessing run rate. You’ll learn how to stack committed volumes with live run rate to set honest targets and expose realization gaps before they become surprises.

Role design gets a reset too. AEs close the first purchase and stay accountable through the ramp window, then hand off to CSMs or AMs to maintain and deepen value while they open the next wedge—new divisions, higher tiers, or complementary products. We share practical ways to instrument telemetry, trigger alerts when adoption stalls, and align incentives to ramp and sustained usage. The result is a simple, repeatable operating model: forecast with data, manage at the account, pay for realization, and hunt for expansion where customers already show proof of value.

Ready to turn promises into proof and surface the growth hiding in your consumption revenue? Follow the show, share this episode with a teammate who owns forecasting or CS, and leave a quick review telling us your ramp window and how you define success.

Transcript

Seth Marrs 0:03

Hello everyone, welcome back to the Innovative Revenue Leader Podcast. This is the fourth and final podcast in the series around usage-based sales. The goal of this series was not to talk about how to implement usage-based pricing, but to provide revenue leaders with tools and insights into how to optimize growth when you're working with these types of sales models. So, just to recap a little bit, the series started with Anthony McCartland, where we went through why CROs should care about this, like how pricing aligns to value and how you can actually drive up sales faster because you don't have the chunky contract periods that are in most like SAT sales. So the opportunities there, but also the declines that come with that in that you can stop using things as much as possible and how it also changes the dynamic of the role of a CSM versus the role of a seller. And then we moved on and we talked with Dara, where he was talking about how do you operationalize and really go after realization and what that looks like and how he's putting that into place with XPO. And then finally, we the last one was with Chuck Lee, who talked about how you compensate for this and how you make the most of those things by going after compensation plans that are really set up to optimize the key components of that. So in this session, what I want to do is pull these things together and talk a little bit about strategies for these different areas. So the first one that we'll talk to is really around when you're managing consumption or usage base, there are two different sales motions. So the first one is you have to earn the right to buy. So this is what you typically see in an opportunity management process. I create the opportunity, I get the customer to agree that they're going to buy from us. And as a SaaS model, they buy and then they sign a contract and they're signed in. You can pay the seller on the booking and let them move on to another sale. In a usage-based pricing model, that's just the right to spend money in most cases. Now, there are different types where you have a minimum spend and different flavors with it, but by and large, the right to buy is just a starting point. There isn't a ton of sales that comes with it. It actually just allows you to go into the next phase, which is the most important piece, which is the realization side. And when you're dealing with realization, you have certain components that you have to work into. And this is where opportunities using a standard opportunity-based approach. So you're a SaaS company that has been using opportunities to drive sales, and now you're moving into consumption and trying to still use opportunities, like for example, saying, Oh, I think this person is going to buy something. So I'm putting an opportunity in for what I think will be like$4,000, or you're putting in opportunities for contracts that you sign that haven't realized revenue. Those things are different in a usage base. So when you're thinking realization, there are key components. You need to start. How do I get you to start spending once you've signed the contract? How do I ramp you up? And we'll talk a little bit more about that in the coming slides. And then how do you move into growth? Like, how do I find new ways to grow you as the company? So you're really doing it through account management because for a number of reasons, it's just very hard to use the opportunity. And I've had people say, Well, yeah, you could do it. So if you are a single product company, you could potentially do it, or you're selling one thing into an account. But where this gets problematic if you're using opportunities, even if you're trying to be very sophisticated about how you allocate, think for a second about an opportunity where you're selling into a large multinational where you have multiple divisions under the same account. So you could have eight opportunities open in that account. Now, if you're selling the same product into each one of those, you have no real good way to allocate those sales into an opportunity. So it makes it really tough to know if I won the opportunity, how do I make sure I realize it? And the reason I say this is because a lot of companies say, well, I just want to keep using the opportunity and allocate funds. It gets really tricky. The simplest way, and the way that is that is structured to work best, you lose a little resolution, but if you manage it at the account level where a seller is assigned to that account, and you're looking at the total sales for the account, that's much more manageable, much more tangibly affect by tangible in that you could actually do it, and it allow for you to effectively go after growth with realization. It's a lot bigger discussion, but that's something that you really need to think about. Don't use opportunities for usage base, use accounts and use account structures to be able to do this. The next thing is you need to develop a usage-based forecasting model. So what I'll go through here is you the account is what you're going to need to use to do this. The opportunity was just there to say, Did I earn the right to buy? And then ideally, in that opportunity, you would say, How much do I think? And then now it's trying to go and figure out how much can I earn. So typically what you would see is you've got the opportunity, and that estimate in a common setup is done by sales. That is really not a good idea because there's a lot of reasons why sales would and would not understand what's going on in usage base. And ideally, you would have the data, and you actually do have the data, you would analyze the data that you have because the good part about usage base is you get a lot of information with run rate sales where you can look at customers and understand what typically happens. So the best practice is you have that done by a deal desk using analytics or your finance team, somebody who can look at all of these accounts and understand how much is typically a deal like this in this customer. How much do you typically sell? And you let that guide you for how much the opportunity is worth rather than a seller, because this the salesperson is either going to be overly optimistic or really pessimistic, depending on how you set up the comp plan. You want to use real data to see what the true potential is. If you want to hold the salesperson accountable, that that is you need to have another piece on the back end that where they that where you're going to motivate them to try to better forecast, but they're really not the best people to do it. The next thing is looking at run rate. What typically happens is that same prediction is made by sales, where you ask the seller, how much do you think it's going they're going to spend this month, this quarter? That is an unfair ask to a seller because they don't have the data and their job is to