Clustering function and value to price learning solutions
Steven Forth is CEO of Ibbaka. Connect on LinkedIn
Last Thursday (February 6, 2025) Ibbaka published its first Category Value Report. The focus was learning solutions and the report was built using generic value models generated for Absorb, Cornerstone, Degreed, Docebo, SAP Success Factors, and Talent LMS.
These six companies were selected by our AI as key vendors in the Learning Space (there are many others). Ibbaka used its AI-based Value Model Generation approach to create generic value models for each of these companies and then combined them to create a general value map for the category. You can learn more about this process in our post Category Value Maps define positioning and differentiation.
You can download the Ibbaka Category Value Report: Learning Solutions here
As part of the category value analysis we identified the value drivers common to these six vendors. We then ran a simulation to see which of these value drivers delivered the most value across a variety of use cases.
Value Driver Definition:A factor determining the value of a solution to a customer. There are six main types:
Increase Revenues
Reduce Operating Costs
Reduce Operating Capital
Reduce or Defer Capital Investment
Reduce Risk
Increase Options
Value Driver Equation Definition: An equation used to quantify a value driver.
The list of the most important value drivers for learning solutions follows.
1. Enhanced Employee Productivity
3. Accelerated Employee Onboarding
9. Increased Sales Performance
2. Streamlined Admin Efficiency
4. Improved Employee Retention
5. Optimized Content Creation
6. Enhanced Customer Education
7. Compliance Risk Mitigation
8. Data-Driven Learning Strategy
10. Flexible Learning Infrastructure
The next step in generating the category value map is to create a Design Structure Matrix (DSM) of the different equations. These matrices are a standard tool in modular design and are used to find and cluster interactions.
Design Structure Matrix (DSM) for Value Drivers in Learning Solutions
This approach found four clusters:
Productivity and Onboarding
Administration and Content Creation
(Improved Employee Retention bridged these two clustersCustomer Education and Compliance
Data-Driven Learning and Flexible Infrastructure
A fifth interesting finding is that a Data-Driven Learning Strategy acts as a bridge between all four clusters.
Key clusters in the DSM for Value Drivers in Learning Solutions
Generating a DSM based on value drivers is a new tool, made practical by generative AI. It gives an external view of the underlying connections between different value drivers. Understanding this can help companies look deep into how they create value for their customers.
This is a category-level view. Individual companies will want to repeat this using a value model based on their own proprietary data. This will give critical insights into
What value needs to be sold together
Packaging design - put the functionality that supports each cluster together into the same package
Personas for each cluster
Ideal Customer Profile for each cluster
How functionality should be priced
How is this used in pricing?
The DSM shows how the variables in the value drivers interact. How is this used in pricing?
The key is the variables. You want to find the small subset of variables from the value model that can be used as pricing variables. The variables you choose should be the ones that
Account for most of the value
Can be tracked
Can be predicted
The DSM helps you identify these variables and to understand and predict interactions.
All of this goodness depends on having a value model. The good news, with the Ibbaka Foundation package you can get a value model in days, not weeks or months, and build a foundation for value based pricing, sales, and customer success.
