Building Value Chains

 

A powerful value chain not just an efficient supply chain is key to the growth and profitability of your B2B SaaS business.

What do I mean…

Producing a SUPPLY of customers and revenue is front of mind for any business leader. Right?

Of course, as with any supply chain, you’re striving for efficiency. Optimizing customer acquisition, retention and expansion costs.

All very important for profitability or at least the productive use of capital. But internal efficiency alone won’t drive growth and profitability for your B2B SaaS business.

As company leaders we also need to be focused on optimizing the AOV of new customers and maximizing your net revenue retention.

An internally focused supply chain focused on efficiency…what I find many companies simply relabel and brand as their customer journey…does not drive these.

To drive AOV, net revenue retention and overall customer LTV upwards there needs to be a value chain that maps to your supply chain.

You may have heard of Michael Porter’s 1985 value chain concept for the manufacturing industry. Porter proposed that each activity involved in a manufacturing supply chain should add value to the customer – forming a value chain.

How can we apply the value chain concept to your SaaS supply chain – aka your customer journey?

By ensuring that at each stage of your customer journey we’re either prescribing Value-based Outcomes OR delivering Value-based Outcomes. The value of these outcomes must outweigh the cost to the customer of obtaining the outcome.

This cost could be customer time invested in the acquisition process, the cost of the subscription purchased by the customer, or customer resources invested in onboarding and other adoption activities.

By designing, building and integrating a value chain into your supply chain/customer journey, you will drive recurring value realization for your customers.

This, in turn, will drive increase in revenue value for your SaaS business by increasing AOV plus retention and expansion of your existing customers.