Why documenting value creation is essential to customer value management

Ibbaka Value and Pricing Blog - Why documenting value creation is essential to customer value management

Rashaqa Rahman is a Principal Consultant at Ibbaka. See her Skill Profile on Ibbaka Talent.

Fashioning a business with value at the center requires a commitment to ongoing value creation for customer stakeholders. In depth understanding of how value is created for the customer is foundational to designing fair and effective value-based pricing. It is also the key to delivering positive customer experiences across the lifecycle of the customer engagement. 

Customer value management is an emerging business practice that manages value to customer (V2C) across the full customer journey. Managing value entails creating, communicating, delivering, documenting and capturing a fair share of the value created through pricing. This is the value cycle - fair, consistent and transparent pricing are the product of the value cycle. 

The five spokes of the value cycle are:

  • Creating value for the customer

  • Communicating how the value is created for the customer

  • Delivering value to the customer through implementation, customer success and support

  • Documenting value for the customer by comparing the value delivered to the value promised

  • Capturing through pricing a fair share of the value created for the customer through value-based pricing

Ibbaka's Value Cycle

The Value Cycle

Most organizations struggle to understand and quantify how they provide value to their customers - which is critical to customer value management.

Customer value management requires an understanding of

  • value drivers (how value is created), 

  • customer stakeholders (who value is created for) 

  • value paths for specific customer stakeholders (a series of actions that need to happen on the buyer and seller’s side for value delivery)

  • specific touch points along the customer journey where the different parts of the value cycle become important

Value Documentation and Ongoing Engagement

One of the goals of taking a customer centric approach to value is to create long term value for the customer. The commitment to ongoing value creation paves the pathway for renewals and upselling opportunities. However, value creation alone is not enough - value communication and putting price in the context of value created for the customer is very important to successful value-based selling. This significantly lowers the risk of customer pushback on pricing and creates upsell opportunities.This is why value documentation is very important. It not only ensures that the value promised was delivered, it also provides clarity on how value was delivered and uncovers opportunities for additional value creation

At Ibbaka, one of the tools we use to support the value cycle and Customer Value Management is the Customer Journey Map. The Ibbaka approach to the customer journey:

  • highlights specific touch points across the lifecycle of the customer engagement 

  • maps each of the five spokes of the value cycle along these touch points

  • identifies value paths for specific personas

  • identifies avenues for additional value creation → thereby keeping the value cycle going

The customer journey map probes also probes into the experiences between customer touch points that can shape value-based conversations with customers. Exploring the value paths through primary research work (surveys and customer interviews) also helps uncover gaps, find out how the experience may be improved, as well as where messaging can be layered in to differentiate value delivery.

As we design the customer journey map, we are essentially creating the blueprint for future value creation opportunities, shaping the conversation and messaging that ensures culmination of value for key stakeholders, as well as uncovering opportunities for additional value creation where resources should be dedicated.

It is important to note that a customer journey map is a living document to shape the conversation around value and impact. Value is relative and contextual. Therefore a customer journey map is not once and done and should be periodically updated to reflect any changes in  the value cycle. 

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