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Q: You mentioned “voice of the customer” research as a way of collecting data. How do you collect the right kind of data to do this type of research?
A: That will change as we go through the process. Very early on in the development process, a lot of times you don’t want to invest huge amounts of time creating and investing in research until you’ve got a clearer picture of what you want to focus on. Typically, a lot of times what we’ll start with is what we believe to be the value drivers, and what those dollar amounts mightbe. So we start with some hypotheses using secondary research, and that’s at least a place to start. Now, where this really starts to get powerful is when you go out and spend a little bit of time talking with customers. For a new product we might, depending on how innovative the product is and how many segments we might be looking at, interview anywhere from 10 to 12 customers. Other times, I’ve done as many as 30 or 40 customer interviews to try to understand the business models, and to try to understand where the product might have an impact. Typically, we use an in-depth interviewing approach. Over time, you can augment that with surveys, etc. but I’d say the majority of the companies that I’ve worked with are satisfied using that in-depth interviewing approach.
Q: How do you use this approach for segmentation? We’re assuming a particular customer segment in your case study, but how do you manage that if you have different segments with different value?
A: It’s a really critical question. In the case study, there were about four major segments that the company was focused on. And for each one of those segments, we developed a different value model. What was great was that once we had developed the initial value model for one of their main, primary segments, then it was pretty easy to adapt the model to say, ‘These customers over here have a different business operational approach.’ Because some of their business processes are different, some of the value drivers were less important and others were more important. It was easy, then, once we built the initial model to adjust the model and the value capture rate accordingly. Once we had that first one done, it was a fairly straightforward exercise to adapt that to different customer segments.
[Editor’s note: Since the discussion of how to actually fill out a value-based segmentation was beyond the scope of this 30-minute webinar, you are welcome to explore this topic further with John by emailing AskTheExpert@leveragepoint.com.]
Q: Our most difficult challenge is getting reasonable metrics to quantify the value. What are reasonable metrics? Does LeveragePoint help with this?
A: When we’re developing value models, whether it’s for product development or for pricing, metrics are where we start. When we go out and we talk to customers, one of the first things we ask is, ‘What are the metrics that drive your business?’ That typically starts at a very high level, like growth, sales, revenues, whatever it may be. But then we start to dig into that and get under the surface, and the next thing you know, you’re talking about operational metrics that are tied to those revenue metrics, cost metrics, etc. And you, along with the customer, are rolling up your sleeves, talking about their business, and you start to get a picture of what those metrics might be. One other thing I would say about it is typically, the first interview going in, you don’t have a clear picture. It’s not all new, but you’re learning a lot of new things. You go to the second, the third interview, and you’re still learning a lot, but by the time you get to the sixth, seventh, or eighth interview, you start to hear the same things coming up again and again. As you start to see that overlap and those repeat metrics, now you realize that’s where value is being created. Those are the metrics that I want to focus on, and those are the ones that all of the customers are going to recognize. That’s kind of the way that I begin to approach that.
Ed: Where LeveragePoint helps with that is when you have the best practices of the team captured in a platform, you’re not constantly reinventing the wheel. You’re not constantly having to find that pattern. We have a number of things within the platform that allow people to share, find, and reuse thinkings about metrics. We have a full library functionality, so whether you’re looking for the logic of how you think about this, or whether you’re looking for the data, we have a lot built in to help you find and share that across an organization.