Customer Value Realization Scoring

An enhanced way to track customer health through outcome achievement

In the past couple of years, we’ve seen renewed attention on customer retention as a focus for B2B companies everywhere. I think this is not only a natural reflection of hard times, but also because businesses are realizing the immense value in retaining current customers & keeping them happy.

Sales quotas don’t go up, it’s easier to sell more to current customers, NRR is a key indicator of the most successful companies on earth, etc, etc, etc.

So along with this renewed attention on retention, we heard of a paralleled movement toward tracking “customer outcomes” in addition to “customer health” as a way to ensure we are retaining customers and also keeping them happy. (The latter we have focused on in previous posts, so we will tackle the former today.)

Customer outcomes is another way of saying customer value, aka are people getting what they want to get from you/your product offering? Are they getting what they thought they would get at the time of purchase? Is your product doing the job they “hired” it to do? Has the job they wanted to originally do changed throughout the engagement? Do we know what those expectations are?

For example, if they bought you to reduce churn by 2% annually, how are you pacing to that?

If they bought you to help drive down delivery times and improve efficiency metrics by 20%, are you doing that?

Are you helping them reach their concrete security goals?

Looking at that is not enough though, how do you compare to the next best alternative (competitors, doing nothing, spreadsheets)?

Executives buy your product to do a job that brings down costs, improves efficiency, or makes them money. Those are the three reasons they make purchases.

So, if we reframe this conversation as a “Job to Be Done”, one that either brings down costs, improves efficiency or makes them money, then we know how to keep our products employed.

Take for instance a product in your space that is very expensive, but people still buy it time and again when there are cheaper alternatives. The reason people don’t mind paying more is because of the perceived value that customers believe in relation to the cost they pay. They might even believe that by paying more they get more value. This is why many enterprise software companies that charge a lot do so well, is because the perceived business value is so much higher than going with a cheaper alternative that might not know what they are doing—and therefore can’t help you as much.

So what are some of the leading value indicators we might look at?

Before we can do the work to set up a score there are 6 fundamental value questions to ask any given customer related to value itself:

1.    Has an executive expressed to you in the last quarter that they are achieving the business goals they intended to achieve with your product?

2.    Are the people who are supposed to be using the product, using the product to the fullest capacity?

3.    Are the business goals of the customers documented in a place where others can view them?

4.    Are the business value metrics documented for these goals?

5.    Are the statuses of these metrics all in a forward-progressing state?

6.    Have you reviewed these with a person internally in the last quarter?

These put together are “customer value indicators.”

After we put together the value indicators, it’s important to realize what costs are associated with working for us.

1.    What are the “experience-level” costs associated with working with us? (do they like the experience they get overall?)

2.    What is the actual financial cost of purchasing or keeping your product?

3.    What are all the change management costs?

4.    What are the emotional costs involved?

5.    What are the learning costs involved?

6.    What are the opportunity costs of working with us (doing nothing or working with/ competitors)?

Scoring

1.    Document each question above in section 1= Create a Perceived Value Score

2.    Document the answers for each above in section 2= Perceived Costs Score

3.    Weight the scores.

4.    Factor this weight to calculate the total final score.

Sometimes when looking at customer outcomes, it is easy to overlook the costs associated with working with us.

Customers always have options to work with alternative tools or to not do anything at all. This can even be useful when determining what features to build or what to focus on at any moment. For example, a customer might articulate the XYZ feature, but the ABC feature might have 10x the ROI for them + other customers you’re talking to, so tabling the XYZ in favor of the ABC is something we should be able to articulate in a way that passes the business case test.

More important than the score itself is the habit of documenting the answer to the simple question, “Are customers achieving the business outcomes that they hoped with your product?” This is the biggest clue as to why customers stay and what makes them leave.

You should always know whether you are aligned to the goals of the executives had in mind when they purchased your product to achieve a specific outcome and if not, then what needs to be done to get back on track.

This starts with really simple documentation and later creating up with a customer value score that is visible for every customer.