What is Value Realization in SaaS and Why Does It Matter?
Value realization can make the difference between a customer who unsubscribes and a customer who becomes a brand advocate.
If you want to build a loyal customer base and nurture product growth, your focus should be spent on making users realize the value of your product as soon as possible—which might be trickier than you think.
So, let’s talk about value realization and what you can do to improve it.
- Value realization is when a customer experiences and recognizes the value of your product or service.
- Value expectation is when a customer has an “AHA moment” and thinks your product can bring the results they need. While value realization happens when the customer experiences value that exceeds those expectations.
- Value realization is key for product growth. As it allows you to convert free trial users into paying customers, it unlocks upsell opportunities and drives long-term customer retention.
- There are four metrics you can use to measure value realization:
- Time to value (TTV)
- Time to live
- Return on investment (ROI)
- Net promoter score (NPS)
- The value realization process has five stages:
- Definition. Where you need to determine the meaning of your customers’ success by creating user personas.
- Delivery. Which involves the implementation of your product through in-app onboarding and self-service support.
- Realization. When the customer starts getting results from your product and getting hyped through gamification.
- Validation. When you have to keep providing actual business value throughout the journey through secondary onboarding and account expansions.
- Optimization. It involves adapting your product to your customer’s ever-changing expectations through in-app surveys and review gathering, making it timeless.
What is value realization?
Value realization is when a customer experiences and recognizes the value of your product or service. This can be achieved by aligning your output with the customer’s unique strategic or personal objectives.
Value expectation vs. value realization
Although “value realization” and “value expectation” are closely related, they’re different.
Value expectation is when a customer has an “AHA moment” and thinks your product can bring the results they need and then continues their journey with that expectation in mind.
Value realization is a later stage, and it happens when the customer experiences the value they were expecting face-to-face. It’s the moment a customer has finally reached the activation stage.
Why is value realization important?
If you think value realization isn’t worth paying attention to, you’re missing out.
Ensuring that your customers find real value in your product is essential for multiple reasons:
Convert users into customers
If your SaaS offers a demo or a free trial, value realization can be the decisive moment when a user decides to convert into a paying customer.
The reason is simple. Most people will only pay for a product when they recognize the benefits of your product and experience the promised value directly.
Unlock upsell and cross-sell opportunities
After realizing the value of your product, customers are now convinced that it’s worth investing in your brand. Making them more likely to accept upsells, upgrade, and buy additional services.
Drive long-term retention and loyalty
If you ensure that your customers are experiencing value throughout their journey (and not just during the free trial), you’ll retain them and maximize customer lifetime value (LTV).
Not only that, but if you exceed their expectations, they’ll eventually become brand advocates and share your product through word-of-mouth. Slowly cultivating customer loyalty.
Important value realization metrics to track
Now that you know the importance of value realization, you might wonder how to track it.
And while you can’t read your user’s minds, there are some key performance indicators that can give you an idea of what’s going on:
Time to Value
As the name indicates, time to value (TTV) refers to the time it takes for a user to realize the expected value of your product.
If you want free trial users to convert into paying customers and reduce any churn risk, you want this metric to be as short as possible.
How to decrease time to value?
To reduce time to value, you can show a personalized empty state.
An empty state is what users see when they sign-up, and all they see is a blank dashboard, which puts barriers to value realization and hurts time to value.
However, when you replace the white space with personalized messages, templates, guides, and onboarding checklists, you can help users get a head start when they sign up and accelerate their journey.
Time to live
Time to live is the time it takes for a customer to implement your solution. In short, it measures how long the value delivery lasts (as you’ll learn later), so you can shorten it.
Return on investment
Return on investment (ROI) is the most famous KPI. It measures how much income you get from your investment.
Since most businesses use ROI as their primary metric for success, you can use it to measure your customer’s success with your product and make them realize its value easier.
Net promoter score
Net promoter score (NPS) shows how willing customers are to recommend your product to others by comparing the number of promoters and detractors.
If NPS scores are high, it means customers are realizing your value since they are willing to advise others to use your product.
What are the stages of the value realization process?
If you want to improve time-to-value and make sure that more users realize the value of your product, then you need to pay attention to the five stages of the value realization framework, which include:
So let’s go over each stage while sharing some practices you can implement to optimize each stage.
1. Value definition
For value realization to happen, there must be an alignment between outcomes and expectations.
For this reason, the definition of value you communicate with customers is indispensable during this process. This way, your sales and marketing teams can set up the right expectations that will lead to value realization as customers start using your product.
Here’s what you can do to create a clear definition of value:
Know your target audience and define what value means to them
Before communicating value to prospects, you must determine what’s valuable for your user personas in the first place.
