Value is the golden rule of business — the rule that sets up all the other rules. It’s something sales professionals of all kinds are preoccupied with during the current market downturn, and for good reason. Now, more than ever, with budgets being slashed and purchases scaled back, you need to provide your customers with the greatest amount of value possible with your product. It’s a bear market, and cash-strapped prospects will not part from their budgets easily.
That’s why your sales organization needs to help maximize the customer value your company is offering to your target market. The creation of customer value is the responsibility of your entire business, from product development to HR to marketing as well as sales. However, your sales organization is in a unique position to increase customer value in a lean market. You can achieve this through a mix of improved prospect targeting, diligent attention to customer service, and a maintained focus on your existing business.
Defining Customer Value
The definition of customer value is the total sum of all returns a customer expects to receive across the length of their subscription, having invested in your product or service. You can also think of customer value as their expected ROI from your product.
If you’re looking for a formula for customer value, measure the interaction of the value your product provides against the cost of acquiring it.
Value = Service/Cost
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Why Customer Value is Important
Customer value’s importance cannot be accounted for entirely through observable statistics or through the use of a one-time formula — this can make it tricky. There are both data-based and perception-based reasons why the customer value you’re providing is vital for your company.
In terms of what you can measure, customer value means monthly recurring revenue (MRR) for your business. The more value you’re providing for your customers, the more likely they are to stick with you, increasing their respective lifetime value (LTV).
Customer value is also important for what it does for your brand perception. Customer value is not just about absolute value. It’s also about perceived value. As stated in the Harvard Business Review, perceived value “can be difficult to pin down and psychologically complicated.” The perceived value of your product is tied to customer perceptions of it, which are a combination of “logical evaluations and emotional impressions.”
- For example, a product with a track record of success (social proof) and versatile, high-value features that bring new success to customers quickly will have a much higher perceived value among customers and prospects. If the quality of the product is perceived to be higher, prospects believe they can get a higher level of customer value by investing in it.
- Things like usability and quality of onboarding and support (all part of “customer feel”) also contribute to perceived value. Word gets around about good products.
In short, customer value is important because it is a direct measure of customer satisfaction — the concrete benefits your product provides and how these benefits appear in your customers’ estimations.
Why your value proposition is more important than ever
It is particularly vital in a market downturn to use your marketing strategy and sales approach to clearly articulate your product’s value proposition (what makes it uniquely useful to prospective customers). There is less money to go around following the outbreak of COVID-19. Make your product stand out — and to do so, you need to articulate its customer value particularly well.
Using customer value as a guide can help your sales organization devote sufficient focus to both new businesses and, particularly, expansion revenue. It can be tempting to go all-out on new business in a lean market — particularly if the competition has decreased or you stand to gain in market penetration by going for a high-volume, lower-value sales approach.
It is particularly vital in a market downturn to use your marketing strategy and sales approach to clearly articulate your product’s value proposition.
But in SaaS, it’s customer value, not pure units sold, that ultimately fuels your revenue and provides stability for your business. Unlocking expansion revenue (i.e., increasing value being seen by increasing customers) is key to keeping your clients on board and churn rates low.
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Maximizing Customer Value Through Buyer Personas
As with so many other best practices in sales, maximizing customer value starts before you even have a customer. The logic behind choosing a target market and building buyer personas is that some kinds of prospects will be apt to see more customer value from your product than others.
To maximize your value proposition in this lean market, reevaluate and modify your buyer personas. If COVID-19 has affected one or more of your market segments (e.g., a loss of spending power in an already low-spend demographic), consider relaxing your efforts toward them for the time being. Shooting for the same market segments in the same ways as before can lead to heightened customer acquisition cost (CAC) without equivalent reward in LTV.
To assess your buyer personas for the customer value they’re likely to see, vet them carefully for the following qualities:
- Their typical workflow, and how your product can help improve it
- Needs and goals
- Challenges and pain points
- Learning type
By targeting prospects whose workflow your product most smoothly fits into with the best-matched goals and pain points and the highest motivation, you can optimize for customer value and customer success before you’ve even made the first contact.
Share this intelligence with your marketing department — their job is to communicate potential customer value through a marketing strategy that your sales organization will then deliver. Help them get their target audience right, and they’ll help your sales organization get easier higher-yield conversions.
Maximizing Customer Value Through a Customer Success Program
The essence of customer success is making sure that your new clients are seeing the maximum possible customer value. That’s what makes diligent client onboarding and customer success management so vital, particularly given the high rates of churn in the onboarding and success phase. Investing available time and resources into customer success is, therefore, a must.
Ensure, before deals are signed, that you’ve guided your buyer to the plan that’s best for them, with respect to balancing their budgetary constraints with features that will allow them to see solid, quick ROI. Their plan and the features they can access with it constitute the foundation of a successful customer experience.
Make sure that all pertinent customer information — as listed above — is handed over from rep to customer success specialist through Deal Hub. Maintaining contextual continuity on client needs and preferences, expectations, and pain points are key to managing a smooth customer success program.
Then, follow our steps in for a customer success program that will make each new customer a subscriber for life:
- Consult with your customer on a plan of what success looks like for them.
- Practice good data hygiene.
- Take care of compliance.
- Schedule tutorial sessions with your product.
Thereafter, it’s simply a case of observing your new customers’ progress and offering your support when required. Doing this well will help your customers rapidly achieve the value creation they were expecting when they invested in your product.
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Maximizing Customer Value Through Existing Business
Perhaps the most topical and vital approach to maximizing customer value involves looking at your existing customer base. Your current customer base is just as vulnerable to value loss (and, by extension, churn) in the market tumult. Nevertheless, they’re considerably easier and cheaper to access than new business, and they already know the value of your product and relationship. That makes them a chief route towards increasing customer value and, by extension, the LTV being supplied by your entire customer base, all while reducing CAC.
Focusing on expansion revenue will lead you to provide customer value for your existing customer relationships. This can be done in concrete ways, such as through upsells and upgrades or modifying current packages (where viable). However, it can also be done in ways that contribute to the perceived value of your product and customer relationship — by giving advice and support to your clients in this difficult time.
When seeking to maximize customer value through existing business, offer those members of your base:
- Bespoke packages on upsells, with discounts or deferred payments where necessary/feasible.
- The odd free add-on for loyal customers or members of a certain subscription tier to the degree that’s financially doable for you.
- Honest and impartial advice about their situations relative to COVID-19. Customers will remember when you made time to consult on their behalf or help them with tough decision-making relative to your product or your company’s market expertise.
Beyond these tangible provisions, offer your ear and your expertise to customers. Make time to talk with customers who might be concerned with budgetary restraints being imposed on their departments or whether or not your product will really be useful during this downturn.
Give attention and weight to any customer feedback you might receive. Make a note of what’s working for your customers during this downturn, what isn’t, and what they need from you. It’s not only vital information for securing customers and winning upsells; it also tells you what your new prospects are likely to need from your product in terms of value creation.
This kind of internal-first approach to customer value is key not only to maximizing LTV but to keeping customer acquisition costs and churn rate down as well.
The Game of Value
Maximizing customer value does not generally require your sales organization to go long distances out of its way. As we’ve seen above, seeing to it that value creation is boosted and customer experience improved is more a case of maximizing the potential of each step in a regular sales process.
You should never underestimate the power of perceived value nor the very real impact it can have on your sales organization’s performance. That’s true for a healthy market and goes double now. A company that’s perceived as fighting the good fight to provide downturn-stricken customers a high-value experience will command loyalty and a lasting good reputation when things settle down. With respect to your new business and your existing customers, customer value should always be your sales organization’s primary compass.
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