The Ultimate Guide to Customer Value Management: Maximizing SaaS Success
Between battling buyer’s remorse, navigating economic downturns, beating aggressive competitors, and managing feature overload, SaaS companies face unique challenges when it comes to customer value management.
These challenges can quickly translate into churn, shrinking revenue, and missed growth opportunities. If your customers don’t perceive the value they’re getting from your product, why wouldn’t they cancel their subscriptions and move to a competitor who can better meet their needs?
This guide provides a comprehensive framework for mastering customer value management throughout the entire revenue cycle.
You’ll learn how to:
- Understand your customers’ needs.
- Develop compelling value propositions.
- Personalize their experiences.
- Continuously iterate to deliver exceptional value that drives engagement, loyalty, and ultimately—maximizes your business success.
Let’s dive in!
What is customer value management (CVM)?
Customer value management is a business strategy that focuses on delivering value across the entire customer journey—from initial awareness to post-purchase and beyond.
While traditional CRM methods prioritize customer acquisition, CVM goes further by building long-term relationships and ensuring customers achieve their goals, leading to increased satisfaction and loyalty.
How is customer value created?
Value is created when you directly address a customer’s problem—over and over again.
While most companies excel at wowing customers during the initial journey stages, they often become complacent once the customer is comfortably using their product. Avoid this trap!
You can continuously deliver value with small, thoughtful gestures. For example, Userpilot sent customers ebooks as Christmas gifts in 2022. The gesture was simple but impactful because the ebooks contained valuable industry insights and expert guides.
Why is customer value management important?
When implemented well, this business strategy helps to:
- Optimize your CLV and retention.
- Drive account expansion and revenue growth.
- Reinforce your competitive advantage.
- Build customer and brand loyalty.
Let’s discuss these benefits in detail.
1. Optimize customer lifetime value and retention
Acquiring new customers is expensive, but customer value management flips the script and focuses on maximizing the value you get from existing customers.
When you prioritize customer satisfaction, they’re more likely to stick around for the long haul. This increased retention rate contributes to a higher lifetime value, which is crucial for SaaS businesses, especially considering the average CAC payback period for SaaS is 5-12 months.
So, how do you maximize customer relationships and boost retention? It usually involves a combination of strategies, including personalized onboarding, proactive customer success, and targeted upsells. We’ll dive deeper into these strategies in a later section.
2. Drive account expansion and revenue growth
Customer value management doesn’t just retain customers; it encourages them to spend more. By understanding their evolving needs and offering relevant solutions, you open doors to upselling, cross-selling, and other account expansion opportunities.
Amazon is a great example. Its recommendation engine, personalized offers, and Prime membership program are all designed to increase customer spending and drive revenue growth.
3. Establish a relative competitive advantage
Customer value management is your differentiator in crowded markets. When you consistently delight and exceed customer expectations, you create a unique selling proposition that sets you apart.
This translates into benefits like increased pricing power—the ability to command premium prices without losing customers—and a strong brand reputation that positions you as the top choice in your industry.
4. Build customer and brand loyalty
Customers will cultivate a deep emotional connection with your brand when they feel valued and appreciated. This leads to:
- Increased engagement: Customers actively participate in your community, provide feedback, and show interest in your brand’s activities.
- Increased trust: A willingness to try new offerings and forgive occasional missteps.
- Positive word-of-mouth: Enthusiastic recommendations to friends, family, and online networks.
Nurturing a solid relationship with loyal customers is an investment in long-term sustainability and growth. It allows your business to flourish even in challenging economic climates.
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3 key customer value management stages
Broadly speaking, customer value management can be divided into the following stages: selling value, realizing value, and optimizing value.
Selling value
This stage focuses on identifying and communicating the value your product offers to potential customers.
Your goal here shouldn’t be just to close deals. Aim to connect with customers on a deeper level, understand their pain points, and demonstrate how your product can help them achieve impressive business outcomes.
Best practice: Choose the benefits-over-features approach when selling. Imagine you’re selling social media management software.
Instead of simply listing its features (e.g., “scheduling posts,” “analytics dashboards,” “engagement tracking”), explain how these features translate into tangible customer value (e.g., “increased brand visibility,” “improved social media engagement,” “data-driven insights to optimize your strategy”).
Realizing value
As earlier mentioned, value doesn’t stop at the sale; it’s just the beginning. After a customer signs up, your focus should shift to helping them achieve their desired outcomes using your product.
A close collaboration between sales and customer success is crucial at this stage. The sales team can share valuable insights about the customer’s goals and expectations, enabling customer success to provide personalized support and implement strategies aimed at increasing customer value.
