If you’re in any finance profession, you’ll know that time is money. Every day that passes without your customers realizing the full value of your product is a day of lost revenue.
To stop (or at least reduce) the chances of that happening, you need to reduce your time to value (TTV) metric. A lengthy time to value can be a silent killer for SaaS businesses. Customers who don't see results quickly lose momentum, leading to increased churn, stunted growth, and ultimately, a negative impact on your bottom line.
On the other hand, a shorter TTV means faster profits, happier customers, and a competitive advantage in the market… but how can you reduce time to value?
Keep reading as we cover actionable steps to help you reduce your TTV and turn hesitant customers into loyal advocates – all while strengthening your financial position.
What is the time to value metric? ⏰
The time to value metric measures how long it takes for a customer to start experiencing the benefits (value) of a product or service.
Tracking TTV provides a window into how quickly (or slowly) customers unlock the value of your product. Knowing your time to value metric helps make it easier to refine and adjust your strategies and processes appropriately.
By reducing TTV, you unlock faster revenue streams, enhance customer satisfaction (leading to higher retention rates), and ultimately, optimize business efficiency – all factors that contribute to a healthier bottom line.
How to calculate time to value
Calculating the time to value metric is pretty simple, especially when you follow these steps:
- Mark the start date: This is when a project, product, or service is first introduced to the customer. It could be the purchase date, the day they sign up, or the day they first log in or start using what you offer.
- Identify the 'value moment': Think about the point when the customer first realizes significant benefits from the product or service - this is the 'value moment'. For example, achieving a certain outcome or hitting a milestone.
- Record the value date: This is when the customer achieves that significant benefit or value.
- Calculate the duration: To find the TTV, simply calculate the time between the start date and the value realization date. If your customer signed up for your service on April 1st and realized significant value on April 18th, your TTV is 17 days.
Why TTV matters in finance
The time to value metric is more than an indicator into customer satisfaction and churn. It also serves as an important metric to help make informed decisions that directly influence the company’s financial health.
So, here’s a few reasons why TTV matters in finance:
Investment decision-making
Time to value acts as a key metric when evaluating potential investments, especially in SaaS ventures.
A shorter TTV hints to a faster return on investment (ROI) as customers realize value quicker. You can use this info to prioritize investments with a proven ability to generate revenue quickly. 💸
Cash flow management
A long wait means your income comes in slower. By keeping an eye on TTV and shortening it, you can better predict how much money is coming in at different times. This helps you to allocate resources wisely, like making sure there's enough cash on hand to pay bills and avoid any financial hiccups.
Performance evaluation
TTV serves as a valuable benchmark for assessing the overall effectiveness of a product or service. By looking at TTV alongside other financial metrics, you can see how much money you're getting back from the money you spend on marketing and sales. This lets you make adjustments to get the most out of your resources and boost your profits.
Strategic planning
A clear understanding of your time to value metric helps with strategic planning. By considering the time it takes for customers to see value, you can create more realistic financial projections and develop long-term strategies that account for the cost of customer acquisition and retention.
Risk assessment
A lengthy TTV can pose a significant financial risk. If it takes too long for customers to see value from a product, they might get frustrated and stop using it altogether. This can be risky for the company's finances because it means losing potential income from those customers.
By focusing on making the product's value clear and easy to experience quickly, you can help reduce the risk of customers leaving and protect the company's financial health.
Types of TTV
There's more than just one type of time to value metric, so here’s a simple breakdown of each one and what it means:
- Immediate time to value: This refers to situations where customers experience the product's benefit instantly, like using a free online tool that delivers a specific result.
- Time to exceed value: This one measures the time it takes for customers to discover the product's full potential and unlock additional functionalities or benefits they might have overlooked at first.
- Long time to value: We mentioned this one a few times already and it refers to when there's a lengthy period before customers experience the product's value, which can lead to increased churn.
- Time to basic value: This focuses on the time it takes for customers to experience the basic functionalities and intended purpose of the product.
- Short time to value: Customers see the core value proposition of the product quickly, typically within days or weeks, leading to initial satisfaction and continued use.
