What is Value Realization: A Complete Guide

what is value realization

Value realization is a concept in a SaaS industry that can determine whether the customer cancels their subscription or becomes a loyal customer and, eventually, brand advocate. Although value realization is about ensuring your customers derive the most value from your product in the shortest time, its success is reflected in your company’s ability to deliver ongoing value to all customers over time. 

In this article, we will explain what is value realization, how to measure it, and what are its benefits. So, we suggest you stay with us and learn what it takes to deliver maximum value and increase revenue. 

What Is Value Realization?

First things first, let’s start with the value realization definition — value realization is, in a nutshell, helping each customer achieve their desired outcomes with the software or service in a short time, ultimately leading to higher customer satisfaction and retention. 

Value realization is the point when a customer experiences the value of your product or service. It is often described as that ‘AHA’ moment when the customer realizes that your product can resolve their issues and help them achieve their goals.

Value realization is an ongoing process that requires constant monitoring, assessment and optimization. It’s about ensuring that the product is not only used frequently but also used effectively so that the maximum value is delivered over time. 

Value realization often equals business value, as it is a key to business and product growth. Besides converting free trial users into paying customers, it opens the possibility of upsell opportunities.

Customer success teams are responsible for understanding and meeting customers’ needs and expectations, which is one of the aspects of value creation and customer value realization. Therefore, by investing in customer success and having a clear vision, you are directly improving chances for quick value realization. 

Customer success value lies in the company’s ability to improve customer retention, drive customer loyalty, and increase revenue, which are all key aspects of value realization. 

Value Expectation vs. Value Realization

Value expectation refers to the perceived value that customers expect to get from software before they start using it. On the other hand, value realization refers to the actual value that customers experience when using the product. 

Value expectation focuses on the customer’s first impression of the benefits that the product can bring to them based on factors like sales interactions, marketing and product descriptions. Value realization focuses on customers’ real experiences with the product – how well it meets their needs and solves their problems. The goal of value expectation is to align with customer expectations, while the goal of value realization is to align with the customer experience and expectations. 

How is Value Realization Created?

Before we move forward, let’s see how value is created and what the difference is between value creation and value capture

In SaaS, value is created by combining multiple factors that make software valuable for customers. If the product can solve a specific problem quickly and is cost-effective and scalable, it’s an exceptionally good starting point. Then, The product should be accessible from anywhere with an internet connection, and it should easily integrate with other systems and tools used by customers. Also, having regular updates and improvements based on customer feedback is surely a plus in a SaaS environment, and let’s not forget that the customer experience should remain outstanding at each point of the customer journey. 

The quality of a company’s value management often determines whether all the given objectives are achieved. 

Value Creation vs. Value Capture 

In SaaS, value creation refers to the process of creating and delivering a product that meets the needs and expectations of customers, providing them with great benefits and helping them achieve their goals. On the other hand, value capture is the process of capturing the portion of the value that is created for customers, and refers to the profit or revenue. 

Value creation focuses on understanding customer needs and on creating software that meets the customers’ needs. Also, it focuses on updating it regularly to enhance the delivered value. Value capture focuses on creating solid pricing strategies and revenue models used by the company to get as much revenue as possible from the product. 

What is a Proof of Value?

Proof of value in SaaS is the process of demonstrating the value and benefits that a product can provide to a new or potential customer. Its key aspects consist of customized product demonstrations, real-world scenarios that show how the product can solve customer’s problems, engaging with customers and seeking feedback, addressing customer concerns proactively, and providing customers with the insights and information they need about purchasing the product, like ROI and the cost.

What is Price Realization?

Price realization refers to your company’s ability to understand and measure the full value of its software through its operations and strategies. In SaaS, it is often influenced by factors like perceived value, which is a customer’s perception of the value they get from a product, pricing strategy (subscription-based pricing, usage-based pricing, value-based pricing), and revenue recognition, which reflects the way the revenue from SaaS subscriptions is recognized in your financial statements. 

