How to Connect Your Service Offers to Business Value: Part 2

Posted by on

    

How_do_you_measure_performanceIn the first part of this three part series, I discussed the top factors driving the shift to outcome-based offers, as well as the key capabilities required to be successful. Let’s dig a little deeper into how to get started, and in particular, how to surface the unmet needs of your customers.

What Are the Logical Groupings?

Getting clarity on customer outcomes begins with segmenting customers into logical groupings. Customers can be segmented by vertical industry, by size of revenue, by role, by their purchase history, and many other ways.

Segmenting customers solves for:

It's okay to make some assumptions in order to get started — you can always prove or disprove these assumptions later.

How Do Your Customers Measure Success?

Success can mean different things to different organizations, and the terminology, as well as key performance indicators (KPIs), can vary widely across industry verticals and roles within a company. (Tweet this!) For example, the KPIs a CIO in the manufacturing industry is responsible for might be very different from the CMO’s. The real question is, what metrics are your target audience trying to improve to drive better business performance? If you understand this, then you have a target to shoot for in terms of helping customers achieve their intended outcomes.

Recently, I spent time with one of our member companies and learned that many of their customers want to “improve productivity”, but each of their customers measure productivity differently. Before you can help deliver on customer outcomes, you must first take the ambiguity out of the elements they’re trying to measure, and get a solid grasp on how your customer quantifies improvement. (Tweet this!) This can be accomplished by engaging with customers to ask detailed questions about their business objectives. Once you’ve narrowed it down to specific metrics, you can then move forward with creating a plan of action to help your customers achieve their outcomes. 

Uncovering Desired Business Outcomes

In these conversations with your customers, you’ll be able to get a clear picture of how they think about their business, along with the key metrics they measure and are committed to improve upon. To do this, you'll want to develop a Business Value Map to document and organize the core KPIs that matter most to a specific segment of your customers. You can create a Business Value Map for each customer segment in order to ground you and your service offer development team on the target outcomes.

Here's an example Business Value Map TSIA has created for the role of Chief Information Officer. You can see how CIOs define a number of metrics, including employee productivity. These specific metrics take ambiguity out and create a clear target as you develop new service offerings.

business_value_map-1

(Click image to enlarge)
Develop a business value map.

Having this visual plan can also be helpful to your marketing and sales teams when it’s time to go to market with your new offer.

Listen To Your Customers

So, how do we gain the knowledge to populate a Business Value Map? There are a couple of tactics:

  1. First, do some homework ahead of time. There is a plethora of information on the internet regarding metrics for specific roles and industries. Review the materials and pre-populate a Business Value Map with the metrics you believe your company can help a customer with.
  2. Second, validate or invalidate the assumptions you made about metrics by interviewing some of your customers.

As you begin to temporarily suspend focus on your products and think more broadly about outcomes, there’s no better resource to help you make the pivot to outcomes than your own customers. In our recent “Emerging Offerings” survey, we found that 77% of survey respondents make time to interview their customers. The objective of these interviews is to ask questions about the business objectives of customers and then simply listen — we’re not looking to problem solve or lead the witness, just hear what they have to say. I talked with a number of service marketing professionals within our membership and they were pleasantly surprised by how effective these interviews are with uncovering unmet customer needs.

"Customers are more than willing to talk, if you'll listen." – Pamela Morgan, Juniper Networks

Customer Interviews: Some Tips To Help You Get Started

Here are just a few quick tips to help you begin conducting your own customer interviews:

  1. Assemble a cross functional team to conduct the customer interviews. Trust me – it will be a bonding experience.
  2. Create a discussion guide with the relevant questions so all interviewers have some structure to guide them:
    • Ask open-ended questions, which typically begin with "how", "what", or "why".
    • Include secondary questions to dig deeper into interesting responses.
    • Ask customers about their current practices — what are they doing, how they do it, what are they trying to accomplish. 

Here are some sample questions for reference:

  • What are your top initiatives this year to increase revenue, optimize costs, or comply with regulatory requirements?
  • How do these initiatives link to your CEO’s top initiatives for the company?
  • Which specific business metrics are you focused on improving over the next 12 months?
  • How will you define success?

Reading Between the Lines

After the interviews have been conducted, collect the responses and identify the patterns across a customer segment.

Segment_Needs

The good news is, you don’t have to interview all of your customers to start seeing pattern recognition. A core sampling of 20 to 25 interviews will deliver intriguing patterns in terms of input to inform your new service offer development. It is through active listening and digging deeper with secondary questions that will help you answer the following questions:

  • Who are my most strategic customers?
  • How do these customers think about & measure their business?
  • What are the outcomes these customers care about?
  • What are the new offers that can fulfill their unmet needs?

This is the beginning of the pivot from product-attached services to developing outcome-based services.

How Will I Know When We’re Ready?

The most important part of this process is taking the first step — you just have to jump in and get started. You’ll find that many of your customers will actively want to help you help them, so don’t be afraid to engage them and listen to what they have to say.

Insights from interviewing customers and identifying common unmet needs within a customer segment will give you the confidence to pilot new outcome-based service offers. (Tweet this!)

If you need more suggestions for good questions to ask your customers, or just want some words of encouragement from someone who’s seen many companies successfully come through the other side of this transition first hand, feel free to drop me a line. You can do it, the key is just taking that first step!

Stay tuned for part three in this series, where I will be talking about adoption services and how you can charge for them. 

Read other posts in the "How to Connect Your Service Offers to Business Value" series:

About the Author

julia-stegman_80x100.pngJulia Stegman is vice president of research, leading TSIA’s efforts in industry benchmarking, research, and thought leadership in the area of Service Revenue Generation. She is responsible for driving the TSIA research agenda related to the growth of maintenance, SaaS, and managed service revenues as well as the expansion of product revenues with existing customers. 

 
  Register: Adoption Services that Drive the Win-Win
Register for TSW Las Vegas 2016

Topics: service revenue generation, service offers, Connecting Service Offers to Business Value

Comments

Subscribe to the Blog

Posts by Topic

see all

Follow TSIA