How you do anything is how you do everything
By Gregory Ronczewski, Director of Product Design at Ibbaka. His skill profile .
Martha Beck is credited with the quote in the title. She is an author, life coach and speaker. A quick Wikipedia search shows she holds three degrees, a BA, MA and PhD from Harvard University. I came across her quote while watching another inspiring podcast by Rich Roll and a notion of change he was discussing. How we change and why, quite often, a change to one thing changes everything. It's one of the fundamental inner workings of design. That is why designers are reluctant to fulfill such demands when asked to change something. And yet, change is everything. Without change, there is no fun in playing the game. Change is the engine that moves everything forward.
Change is also at the center of any analytics. Obtaining helpful knowledge from an analytical device is problematic without being able to see the differences between past and present, not to mention the possibility of a future prognosis.
At Ibbaka, we like changes. Change is good. It keeps us venturing into the unknown areas, or rather "known," but hard to assemble into tangible variables available for anyone to use. Welcome to Ibbaka Valio Analytics - a new module we are adding to our end-to-end Pricing and Customer Value Management solution. Although we were able to identify several areas that we know our users would love to analyze, we decided to focus on three key elements:
An aggregate view of value drivers across customers, showing how different groups of customers can receive value in different ways
A Price Dispersion graph to help understand discounting
A Net Revenue Retention (NRR) graph to help analyse what is driving NRR and where the focus should be
Let's look at each element, starting with value drivers. A value driver is an activity or capability that adds worth to a product, service or brand. More specifically, a value driver refers to those activities or capabilities that drive revenue growth, reduce operating costs or reduce risks (there are other types of value driver, but these are the most common). Value drivers are the foundation on which value models are built. They are simple equations that are used to estimate value. At Ibabka, we derive pricing models from these value models. Some examples of value drivers for a new CRM could be something like the following:
“A function that generates compelling content that brings 20% more Sales Qualified Leads into the sales funnel.”
“A function that better filters leads, resulting in a 10% improvement to the conversion ratio from Sales Qualified Lead to Closed Deals.”
“A function that reduces the time from Sales Qualified Lead to Closed Deal by 50%.”
But, here is the thing. Some value drivers generate more value than others. Usually, we work with three to five value drivers to get the most out of the platform. Seeing all of them in an aggregate view listing from the most value-generating to the least is a valuable way for any pricing expert. Being able to cluster customers by value driver gives insights needed for pricing design and optimization.
In pricing, price dispersion is variation in price relative to some other factor such as sales volume. Price dispersion is used to see how consistently a company prices or, in other words, to measure pricing discipline. Plotting prices on the graph gives an instant view of how they are organized. Why do we see clusters of high prices? Why are there clusters of low prices? Do we have any outliers? And lastly, can we calculate a line that predicts the actual price based on pricing factors such as volume?
Finally there is NRR - Net Revenue Retention. Recently, the hottest topic when it comes to pricing. This. metric is critical for any SaaS company. And it is B2B SaaS businesses that are the primary users of Valio. Net revenue retention calculates total revenue from the existing customer base (including expansion revenue) minus customer churn and revenue contraction. An NRR rate of over 100% suggests that a business will continue to grow even if it does not add new customers.
A quick Google search reveals plenty of formulas helping one with the NRR calculations, but, as with any formula, seeing numbers does not necessarily equals seeing insights. Welcome to Ibbaka's NRR display. We have identified six levers that affect the outcome or the subtotal.
Positive factors
Growth in package
Upsell
Cross sell
Negative factors
Shrinkage in package
Downsell
Churn
For sure, seeing all the separate elements is pretty cool, but what if you could manipulate each lever through the adjustments of the pricing model? That is a different game, isn't it? And again, the change between the previous and the current reporting period offers a glimpse into the predictive view.
Would you like to experience Ibbaka Valio for yourself? It's simple, hit GET IN TOUCH below, and we will give you a personal tour of the platform.
