How to Establish Customer Value Definition, Before Funds are Committed

Ensure you’re achieving business outcomes by defining the elements and metrics that translate to customer value.

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Broadcom

An executive for a Fortune 100 company recently asked me a question that seemed fairly simple: "How do I prove customer value?” The executive recounted how they make decisions to fund initiatives that they are told customers will value, but they don’t really know what value customers actually receive.

This is a problem, because we only achieve key business outcomes if customers find value in what we do. Today, that means ensuring you’re making data-driven decisions about what you fund. As a result, it’s vital to define the telemetry and the metrics you will use to prove value—and to do so up front, before anything is approved or ready for development. This led me to develop a chart that can be used to prove that the changes you are making will provide value to customers.  

screen shot 2021 05 07 at 10.15.07 am Broadcom

Following is more information on the key components that go into the customer value definition:

  • Customer value. Based on conversations I’ve had with customers, many will define value as “saves time.” The value you define can be more of an emotional description, yet it has to be one that is measurable.
  • Enhancement. This is the feature or change that will create the defined value. Note that the items in this column are usually guesses, so make them as small and discrete as possible. You want to be able to get enhancements into customers’ hands quickly and see whether they’re delivering value or not.
  • Metrics to prove outcome. Define the parameters that product stakeholders can use to validate if the enhancements are creating value. Those individuals who are funding or approving the enhancements should be able view the metrics listed month over month, and tell whether value is being created.
  • Telemetry to prove outcome. The items in this column are key to creating the metrics you want to use to prove the outcome is being met, and therefore your customers are getting value from the changes you are making.

Following is an example of what a completed chart might look like:

screen shot 2021 05 07 at 10.14.32 am Broadcom

As a leader, I can see my customers are getting value from changes if, on a month-over-month basis, number of clicks per visit is declining, people are spending less time on certain pages, visits per month have dropped, and app rating has remained steady or increased.

To learn more, be sure to see my recent blog post on customer value definition.

This is a shortened version of a blog that exists on bizops.com

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