Value Realization Framework: 5 Stages

A way to improve time-to-value (we’ll talk more about it later) and speed up the value realization is to have a well-established value realization framework that streamlines the process. 

Here are the 5 stages that you should consider:

  1. Value definition
    • Expectations and outcomes must be aligned for value realization to happen. Therefore, the definition of value you convey to your customers is crucial during the process. This is how your internal teams can set the right expectations. 
  2. Value delivery
    • Value delivery refers to all the support processes like guidance, installations and integration that prepare the customers and your team for success. 
  3. Value realization
    • After the customer starts using the product, it is time for value realization. If you make sure to educate the customers properly during the onboarding process and if the product works impeccably and delivers the expected results, there is a great chance that value realization will happen. 
  4. Value validation 
    • This stage is crucial as it brings a return on investment (ROI). After realization, you need to ensure that the value you deliver is consistent and maximized. This is the time for customer success teams to shine and help customers achieve their goals with the product. 
  5. Vale optimization
    • There’s also a time for ensuring that the value delivered aligns with customers’ expectations, which are rapidly changing in SaaS. Make sure to communicate with them regularly, solicit feedback and act on it, and automate customer success workflows to facilitate the process. With customer success platforms like Akita, you can set automated triggers and monitor customers’ health scores and interactions. Also, you can perform customer segmentation within minutes based on any trait and evaluate how different cohorts respond to value realization processes. 

How to Measure Value Realization?

There are a few key metrics that can help you measure value realization. 

Here are the most crucial ones in SaaS:

  • Time-to-Value (TTV)
    • Time to value in SaaS measures the amount of time needed for a customer to realize the product’s value. The shorter the TTV, the better. 
  • Return on investment (ROI)
    • ROI evaluates the financial returns you get from investing in software development and launch.
    • Here is a video tutorial on measuring ROI.
  • Customer success metrics (usage metrics and outcome metrics)
    • Usage metrics aim to determine how frequently the customers are using the product, while outcome metrics measure the certain outcomes the customers achieve with the product. 
  • Net Promoter Score (NPS)
  • Renewal rate
    • This metric shows the percentage of customers who renew their subscriptions.
  • Churn rate
    • The churn rate measures the percentage of customers who cancel their subscriptions. 
  • Customer Satisfaction (CSAT)
    • CSAT measures the customers’ satisfaction with the product. 

Importance of Value Realization

There are several important things related to value realization that both customers and SaaS companies can experience if the processes are done right and customers’ expectations are met or exceeded. 

  • Customer satisfaction
    • Value realization ensures that the customer’s goals are achieved, which contributes to a higher level of customer satisfaction. 
  • Customer retention
    • Value realization can reduce customer churn and improve retention rates, as satisfied customers are more likely to stick to the product that can meet their needs. 
  • Revenue growth
    • Happy customers will probably buy additional products, which leads to more upsell opportunities. 
  • Competitive edge
    • You can attract new customers and retain existing ones if you deliver value consistently. 
  • Product development improvement
    • Customer feedback can provide valuable insights that can help your product development team make needed improvements. 
  • Better quality of customer relationships
    • Value realization includes continuous engagement and communication with customers, which can lead to customer relationship improvement and customer advocacy. 

What is Value Realization — Conclusion

Hopefully, we helped you understand what value realization is and how you can improve and measure it effectively. By using the right customer success tools like Akita and implementing adequate and effective practices, you can foster value realization, improve retention and satisfaction and improve business growth and revenue. 

Frequently Asked Questions

What are the best strategies for improving value realization in SaaS?

Effective onboarding and training, proactive customer support, continuous product improvement, and setting clear expectations with customers.

Why is value realization important?

Value realization is important because it affects customer satisfaction, retention and business success. If you help customers realize the value of your product, you can improve customer loyalty and drive revenue growth. This is the sure way to become recognized on the market!

How do you measure value realization?

By using various metrics related to customer success, customer satisfaction and loyalty, expansion, and renewal and churn.

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