A user is someone that uses your SaaS product, right? Or is it someone that signed-up? Or someone that’s active? Or someone that logged-in a few times? Hmm.
Okay, so maybe defining a user is hard, but defining a customer is easy, right?
A customer is someone that pays you for your product or service. Even if they’re still within the legal timeframe for a refund? Or a contractual “cooling off” period? Or if they’re within the 90-day “stick period” (if they make it past 90-days they’ll stick around for a long time)? Or…
Wow, so even defining a customer isn’t as straightforward as it might have seemed.
And it gets even messier if you’re in a market with a more transient customer base (i.e. the level of real unavoidable churn is high), if you offer a completely free or freemium product, if you just launched with a lot of early adopter interest (i.e. the “Product Hunt effect”), etc.
To get honest about what’s going on in your company, you need to modify the customer (or user) definition, which is the main input into how you calculate the core metrics of your SaaS business.
Let’s explore this a bit…