sell. Their job is not to understand how run rate is happening. Remember, usage-based sales, these are transactions. They're going to happen, thousands, millions of transactions that are happening. Tools are out there, machine learning is out there, technology's out there to run the analytics and understand what those trends look like. Don't burden your salespeople with what that looks like. Instead, give that to them. So the best practice to do that is just use finance or analytics to tell you what that run rate is so you have an idea of what's going on. What you want the seller to do is to act on that and be able to address an issue if it comes up, ramp if they're seeing potential to grow, those types of things. And the final thing when you're looking at forecasting is growth. So what a lot of companies do because it's easy, is they look at year over year. I did a million last year, I want to do 1.1 this year. That is not the right way to look at it because there are so many things that go into a year over year increase. The ideal scenario is you look at the opportunity commitment. So what is the run rate for the year? And then what is the opportunity commitment? So there's a stack that goes with that. So you could use run rate once you've made it through your first year. So if I sell a usage-based model a year in, I see it's$120,000. Okay, I think I'm gonna do, I want to grow that$120,000 in the next year. But if you sold a usage-based model in that previous year, the opportunity commitment for that is probably say that's$120. Well, you wouldn't use run rate on that because it's not visible yet. So you would take the run rate from the one-year-old deal, add it onto the commitment that was made for that, and the growth should be the addition of those two. And in a lot of cases, the commitment that was made gets ignored, and you don't even see what's going on and how badly you're missing on the usage-based side until a year later when your run rate's way lower than you expect it to be. Or you don't even see it because you're still doing run rate and ignoring the commitment side. So you need strong functional forecasting models to be able to do this well. And they're different types of models than what you've used before. The cool thing about this is because it's so there's so much data happening with this, the ability to effectively predict it is much, much better. Next thing uh you need to look at real the game with usage base is with realization, not run rate. You want to look at the realization side of things. So just going through like what what this looks like typical run rate, say you have 100k, you're gonna have 20k in churn, you generate 60 60k in new opportunity, and then you have a realization gap, and you have an annual result of 110. So beginning of the year, end of year, you're at 10%. Is is that a good thing? Did you have a good year? Like if you're looking at it from a run rate standpoint, 10% growth in some companies is is really good. Um now, maybe for a fast-growing tech company that'd be bad, but in a say an established company is doing that, if you set a target for 10% growth and you were around that 10% target, you could feel really good about that. The thing is that account was supposed to grow by 40% with churn. So you had committed to grow that by 40% and you only grew it by 10%. So the reality is when you look at the commitment, going back to the previous slide, when you're looking at that commitment piece, you actually weren't successful in that account. What you should have sold actually means that you missed pretty badly. And then most companies, when working on this, don't even realize that they're celebrating the success of the 10%, and they really should. And like what when you think of how to focus on it, I would much rather focus on that 40% and driving the hell out of that than being happy with the 10% because I'm only looking at runway. There's so many blind spots that come with it. Also, think about it if you're a company that is doing this and actually working towards that 40% when you're looking at the realization potential, you have an advantage because you're hustling to find out what's going on. You're getting insights of what you could have done that most companies don't really have because they're just focusing on the real on the run rate side of things. Another thing to think through is the time window to disconnect. So when do you take the seller out and when do you transition? This is very, very important and usage-based. So when you think about the different areas and where you compensate, every deal that you have with usage-based should have the opportunity that you created to get the right to buy, close one at the point of the first purchase. So that deal, the opportunity window closes you got the first purchase. Great. Deal, that part of the deal is one. Now I'm moving into the realization game. And in almost all businesses, actually, in all businesses, there is a ramp period that happens. It could be a month, it could be six months, it could be a year. And that time period is where you get that person from purchasing or that company from purchasing to where they're typically where they typically grow to. And they're different for every organization. It's something you should analyze to understand what the typical ramp period is. So, how do I go from my first purchase all the way to what the typical period is? Where you would look on it like so, if you ran the analysis, you'd run the analysis and you'd see the growth curve going up and start to level off. And you're gonna see that happen with all of your customers. And what you'll find is there's a subtle period where you'll see most customers will ramp at a certain period of time. You need to cut that. And that is the period that you need your AE driving to get to. So when you're incentivizing, you're incentivizing for the ramp period. That next period transitions. That is when you take the AE out, and then now you bring in the AM or the CSM to drive or maintain growth, depending on what you're trying to do, who's involved, CSM. In a lot of cases with usage, the growth is in just using the product. So the CSM becomes much more important than potentially an AM. It's also why you see AMs and CSM roles kind of morphing a little bit. But that is the group that's going in, and their job is to maintain what you have ranked to. Then the AE's new game that they're trying to do is to build. So now they need to find that next opportunity within that deal where they can go grow that business. So it could be a cross-sell, it could be an upsell of that product, could be going to a new division, whatever. But that's what they're going to be focusing on is that new business and that they the additional growth. So you have a CSM and an AM that's working to maintain what you've already built. And then the AE is going in and finding that new pathway to really drive growth. So just I hope that gives you a little bit of insight into usage base. If you have any questions, feel free to reach out on LinkedIn. This is a complex subject, but it's also what I believe is one of the biggest opportunities to drive growth in most organizations. Because in most businesses, the consumption or usage-based side, remember the definition of usage-based. A lot of people think usage-based is things like AI, date AI tokens or data or just like technical stuff. Usage-based is anything that is highly transactional, in this definition that I'm talking about. And almost all large organizations have that. And most of those organizations just kind of sit on that consumption revenue because they have no real way to drive realization. This is an opportunity to get an advantage where you can drive growth in places where sellers just don't have the tools to do it. So I hope you guys take advantage of it. I hope this is useful. Thank you.