Value Realization: Why It’s Important
Value realization occurs when the customer truly understands the value of the product or service they used. It is the ability to measure quantifiable value such as Cost-Benefit analysis, ROI (Return on Investment), NPV (Net Present Value), Utilization, Product Adoption, and qualitative outcomes their organizations have achieved using a product/service. Value realization is accomplished by implementing the assessment of customer success. It demonstrates the actual business value the stakeholder receives by consuming a product/service. Customer value realization ensures customer retention with the slightest effort and helps cross-selling and upselling, which are necessary for a profitable business. The value realization cycle ensues successful business outcomes when successfully implemented.Value Realization Cycle
Every value realization strategy contains steps the organization takes with its customers or stakeholders. This sequence, from value definition to optimization, is called Value Realization Cycle. It is segregated into five sections, and a successful cycle would have all the stages completely accomplished.Value Definition:
The foremost step is to define the value of Return On Investment(ROI) to the customers based on their expectations during the sales process. Value definition is when the sales team gives a clear picture of the benefits to the customers.Value Delivery:
Derivation of the maximum value to the customer’s benefit after the product’s sale is called Value Delivery. The delivery process should include benefits, training, support, customer experience, and attributes that create value for the customer.Value Realization:
A tangible way to track the actual business impact is through value realization. Value realization is when the customer realizes the value of the product bought and the value it accrued to the organization. It’s a measure of how the customers perceive the value delivered by the purchase of the product. The top digital marketing company, KloudPortal, understands the obstacles and mitigates the necessary steps to ensure a successful CVR.Value Validation:
Value validation is a confirmation by the customer that the expected value has been received. Additional value is added to the product at this stage while realizing the actual value of the product. The customer comprehends what more value is expected of the product beyond the value realized.Value Optimization:
Customers seek ways to optimize revenue by understanding and maximizing the Customer Lifetime Value (CLV). Customers can be repeated, and loyalty points are gained by optimization of value. It helps in retention, thereby increasing the value to the companies further.Emphasis on Customer Value Realization Analysis
- Customer loyalty increases when trust is gained through value realization. They tend to stick to the brand even during times of crisis.
- Customers can convey their success stories to other stakeholders, opening new horizons for selling the products/services.
- Value realization leads to the renewal of customer agreements through customer satisfaction.
- Businesses can gain insights from value realization, which can help in post-sales processes and the beginning of a new cycle.
- Customers can take any corrective actions necessary to fulfill the next set of business objectives.
- In addition, companies can design and create a Value Realization Framework, which is critical for a company to work together towards a single goal.
- All the information collected can further be used in a business’s pre-sales process, resulting in further customer success.
- Value realization can enhance the brand value of the products the business is selling through the success of its customers.
- Implementation of the VR cycle improves productivity while keeping the risks minimal.
Key Metrics for Value Realization
In addition to the Value Realization Cycle, it is a good practice to build value realization metrics or key performance indicators (KPIs) that help measure the business’s overall health and performance. These key performance indicators will map out the business outcome in every stage of work, ensuring value realization.
Time to Live (TTL)
Time taken for the product to be implemented after the contract signing is called Time To Live (TTL). The lesser time, the better the performance.
Time to Value (TTV)
The time taken from contract signing to value extraction is called Time to Value (TTV).
Net Revenue Retention (NRR)
The revenue retained from existing customers is known as NRR, and it is a crucial KPI for SaaS and subscription-based companies.
Return On Investment (ROI)
It is the value received against the investment made on a particular product/service. A high ROI shows the product’s high performance and a profitable business.
Customer Success KPIs
There are other KPIs like Customer Acquisition Score (CAS), Monthly Recurring Revenue (MRR), Customer Lifetime Value (CLV), etc… that measure customer success.
SaaS Business Model: An Example of CVR
Value realization in SaaS Business Model is no different from any other business value model, and it gives the ability to look beyond the software product. A good value realization framework will formulate a good strategy with solid objectives, tasks, tools, and metrics. The successful execution of the framework will result in increased revenue, decreased costs, and enhanced productivity with minimized risks.
KloudPortal: A CVR Service Offering
KloudPortal, the top digital marketing company, has the right medium for long-term success through customer value realization (CVR). We ensure maximized customer lifetime value (CLV) by customer value realization analysis provided by our team of experts at KloudPortal.
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Chaitanya Kummamuru
About The Author…
Chaitanya Kummamuru is from the wonderful city of Hyderabad which is the capital of Telangana state in India. She is a Software Engineer with good work experience in testing and development, and has a ‘Bachelor of Technology’ Degree in ‘Electrical and Electronics Engineering’. As an ardent reader she developed an interest in building her vocabulary and also a penchant for writing. With this mindset she wanted to explore content writing. She is a very dedicated individual with regards to work and has been a high performer.