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ZT20 #003: Normalising Value Exchange

saas sales startups venture capital Dec 08, 2022

A brief reminder of my definition of value exchange:


I define value exchange as “the quantifiable metrics that illustrate the value being created by your product or service for your clients.”


In many ways, value exchange is the lifeblood of any business. Without it, you don’t have a business, and yet so many SaaS startups guess or incorrectly presume the value exchange they are providing is fair or that it even exists.

Founders are often given a rude awakening when it comes to renewal, or when the economy tanks (like now: Q4 2022) and their clients ask to reduce their spend or worse cancel altogether!

A common cause of this value exchange being left unchallenged or unquantified for too long is founders relying on anti-patterns (false positives) to justify value exchange, as we discussed in last week's article “Value Exchange Anti-Patterns”.

The way around this is to never leave value exchange to chance, and to bake it into your team’s standard operating procedures (SOPs), ideally from the get-go.


Here are some ways to consider baking in value exchange to your SOPs:


1. Quantify value exchange with your earliest customers

Founders often miss the opportunity to bake value exchange discussions into the DNA of the company by failing to quantify it with their very first customers.

This is the opportune moment to get this data, because you are likely heavily discounting your product, and looking for feedback in return.

Well, in addition to asking for feature feedback, go one step further and ask your early customers to quantify the value your product helped create, ideally in $ terms.

And if they are willing but don’t know how, get in the boat with them and work on it together.

Typically the outcome is a surprise to both parties, and the value is normally higher than both expected - which should be a win-win. Easier for them to justify the spend ongoing and easier for you to justify your pricing ongoing, or even lock them into a longer term deal at a discount off the fair market value.


2. Elevate the discussion to the senior decision-makers

Often the users of technology don’t have a strategic outlook on the impact of technology purchase decisions. So, in order to have a discussion about the strategic as well as monetary value being exchanged in purchasing your product or service, you’re likely going to need to elevate the discussion.

This is a good opportunity for the CEO to join some reps on calls with their biggest customers and ask senior leaders on the client side how they think about your general space, and specifically, your technology.

The value the buyer sees in your product should come up naturally in such a discussion.

For a rep to be a fly-on-the-wall of such a conversation is super-valuable from a development perspective and inspirational.

It’s also an opportunity to wow both the customer and the rep with the future vision of the company.


3. Make it part of every QBR

To me nothing is more important than open value exchange discussions, and if you’re not having them you’re burying your head in the sand.

They need to be part of every quarterly business review (QBR) and hopefully it’s fairly simple math. For example, in B2B SaaS for as long as you have worked out the value of your product or service on a single user or unit basis (i.e. team), it might be as simple as working out how much the user base has grown and running the math again live in front of the customer in the QBR.

This might seem like a pointless exercise, but if you don’t do it with the client, and you don’t re-encourage them to share the number with their team, it might get hidden.

Many companies cancel contracts based on emotions or gut feel without realising they are cannibalising $millions in the process.

That’s on you to stop your client making that mistake, not the other way around.


4. Getting public recognition 

The most powerful use of value exchange I have seen in my career is when a senior leader on the client side is prepared to stand up in front of your clients and prospects and tell them just how smart they were to use your tech, and what it did for them and their business.

This can be in the form of a case study, PR, joint webinar or an in-person client symposium or a joint talk at a conference.

The impact on the client’s personal career is massive. It’s a huge personal brand win that will increase their equity in the industry. Never be afraid to encourage your customers to work with you to build their own personal brand, under the auspices of measuring value exchange of your product or services.



To sum up


There’s no more important a time than now, as we enter a recession to bake ‘value exchange’ into your internal and external lexicon, you’ll have stronger client relationships, much more predictable revenue and a product and product roadmap that’s reflective of the highest value demands of the marketplace.

Without it though, there’s a good chance your business gets swept from underneath you.

Good luck out there folks 👊🏼




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