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24 March 2022

6 Vital Steps To Creating A Revenue-Driving Customer Value Hierarchy

by Emily Ryan Reading time: 8 mins
defining customer value

Are Your Cross-Functional Teams Speaking The Same Language?

As the Customer Success domain has exploded and earned a seat at the table, the concept of customer value has become ubiquitous in the B2B technology industry. Every C-Suite leader understands, or is asking about, how to optimize creating, delivering and defining customer value across the customer journey. However, what has emerged in this new landscape is the continued existence of legacy structures that divide cross-functional teams. This concerning reality can result in a siloed and misaligned organizational ecosystem, and could be preventing your business from delivering a customer journey that seamlessly takes your customers from acquisition to expansion and accelerates Net Revenue Retention. 

Recently, we presented a bold structure for uniting your organization around customer value through a value hierarchy that can break down through these legacy structures. With the help of this company-wide agreed-upon structure, you can obtain a holistic view of your customer’s value journey to ensure that every interaction your customer has with your company, whether it be through Sales, CSMs, Professional Service, Support, Education or the product itself, feels unified and is clearly aligned with the value they expect to achieve.

In this article, we share 6 vital steps to creating an effective customer hierarchy that unites your entire organization around the delivery of optimal customer value.

1. Start With The Customer

While there are 4 main levels in a customer value hierarchy, it all rests on answering the fundamental question: what problems and pain points does my product solve for the customer?

Your product addresses a market need, and it’s absolutely vital that your entire organization has a thorough understanding of exactly what that market need is. When your customers first approach your business at the start of their customer journey, they have a problem to solve. At this point, they may not know the specific use cases that they want to solve for, but they do know the internal strategy and initiatives that they need to support. This is why you need to begin with an in-depth understanding of the pain points your product focuses on alleviating, the goals it helps your customers achieve and defining customer value.

The next step is outlining the specific layers of your customer value hierarchy by answering the following questions:

  • What use cases does our product solve for?
  • What initiatives do these use cases drive? 
  • What strategies do these initiatives support? 
  • What do our customers need to do tactically to achieve these use cases?

Once you have your hierarchy clearly defined across each product use case, you will be able to build up to initiatives and strategies and down to how your clients tactically use your product.

2. Build Your Hierarchy With Input From Your Customer-Facing Teams

Accurately defining customer value requires organization-wide collaboration. Take your value hierarchy to the next level through a robust data layer. As a SaaS business, your product telemetry should tie into your defined procedures and use cases and let you know if your customer has achieved those procedures and use cases through the use of your product.

The order in which you build this structure depends on your organization and product – you could start with the Marketing layer and plot out your initiatives and then go up to what strategies those initiatives serve before proceeding to the use case layer where your product solves for those initiatives through use cases and procedures. Regardless of where you start, you’ll be building out the same pyramid. A key point to remember is that a version, or multiple versions, of this structure already exist within your organization. You don’t need to reinvent the wheel, but you do have to ensure that you create and roll out one hierarchy that is the same across your organization.

3. Develop A Universal Language

One of the major goals of creating a customer value hierarchy and defining customer value is to align your cross-functional teams and help them to speak the same language. For example, in many organizations, the term “Success Plans” means something different to every function because there’s a Sales version of the Success Plan, Customer Success version of the Success Plan, and so on. Even though your teams are using the same word here, there is no universal definition. This lack of a centralized understanding often results in miscommunications that may cause hiccups in your customer journey and unrealized customer value. The customer value hierarchy aims to eliminate this misunderstanding and create a universal language that facilitates cooperation and communication between your teams and drives value for your customers. 

When you’re learning a new language, the first thing that you need to do is learn the vocabulary. The problem is, if your teams aren’t constantly exposed to those words in the vocabulary, then it becomes harder for them to become proficient in the language. Once you create your customer value hierarchy, you need to ensure that it is readily and easily available to everyone – whether that’s physical copies placed around various departments and/or digital copies that are accessible by everyone. If it’s not, then your teams are going to revert back to the words they already know instead of using the agreed-upon vernacular and your extensive exercise in defining customer value will have been in vain.

4. Ensure Constant & Easy Access To Your Customer Value Hierarchy

The importance of providing easy and constant access to the customer value hierarchy cannot be overstated. In addition to clearly defining customer value and helping your organization learn a universal language, it also serves as an essential reference for your teams as they plan and strategize initiatives for themselves and your customers. For example, when your Marketing team is wondering what corporate strategies they should focus on promoting this quarter, or if Product is wondering what they should do to enrich the product for the next quarter, all they have to do is look at the customer value hierarchy. This way, everyone is referencing the same structure to drive your organization’s strategy and initiatives, which will invariably become second nature.

5. Leverage Your Customer Value Hierarchy Across Your Organization

Creating a value hierarchy isn’t just a beneficial cross-functional exercise – it’s an invaluable resource that can guide your company-wide priorities and overall strategy.

Here are some of the ways your teams can leverage this important structure: 

  • Marketing can use it to determine how to effectively engage with the marketplace based on the hierarchy branch your organization is prioritizing this quarter
  • Sales can utilize it to identify opportunities based on what branches your active customers or prospects have already completed and what their goals are
  • Customer Success can use it to ensure adoption inside of the customer ecosystem and to clearly state and drive value, identifying opportunities as they go
  • Customer Success Operations can use it to deploy the right use case across the different branches on the hierarchy through email and create a use case library that can scale your CS voice directly to your long-tail customers. 
  • Product can utilize the value hierarchy to identify opportunities for new uses to support major initiatives and feature development

6. Build, Maintain & Iterate On Your Customer Value Hierarchy

Like any other important piece of collateral in your organization, this structure will need to be maintained and routinely iterated upon. Your customers’ needs, goals and pain points form the basis of your customer value hierarchy and these are all constantly evolving. Gathering and analyzing customer data is a crucial part of creating an effective hierarchy. As you see your customers’ goals and challenges change based on the most up-to-date information, your customer value hierarchy needs to change accordingly. Working off of old data, or worse, a static value structure, will severely disrupt your ability to drive optimal customer value across your customer journey. As a general rule of thumb, we recommend reviewing and iterating your hierarchy after every major product release, any M&A or every six months.

Customer Value Hierarchy = Unparalleled Team Alignment

Creating a customer value hierarchy is a fundamental step in uniting your organization around a universal language of customer value and accurately defining customer value. Organizations that leverage the full power of this resource can successfully empower their cross-functional teams to create a smooth customer journey that takes your customers from adoption all the way through to retention and expansion. 

You need a robust data management process in order to build an impactful customer value hierarchy that accurately captures your customers goals and needs. Follow these 4 steps to effectively leverage your data to better understand your customers and maximize value delivery across the customer journey.

Emily Ryan

Emily has nearly 15 years’ experience coordinating teams across Sales, Post-Sales and Product/Delivery to ensure successful customer interactions. Her unique expertise applying Customer Success Strategy to effectively establish, analyze and scale great customer-centric teams means her impact is not only to corporate revenue and retention, but to the health and productivity of the teams she empowers.