Value realization is key to successful customer relationships in 2022. It enables customer success teams to monitor and report on the actual business impact that solutions have on your customers and their business operations, driving customer satisfaction, helping secure contract renewals, and opening new revenue opportunities within existing accounts.
What is a Value Realization Framework?
A value realization framework is a documented approach to value realization, a roadmap for how you will measure, monitor, and communicate success metrics. In most cases, customers don’t have their own value realization frameworks, so vendors should be prepared to provide a value realization framework for their customers. If you’re reading this blog post, you probably already have a value realization framework, but are wondering how it measures up: Are you missing any key components to help you maximize positive results? This blog post will help you gauge your company’s value realization framework and identify any gaps or areas for improvement using The Value Trinity™.
What is The Value Trinity?
The Value Trinity is an approach to value realization that helps you avoid gaps in your value realization strategy by demonstrating customer value across three interlocking gears: Corporate Value, Job Value, and Personal Value. This method is based on Aristotle’s value theory–a time-honored model for building an effective argument. Aristotle’s model uses the terms Logos (logic), Pathos (emotion), and Ethos (credibility), which we’ve mapped to the modern-day business as shown below.
Corporate Value, adapted from Logos. This gear focuses on fact- or logic-based decision making. For example, Corporate Value might demonstrate the financial benefits of your solution, including revenue generation, cost reduction, risk mitigation, etc. Corporate Value answers the question, what is the ROI and TCO of this investment decision?
Job Value, or Pathos. This gear focuses on the emotional elements of decision-making and specifically demonstrates the benefits to the stakeholder’s job. Job Value answers the question, how does this solution align with our vision for the company and where we want to go, and how does this solution make my job easier or more efficient?
Personal Value, or Ethos. This gear focuses on building credibility and demonstrates the intangible benefits to the individual as a person, for example, how the solution improves or enhances their reputation. It answers the questions: am I better off working with you and what tells me I can trust this person to be a successful business partner?
Ultimately, the Value Trinity framework centers around how we make decisions as humans: we make choices and gauge new ideas through an emotional lens backed up with logic and credibility. The key here is we need all three dimensions working together. For example, ROI and TCO calculators can go a long way to convincing the “logical” portion of our brains, but they lack the ability to inspire. A comprehensive value realization framework is both logical and analytical, while appreciating that there’s more to value than numbers.
Evaluating your Value Realization Framework
Now let’s put The Value Trinity into action: does your value realization framework measure up? The following checklist of questions is designed to help you identify potential gaps in your approach.
Corporate Value demonstrates the ROI (return on investment) and TCO (total cost of ownership) of a customer’s investment decision. To gauge how your value realization framework stacks up within this first gear, ask yourself the following questions:
Does your value realization framework demonstrate clear financial benefits to your customers? Examples include increasing revenue growth, reducing costs, increasing margins, reducing risks of fines, audits, unexpected downtime, lost productivity, etc.
Are these benefits aligned with your customer’s strategies and goals?
Do customers have access to KPI reporting dashboards that clearly show ROI?
Is your financial reporting clear, understandable, accessible, and actionable?
Are you holding Quarterly Business Reviews (QBRs) that track progress toward these financial metrics?
Next, does your value realization framework demonstrate value for the stakeholder’s job, including their emotional needs? Ask yourself:
Is your value realization framework aligned to the customer’s more subjective pain points. For example, does the solution make their job easier, improve their workflow, increase their efficiency, etc?
Do you have a way of measuring or articulating Job Value for customers?
Are you regularly communicating or reporting on Job Value for customers?
Finally, does your value realization framework build trust with your customers? Ask yourself:
Does your value realization framework address your customer’s emotions as an individual person? For example,can you demonstrate how your solution improves their reputation, positions them for a promotion, or otherwise sets them up for success as an individual?
Do you have a way of measuring or articulating Personal Value for customers?
Are you regularly communicating or reporting on Personal Value for customers?
Are you missing any of the dimensions of value?
If there were any boxes above that you weren’t able to check off, you’re in good company. The more subjective components of value represented in Job and Personal Value are often overlooked and can be challenging to clearly articulate to customers. Fortunately, there are tools available that can help you digitize financial reporting and give your customer success teams the training and time to communicate the “softer” dimensions of value described above.