Time to Value

How long do your customers have to wait?

Customer Acquisition Cost, Life Time Value, Churn, MRR, ARR, NPS, Response Times (customer support), Retention, and Gross Margin are all key startup metrics for tech companies. Usually, the amount of time, money, and effort to acquire customers are key indicators of how fast a startup, or any company for that matter, can scale. The more resources, the harder it is.

Those are mainly metrics for measuring the value of a customer to your company. What about measuring the opposite:

How much and how fast do your customers receive value?

No wonder it can be nightmare to chase down case studies and getting people to talk about their results. It typically takes a lot of effort to figure out the metrics and gather the date. Then we act surprised why its difficult to justify your service come renewal time. It may be obvious to you, but not them. Have you been continuously adding value to your customer over their relationship with you?

Defining “Time to Value”

That can be a hard to quantify for some companies. What’s not hard to quantify is “Time to Value.” I’m no Oxford scholar, but I’ll propose the following definition:

“Time to Value”: The amount of time it takes from the moment a prospect starts to interact with you (say in a sales process) to the moment they receive a meaningful amount of value from your company or service.

I’m not talking about value from marketing collateral, insight, or providing prospects with links to interesting articles during the sales process. While that’s valuable knowledge, it doesn’t typically result in a significant change in state for your client besides moving them along through the sales funnel. I mean, how fast can your customer start using your product and receive it’s main benefit?

Fast Time to Value = A Delightful Customer Experience

I started thinking about Time to Value when Kevin O’Leary, Director of Design at Acquia, and I were talking about designing for customer experience and delighting users when they first sign up. He told me about his experience with Jaco — a service that records your users’ sessions on your website or application by installing a snippet of code. Instead of waiting for a full user session, Kevin was able to immediately see users moving around his application in live time. The product was providing value within minutes and giving Kevin insight into something that typically takes a while a to record. He was delighted and raved to me about the experience.

The chance of Kevin looking to other services is now very small.

HubSpot’s original website grader was also brilliant. You could instantly get feedback on your site’s SEO. Spiro Technologies, Inc., a more recent startup, has a sales app reduces the pain of updating Salesforce while getting on heckling you with R-rated jokes to stay on top of your opportunities and prospects. The app solved a huge pain for me immediately. Immediately spread it to the rest of the sales team.

At Outlearn, we’re making it incredible easy for users to rapidly assemble custom learning paths by pulling in internal & external content. We’re focused on the Time to Value for the learning instructor and for the team. The other company I’m helping is Driftt. Similar to Jaco, you install a snippet of code and you can immediately start a conversation with users on your application or send product announcements while they are using your product. Instantaneously, it changes the game for Product Marketers and Customer Success Reps.

Risks of Slow “Time to Value”

Now imagine a longer time to value and the risk that inherently comes with it… Let’s say you have a product that takes 1 or 2 months for proper on-boarding. Perhaps there’s a lot of integrations required for your product to work or the speed of bureaucracy and having to work with many different stakeholders just takes time. That’s fairly typical in enterprise software sales and since on-boarding takes a while, there’s really no way for a customer to try your product or extract value during the interim. A typical sales cycle for those types of products may take 6 months. So, before your customers receive the value that your company promises, its 7–8 months!

Imagine what happens during that time. Your prospect is contacted by other vendors vying for the same budget. Priorities at the company change. New hires change the decision landscape. Budget is used somewhere else. The prospects stumbles upon competing tools to solve the same problem. The list goes on…

No wonder why time kills deals. You aren’t proving a compelling value fast enough!

Proposed Ways to Measure Time to Value

1. How long does it take to on-board your users?
2. Can you provide a portion of your service that customers can use immediately?
3. How long does it take to install your software?
4. Do your prospects have to talk to a sales rep before they can try it out?
5. Do your prospects have to take a leap of faith and buy first before they receive any value?
6. Are you reducing the amount of time it takes your users to do something? Or, are you just creating a set of more tasks for them to do in order to use your software?

This post is a first stab at thinking about time to value and why companies, especially startups, should focus on how much and how fast users are receiving value from you, rather than you extracting value from them.

Improve your time to value to reduce risk, but more importantly, to drive a better customer experience and the dopamine effect.

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