When a customer buys a business solution from you, the main question the customer is thinking is - "can the solution create value for me or my business?". The longer it takes to deliver value, the higher the probability that a customer will churn.
Creating great customer experience and retention are keys to delivering specific value effectively and quickly. Time to Value (TTV) is an excellent metric for customer success managers to measure and manage the time required for a solution to deliver real value to customers.
So, what is time to value (TTV)? How do we measure it? How does it improve the customer journey? What are its benefits in creating customer success? How do we reduce time in delivering essential value using TTV?
Breaking down time to value (TTV) - what is value?
Value is the utility a business wants to create, or a customer wants to purchase. Sometimes, value can be subjective and ready to measure.
For example, a customer buying a subscription to Spotify would expect a vast library of choices and an ad-free listening experience. In many other cases, customers have specific measures of value. If you do not provide what they perceive as valuable features, they will churn, no matter how cool your product is.
How do we define time to value (TTV)?
Time to value is an important metric for business decision-makers which tells how soon a business starts deriving real value from a new solution. So, TTV is the period between the beginning of customer onboarding and when the customer derives real value from the business solution.
Let's take an example to understand it.
Let's assume you are a SaaS company based in San Fransisco and a small business owner comes to you to purchase a solution that would reduce their operational costs at a business site. You sell them the solution and onboard the company as your new client. Now, your client would have expectations regarding the timeline in which the new solution would effectively lower costs.
In simple words, this timeline is called time to value (TTV), i.e., the time required for a business solution to deliver the promised values. This period is critical in reflecting customer success.
Another way of looking at the time to value is the period required for a business to derive a positive return on investment from a new product or solution. A shorter TTV is preferable to a longer TTV.
How to measure time to value (TTV)
A basic management principle is to measure something to manage it. So, how do we measure TTV?
TTV is very easy to calculate. You need to find out the duration between the following two events:
- The point of time at which new customers have been onboarded
- The point of time at which the customer starts deriving specific values as promised
We can use this simple formula to calculate TTV:
Time to Value (TTV) = Date of Realizing Value - Date of Customer Onboarding
For example, if a customer implements a new software system on 1st December 2022 and realizes the value from 11th December 2020, the TTV here is ten days.
Indicators of TTV
So, how do you know that your solution has started creating value for your customers?
You can look consider the following indicators:
- Has your customer upgraded from a free subscription to a paid subscription?
- Has the customer purchased an additional solution after the onboarding process?
- Has the customer explicitly expressed their satisfaction with your solutions?
- Has the customer indicated to do continued business with your company after the onboarding process?
Why is TTV important?
The business world is getting increasingly competitive every passing day. Your customers have multiple options to purchase business solutions to fulfill their requirements.
Given the increased competition, companies are looking for strategies, tools, and metrics to create great customer value and ensure customer retention.
TTV helps you track the efficiency of your value delivery. The faster you deliver value, the lower your TTV. So, how does TTV makes a business more competitive?
Companies can create great customer satisfaction by lowering TTV. It not only lowers the costs of customers but also creates positive returns faster.
For any business, TTV is important because:
- It helps in ensuring customer retention and loyalty
- It acts as an effective tool to gauge the efficiency of service delivery and value creation
- It acts as a proxy for customer satisfaction
- It indicates the cost-effectiveness of your business solutions
- It helps you acquire more new users through positive reviews and references by brand advocates
What are the types of TTV?
There is no standard time for customers to realize the basic value promised by a product or service. A simple solution may start delivering results immediately, whereas a bit more sophisticated technology, for cloud computing or SaaS products, may take a relatively higher time to deliver desired benefits.
So, depending on the time duration, we have five types of TTV:
Immediate time value
Some business solutions provide immediate value to customers. So, customers can start using and deriving benefits as soon as the solution is implemented.
For example, if you provide a cloud storage solution to a customer, the customer can start immediately using it and get benefitted. So, the TTV is immediate here, and customer satisfaction is at a very early stage of the customer journey.
Customers find a short or immediate time to value provides the best value for money as they are benefited as soon as the onboarding process is complete.
Short time to value
In the case of a short time to value, a customer may not be able to derive value immediately, but the value creation process starts in a short period.
In most cases, customers are looking for a short TTV, if not an immediate TTV.
Long time to value
Even though customers always look for a shorter time to value, some business solutions may take more time to implement and deliver value.
A long TTV value may occur in the following cases:
- Where there is a need for a large-scale Business Process Reengineering (BPR)
- The legacy processes and systems of the customer need to be shifted to a new system
- There is an involvement of a large number of stakeholders
- There are significant challenges to technology adaptation
- There is internal resistance to change in the business
- There are multiple phases of the new solution implementation in the company
Time to basic value
As the name suggests, a basic value is an initial value that a customer can derive from a new solution.
For example, a new CRM system may promise to provide a large number of values, including better customer satisfaction, lower churn, custom integrations, improvement in the new user onboarding process, etc. It may take a relatively long time to deliver all the benefits. However, the company may start deriving some basic benefits. For say, customers can lodge complaints easily at an early stage.
Customers are often interested to know how soon at least some basic benefits would be derived. The time required to get some basic benefits from a new solution is called time to basic value or basic value time.
Time to exceed value
Successful businesses follow the age-old motto "under promise and over deliver." Therefore, it is crucial to exceed customers' expectations to retain them and create a loyal customer base.
Time to exceed value is the period required to exceed customers' expectations by creating value higher than specified at the onboarding stage. In other words, time to exceed value is required to reach the "Aha" moment of customer experience.
What is a good time to value?
There is no 'one-size-fits-all' duration or a perfect TTV. Each business problem is different, and each problem requires a unique solution. Therefore, a good time to value depends on the problem and its realistic solution.
However, you must target to achieve the minimum TTV for a business solution. Also, you must avoid shortcuts or cut corners to minimize TTV by compromising on service quality. So, a business should strive to create a balance between minimizing TTV and maximizing value creation.
How do you reduce TTV?
Measuring and tracking the TTV metric is not enough. You have to try and improve it to retain more customers. Since a lower TTV means a better customer experience, we must find ways to reduce TTV.
A few strategies through which you can achieve a faster TTV are:
Understand the exact needs of the customers
The better you understand the customers' needs, the more efficient the solution will be and the less time it will take to deliver value through effective problem-solving and customer service.
Relook at the solution
Does the solution address the exact needs of the customers? If not, what can be changed to make the solution more effective and efficient? What is the feedback after user testing of the initial solution?
Adequate data needs to be collected, and the data needs to be analyzed to redesign the solution for lowering TTV.
Deliver solutions one at a time
Sometimes, a business increases the TTV by trying to deliver too many things together. A better strategy is to help clients achieve one business objective at a time with your solution.
This would create specific values at each step and lower the overall TTV.
Improve customer support and service
Quite often, the TTV becomes higher because of a lack of clarity and confusion at the end of the customer. Excellent customer support can smoothen the implementation process by removing the confusion that creates bottlenecks.
To reduce TTV for subscription-based services and software with perpetual licenses, customer support and services need to be improved.
Provide training and proper guidance
The team of customers may require training and proper guidance to run and use the business solutions in the desired way. Therefore, you must find the training needs after signing up or a new user onboarding. This can dramatically reduce the TTV.