Best practice: Implement a proactive onboarding process that guides users to their first “quick win” with your product.
Optimizing value
This stage is about consistently finding ways to enhance the customer experience and deliver even greater value over time. It’s critical for maintaining market share and staying ahead of the competition.
For example, observe how many SaaS companies proactively incorporated AI capabilities into their tools in response to the rising popularity of ChatGPT and other AI-powered solutions. That’s a strategic way to adapt to changing market demands and ensure you’re meeting customer expectations.
However, optimizing value goes beyond simply reacting to trends. It also means proactively seeking ways to improve and expand the customer relationship.
Best practice: Establish a continuous feedback loop and use customer insights to drive product development and improvement.
Aligning your organization around customer value
Good customer value management isn’t just a departmental initiative; it’s a philosophy that should permeate an entire organization.
Companies that excel at this typically adopt a top-down approach, where the C-suite champions a customer-centric culture. This creates a unified effort where everyone, from product development to sales, marketing, and customer success, works together to maximize customer value.
Let’s explore how each of these departments affects the value chain:
Customer value in sales teams
Sales teams are often the first point of contact for potential customers, making them crucial for communicating and demonstrating value. They are the frontline ambassadors of your brand and play a pivotal role in shaping customer perceptions.
With this in mind, your sales team needs to go beyond mere product knowledge. They need to:
- Develop a deep understanding of customer challenges.
- Understand the desired business outcomes of each customer.
- Master the art of consultative selling.
For example, instead of leading with a generic product demo, your sales team can start interactions by asking insightful questions to uncover the customer’s pain points. Then, tailor presentations to demonstrate how your product specifically addresses those needs.
This approach will lead to a shorter sales cycle while increasing your product’s perceived value.
Customer value in customer success
Customer success teams are responsible for ensuring customers realize the full value of your product after the sale. To thrive in their roles, they need a deep understanding of why customers chose your solution in the first place. This enables them to provide tailored guidance that aligns with customer goals and expectations.
However, this is where some organizations stumble. Without a proper handoff of information from the sales team, customer success managers may struggle to provide personalized support. This lack of alignment can create a disconnect in the customer journey and hinder value realization.
Here’s how to bridge the gap and empower your customer success team to champion customer value:
- Establish clear communication channels between sales and customer success.
- Create detailed user profiles accessible to the customer success team.
- Empower customer success with data on product usage, customer health, and feedback.
Customer value in product and marketing
Product teams create value, and marketing ensures that value is communicated clearly and compellingly.
For the product team, this means building a product that truly delivers on its promises and provides a seamless and enjoyable user experience. Again, this requires a proper understanding of customer needs, which can be achieved by:
- Weaving customer feedback into the product development process.
- Prioritizing usability and accessibility.
- Regularly analyzing user data to find product improvement areas.
Marketing takes the reins when the product/features are ready (or nearing launch). To effectively reach and engage potential customers, the marketing team should:
- Create targeted content that addresses customer needs.
- Craft compelling, value-focused product messaging.
- Choose the right channels to reach the target audience.
How do you measure customer value?
While value can feel intangible, there are concrete ways to gauge its impact. Tools like Net Promoter Score (NPS) surveys provide direct insight into customer loyalty and satisfaction. A high NPS indicates that customers are likely to recommend your business, suggesting they perceive strong value.
Beyond surveys, key metrics like customer retention rate, customer churn rate, and lifetime value paint a quantitative picture of customer value. High retention, low churn, and increased CLV signify that customers are finding ongoing value in your offerings.
You can also use the following formula:
Total Customer Benefits – Total Customer Costs = Customer Value
Where:
- Customer benefits: All the positive outcomes customers experience from your brand. This includes the product’s usefulness, how it makes them feel, its impact on their social life, and how it aligns with their values.
- Customer costs: Everything the customer invests to obtain your product, including the price, time spent, effort involved, and any potential negative feelings.
By now, you might have noticed this is not like your typical math equation.
How to calculate: assign values for each item based on your understanding of your product and target audience.
Example: For a customer relationship management tool, “improved user relationships” and “increased sales conversions” might be high-value benefits, while “monthly subscription cost” and “integration complexity” could be significant cost factors. Every other thing may be assigned lower numerical values when calculating.
What is a good CVM score?
A customer value management score above 1.02 is good enough.
To benchmark effectively, calculate your relative perceived value (RPV) by dividing your perceived value score by the perceived value score of a competitor’s solution.
RPV = Your perceived value/competitor’s perceived value
Interpreting your relative perceived quality:
- RPV > 1: Indicates a competitive advantage. The higher the score, the stronger your position.