How to minimize your time to value metric
Imagine customers paying you faster and staying happy longer. That's the magic of reducing your time to value metric.
As a finance professional, you know time is money, and a long TTV means lost revenue.
Here are some tips to shorten that wait time and boost your company's financial health:
1. Make it easy to get started
Think of onboarding like welcoming a new guest. You want to make the experience as seamless as possible by offering:
- Clear instructions: Provide simple, step-by-step guides and tutorials that walk users through the product's core features.
- Helpful resources: Offer readily available FAQs, support articles, and even short explainer videos to answer common questions.
2. Focus on quick wins
Highlight the immediate benefits customers can experience. You might want to consider things like:
- Free trials: Offer limited-time free trials that showcase the product's value proposition quickly.
- Pre-configured settings: Set up the product with some basic features already activated so customers can see the results right away.
3. Track customer progress
Keep an eye on how your customers are doing and monitor their progress closely to see how they interact with the product and identify areas where they might get stuck.
Another good way to reduce your time to value metric is by gathering feedback. Ask customers directly through surveys or chats if they're finding value and offer assistance if needed.
4. Invest in a strong customer success team
Having a team readily available to answer questions and address concerns can significantly shorten the time it takes for customers to feel comfortable and successful.
However, don't wait for customers to reach out. The support team can proactively check-in with new users and offer guidance as and when needed.
5. Quantify the value
Work closely with product and sales teams to quantify the expected value of your SaaS offering in concrete financial terms (cost savings, revenue increase, etc.).
This will help you to set clear targets and measure progress towards realizing that value.
6. Prioritize value-based pricing
Think about transitioning to a value-based pricing model where customers pay based on the quantified value received rather than a one-size-fits-all subscription fee.
By linking pricing to the value customers experience, you incentivize them to maximize their usage and discover the product's full potential faster. This not only reduces TTV but also creates a stronger perception of the product's worth (and hopefully leading to increased customer satisfaction and higher long-term revenue).
7. Foster a value-centric culture
Embed the importance of the time to value metric across the company, from product roadmaps to marketing campaigns. A value-first mindset accelerates time-to-revenue and long-term profitability.
When each department functions with TTV in mind, the customer journey becomes seamless and efficient. This translates to:
- Faster time-to-revenue: Customers see the value proposition quicker, leading to increased sales and recurring income.
- Long-term profitability: Satisfied customers with a shorter TTV are more likely to stick around, contributing to sustainable business growth.
By implementing these strategies, you're not just helping customers experience the product's value faster, you're also:
- Boosting customer satisfaction: Satisfied customers are more likely to stick around and become loyal users.
- Increasing revenue: Faster value realization translates to quicker subscription conversions and recurring income.
- Improving financial forecasting: With a shorter TTV, you can predict cash flow more accurately and make better financial decisions.
Remember, a happy customer is a paying customer, and reducing TTV is a win-win for everyone.
FAQs: Time to value metric
What is the time to value (TTV) metric in SaaS?
In SaaS (Software as a Service), TTV measures how quickly customers can start benefiting from the service after they've signed up or started using it. It's about speed and efficiency in delivering value.
What is a good time to value?
A "good" TTV is one that meets or exceeds industry standards and customer expectations. It's short enough to keep customers engaged and satisfied but realistic for the company to achieve consistently.
What is an example of a time to value metric?
An example of a TTV metric might be the number of days from a customer subscribing to a cloud-based CRM platform to when they successfully run their first marketing campaign using that platform.
How is TTV measured?
TTV is measured by calculating the time duration from the start of a specific initiative (like product signup, implementation, or deployment) to the point where the customer realizes value from it.
What is the goal of time to value?
The goal of TTV is to minimize the time it takes for customers to derive value from a product or service, enhancing customer satisfaction, loyalty, and potentially leading to faster revenue growth.
How do you minimize time to value?
Minimizing TTV involves streamlining processes, enhancing customer onboarding, improving product usability, and ensuring clear communication to quickly guide customers to valuable features or benefits.