For this, you can create a user persona that goes deep into what your customers find valuable, such as getting their job done quickly and effectively, saving time, achieving business objectives, alleviating pains, etc. And you can only create a detailed persona through direct customer research such as interviews, surveys, chats, sales recordings, etc.
For example, you can quickly identify what’s valuable for a product manager when looking at the example below, as it clearly shows its pain points, JTBDs, and goals that you can satisfy with your product.
2. Value delivery
Value delivery is about implementing the solution so both the customer and your team can get ready for success. It can involve installations, integrating software, high-touch guidance, and a lot of support throughout the process.
The goal here is to get through this process with as little investment of resources as possible. And here are some tactics you can apply to accomplish it:
Onboard users and provide in-app guidance
User onboarding is essential for customer success and basically covers the whole value delivery process.
Making the onboarding process as smooth and pleasant as possible is a big task, but you can start with implementing in-app guidance when your users first sign-up.
Think of interactive walkthroughs and tooltips that appear on the screen just at the right time before the user starts wondering how to use a specific feature.
Offer ongoing customer support and education with a resource center
Customer education is part of value delivery. But what if a user faces an obstacle and needs answers fast?
Users don’t enjoy waiting in line to get support, and we’re sure your customer service agents are not looking forward to repeatedly responding to the same questions.
As a win-win solution, create and organize self-help resources in-app. Include diverse content formats such as articles, video tutorials, and webinars that caters to everyone’s learning style.
When users know they can find answers in a few clicks, delivery will happen quicker and with less friction.
3. Value realization
After everything has been implemented and your customers start executing their tasks using your product, it’s up to your product and customer to make value realization happen.
Whether it happens or not depends on the expectations you set at the beginning, if your product works as intended, and if you educate your customers properly so they can get real-life results with it. So what can you do to improve at this stage?
Here’s one tactic:
Celebrate customer wins
With UX gamification and emotional design, you can add badges, points, and levels for a more fun product experience.
Celebrating milestones not only reduces the friction to adopt features but also encourages them to feel good whenever they accomplish a task—making them more likely to recognize your product’s value.
For example, here’s how Calendly celebrates when you schedule your meeting:
4. Value validation
Although the value realization stage is important, value validation is the stage that brings ROI.
So after the customer has recognized the value of your product, don’t sleep on it! You must ensure they’ll keep receiving the same level of value throughout the customer journey and achieve their goal.
Here’s what you can do about it:
Introduce users to more advanced features
As said earlier, your job doesn’t stop at value realization. At the validation stage, you must engage users with secondary onboarding so they can finally adopt your product.
For this, provide value to the user repeatedly by introducing secondary features relevant to their use case.
Think of triggered tooltips, secondary checklists, or webinars to encourage users to try new features, just like this one:
Drive account expansion through upsells and cross-sells
To experience the full value of your product, users have to upgrade their plan and buy upsells at this stage.
But it doesn’t mean you should try to upsell something at every touchpoint. Instead, prompt users to upgrade their plan only when you’re sure they will benefit.
Are your users constantly reaching the limits of their plans? Or doing a task the hard way when they could technically automate it with a premium feature?
Then ask them to upgrade with a personalized message.
For example, see how Loom teases you to upgrade when you reach the 5-minute recording limit on their freemium plan (which indicates that you’d benefit from unlimited recording).
5. Value optimization
Industries and technologies change rapidly, and so do your customer expectations.
At the value optimization stage, you must safeguard your acquired customers by ensuring that your value is timeless and evergreen.
Here are two key practices that will help you optimize the value of your product constantly:
Check-in with customers and collect feedback
At the optimization stage, you need to collect to understand how your customers feel about your brand and do your best to keep providing value.
You can automate customer feedback and trigger in-app surveys at different touchpoints to measure how your customers feel across the customer’s journey and find opportunities for improvement.
There are different types of customer satisfaction surveys you can use such as CES (customer effort score), CSAT, NPS, and so on.
But it doesn’t stop there. To make sure your customers feel heard and realize the value of your brand, you must close the feedback loop by acting on it. For example, implementing a highly-requested feature, solving a common bug, integrating your product with other apps, etc.
Gather qualifying evidence of value from your customers
To get evidence of your product’s value to your customers, you can ask for reviews on 3rd-party review platforms, referrals, and testimonials to get social proof and understand what makes your product valuable.
For example, you can ask users to leave a testimonial after they’ve reached a specific milestone. Or you can also do some social listening and find people actively sharing your product with their network, then reach out to them to thank them and ask them to write a G2 review.
Speaking of which, you can even check review sites like G2 or Capterra and see how many users are actively recommending your product without you knowing—maybe there are some gold nuggets you haven’t found.
Although it seems very subjective, you can foster value realization when following the right practices.
Some of these practices can be easily implemented using a customer success tool like Userpilot. So why not book a demo to see how you can enhance your success process without coding?