Your company offers your clients unique value. You understand that value, but without a plan to communicate that value regularly, your clients might not be aware of the impact your solutions have on their business. In many cases, customers have a skewed perception of your value because they don’t fully recognize all the factors involved, resulting in low customer satisfaction, and in turn, high customer churn.
You can counteract this by prioritizing value realization and measuring it appropriately. In this article, you’ll learn how value realization can affect your business and how to identify the metrics you can focus on to increase your success.
Understanding Value Realization
At its heart, value realization is simple. The customer starts looking for solutions to a problem with an inherent value expectation in mind. They then try different solutions until they find one that generates a level of value that has a positive impact on their business.
Value realization is much more than just an understanding that a product or service has worth, though. It’s a specific revelation about the value your offering provides to a specific customer based on their strategic goals. It’s when the customer feels validated in their purchase decision, because they clearly understand the economic impact that their decision has had on their organization.
Value realization is every customer’s goal. It’s satisfying for several reasons.
- The problem they sought to resolve is solved, satisfying the client and relieving their pai.
- The client feels validated for making the correct choice.
- The client receives positive feedback from members of their organization for the effective solution.
Measuring how your customers realize value is vital to being able to deliver value realization. Learning how your customers engage with your product and what generates customer satisfaction helps you win and maintain clients more effectively.
Measuring Value Realization
There are multiple ways to measure value realization. Your company needs to define the value realization metrics that it wants to monitor. It’s important to note that a value realization metric is not the same as a key performance indicator (KPI). To appropriately measure your company’s value realization achievements, you need to set both.
In general, metrics are broad measurements, while KPIs are in-depth data that relate to specific goals. Metrics let your business track general performance. KPIs help you track your team or organization’s performance concerning specific, critical business objectives.
For example, a common metric for online businesses is total website traffic during a specific period. Meanwhile, a standard KPI is the amount of traffic on specific landing pages.
Both sets of data are essential. Your KPIs help you monitor the critical elements of your value realization strategy, while your metrics let you follow broader trends that may affect your KPIs.
Defining Your Value Realization Metrics by Customer
To measure your customers’ value realization, you’ll need to define what metrics to track. Unlike other elements of business data analytics, value realization metrics are highly subjective — the value you provide customers needs to incorporate those customers’ opinions and sentiments about your product, in addition to the quantitative impact your solutions have delivered.
Three important of KPIs to make sure you monitor:
- Return on Investment (ROI): The amount of value your client receives from implementing your offering.
- Time to Live (TTL): The time it takes to implement your offering after the client signs the contract
- Time to Value (TTV): The time it takes your client to receive value from implementing your offering.
It’s important to determine how you’ll measure value from the start. This definition process should begin before you finalize any sale, and it should stay consistent throughout the client lifecycle.
During the presale process, your sales team works with prospects to understand their needs, sell them on your services’ value, and promise them specific results. This is the perfect time to work with potential customers to identify the metrics and KPIs that you should prioritize. Your sales team can ask four critical questions during the presale period:
- What are the key milestones the client wants your offering to achieve?
- What will the client consider a successful implementation of your offering?
- How does the client’s supervisor define successful performance?
- What elements of your offering are most important to the client?
The answers to these questions will help you identify the metrics and KPIs that matter. For example, suppose the client wants to achieve a specific percentage increase in production. In that case, production speed and performance will be essential metrics. Similarly, you can track the time it takes to implement the features that your client considers most important.
Since every company’s strategic initiatives are unique, expect their value realization metrics to be unique as well, especially when considering different industries, company sizes, and more.. It’s worthwhile to track various types of value for different segments so you can maintain similar levels of service across your entire customer base. Using a value realization system can help you easily monitor the value of all your offerings in one place.
The Continuous Value Realization Cycle
The value realization process is only just beginning once you’ve identified your initial value metrics. In fact, the process should never really end — it’s an ongoing cycle. The continuous value realization cycle allows you to regularly update your solutions to fit your clients’ needs and maintain their satisfaction with your services. The cycle has five steps:
- Value Definition: Determining the metrics by which your clients measure success and how you’ll measure the value you provide.
- Value Delivery: Providing the value your sales team promised during presale by helping the client adopt and use your offering.
- Value Realization: When the client realizes the quantified economic impact that they are receiving from your product or solution.
- Value Validation: Confirming with the client that they have received the value they wanted from the product.
- Value Optimization: Improving the value the client receives, exceeding their expectations and building their loyalty to your business.
It’s important to note that your clients’ needs will change over time. As technology and markets change, your clients will begin to measure success by different metrics. Once you start optimizing value, you should also check in with your clients to ensure that you’re still operating under the same shared perceptions of success.
Value Realization Begets Lifetime Customers
Helping your clients understand the value they receive from your offerings is essential to keeping them as clients. When you know the metrics and KPIs to watch, you can show your customers exactly how much your business is helping them. Clients who understand your product or service’s true worth will remain loyal for life.
One method to monitor the value realization metrics that matter is to use a solution like DecisionLink’s Value Realization Tracker. DecisionLink is the industry leader in cloud-based customer value management. You can directly show your current clients how you’ve helped them meet goals and improve performance. Its comprehensive value realization solution can help you build client loyalty, reduce churn, and provide your customers with the service they want.