- RPV = 1: Suggests parity with your competitor.
- RPV < 1: Indicates a competitive disadvantage.
If you’re wondering how to gauge your competitor’s perceived value, you can do it through surveys, market research, and digging through online reviews. Again, you’ll need to assign numeric values to each benefit/cost based on your estimations.
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6 steps to build a successful customer value management strategy
Now that you’ve seen why customer value management is a powerful business tool, let’s explore how to build a solid strategy for your brand.
1. Understand your customers
Before you can deliver value, you need to know who you’re delivering it to. This goes beyond basic demographics. Dive deep into your customer data to understand their pains, needs, and goals.
Use this information to segment your audience into distinct groups with shared characteristics and needs. This allows you to tailor your value proposition and messaging to resonate effectively with each segment.
Userpilot’s advanced segmentation feature helps simplify this process:
For easy reference, create detailed user personas using the template below.
Feel free to add any extra information your team might find useful.
2. Create a value map
A value map is a visual representation of how your product creates value for your customers. Here’s how to create one:
- Value proposition canvas: Utilize this framework to map out your product’s features and benefits against your customer segments’ jobs, pains, and gains.
- Competitive analysis: Research your competitors to understand their strengths, weaknesses, and value propositions. This will help you spot opportunities for product differentiation.
- Quantify value: Identify and measure the key metrics that demonstrate the value you deliver, such as time saved, cost reduction, increased efficiency, or improved customer satisfaction. This provides concrete evidence of your value proposition and will be useful when calculating your customer value (remember the formula?).
3. Develop unique value propositions
When it comes to customer value, one size does not fit all. To maximize impact, you need to tailor your value propositions to resonate with the specific needs and preferences of each customer segment.
A product growth platform like Userpilot can be instrumental in achieving this.
How?
For example, use Userpilot to segment customers by product usage and trigger targeted messaging. A classic use case is to send onboarding prompts highlighting core features to new users while triggering advanced functionality tips for power users.
Super important: Don’t forget to always emphasize your product’s USP when communicating with customers.
4. Personalize interactions with customers
Go the extra mile to create tailored experiences throughout the customer journey, starting from your onboarding flows.
Welcome surveys are handy here. Utilize Userpilot to trigger new user welcome surveys and collect data about their job roles, goals, and primary use cases.
Use this information to segment users and trigger tailored onboarding.
Beyond onboarding, use customer data to deliver personalized experiences at scale. For example, you can segment loyal customers for special product offerings that make them feel appreciated and motivated to stick around.
5. Deliver value
Developing a strong value proposition is only the first step. Now, you need to deliver on your promises consistently throughout the customer journey. Here’s how:
- Empower customers with self-service: Provide comprehensive resources that enable customers to find answers and solve problems independently. This includes knowledge bases, FAQs, tutorials, and interactive guides. Here’s an example from Userpilot:
- Offer excellent customer service: Be readily available and responsive to customer inquiries. Offer multiple support channels (e.g., email, chat, phone) and ensure your team is equipped to provide prompt, helpful, and empathetic customer service.
- Explore upselling and cross-selling opportunities: Once you’ve established a strong foundation of value, identify opportunities to offer relevant upgrades, add-ons, or complementary products and services that enhance the customer experience. Example from Userpilot:
- Align your pricing strategy with value: Implement pricing models that reflect the value you deliver. Offer tiered packages or flexible options that cater to different customer segments and budgets.
6. Capture value and iterate your value proposition
Customer value management is not a “set it and forget it” endeavor. It’s an ongoing process of continuous improvement. To ensure you’re consistently delivering exceptional value, you need to:
- Close the customer feedback loop: Actively solicit and analyze feedback from your customers at every stage of their journey. Use tools like Userpilot to easily deploy NPS surveys, in-app feedback forms, and customer satisfaction surveys.
- Embrace growth: Based on customer insights, refine your messaging, product features, pricing, and customer service strategies to optimize value delivery.
- Track key metrics: Monitor key performance indicators such as customer lifetime value, customer churn rate, and customer acquisition cost to measure the effectiveness of your customer value management strategy.
Conclusion
Impressive marketing and sales efforts may win you customers, but what will keep them is the value your company consistently provides. You can’t joke with this—especially when operating in saturated markets where customers can easily cancel their subscriptions and move over to a competitor.
Userpilot provides the tools and insights you need to effectively manage and optimize customer value throughout their journey. From understanding customer behavior to delivering personalized experiences, Userpilot empowers you to create a customer-centric culture that drives growth.
Ready to transform your customer value management strategy? Book a demo call today and discover how Userpilot can help you achieve your goals.
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