Client paid for more accounts than they use
Client paid a 12 month contract for 10 accounts to my SaaS. But they are only using 4 accounts. I confirmed that they are not sharing login credentials.
How do you handle integrity issues like this? Is it their fault for not getting their monies worth? Is it bad karma for me to not notify them? I would obviously not offer any refunds in the middle of the contract, but the contract auto-renews every year and it's getting close to renewal time for this client.
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I would reach out to them and advised them you've reviewed their account and feel they'd be better off on a smaller plan. It might mean a lower income for that client but it'd go a long way on the customer relationship / loyalty points.
Seems a great opportunity for a positive Customer Success story. You might make them happy they can reduce their costs on the next cycle or they may still be anticipating growth and to fill the seats. Unlikely they’ll request a refund and even if they do it should be easy enough to gracefully decline that. More likely is the upside that they’ll trust you, want to stay in business with you longer, and recommend you to others.
I think there's no right or wrong answer for this. But since it is already raising concern for you, the best would be to do what makes you feel better.
Usually, companies don't notify their customers if they are underusing their services; it is not their "responsibility" to find the best deal to their customers. They can recommend plans during the onboarding, after that, it is not their responsibility - but it would a nice touch for keeping a great relationship.
If your renewal process is through emails, you could take that as an opportunity to tell your client that other plans offering fewer accounts could also fit their usage.
BTW your client may be well aware of this situation, maybe he thought his company would use 10 accounts, but it ended up not happening.
Your first paragraph hit the nail on the head! You're absolutely right.
To me, this is a great time to reach out and better understand your customer. Just give them a call and tell them about what you see and ask them if they meant to do that, if they were confused when buying and bought the wrong thing etc. This is a great chance for a learning experience and to give your client a reason to love you.
When is the last time you got checked on by a company to see if you were paying too much. How awesome would it feel if they did.
Short answer, do what feels right.
The fact that you are even bringing this up on the forums means that you are conflicted and want to make the right decision. For me I err on the side of my customers. It might be less revs in the short term but don't discount the emotional overhead of dealing with this. You took time to write a post, you will read the responses and you will think about how to act. Much easier to just do what you feel is right and move on.