Fashioning a business with value at the center requires a commitment to ongoing value creation for customer stakeholders. In depth understanding of how value is created for the customer is foundational to designing fair and effective value-based pricing. It also creates positive customer experiences across the customer lifecycle. Customer value management is an emerging business practice that manages value to customer (V2C) across the full customer journey.

David Lovejoy has joined Ibbaka in customer success for our pricing and customer value management work. Here he gives his first ideas on the importance of value and customer value management. He also shares his skill profile, which will grow over the coming months as he gains experience.

How do you know if you are executing on a service-led growth model? Like any business model having a clear set of metrics that you are tracking and planning to is critical. For service-led growth, the metrics need to capture both sides of the service-led growth flywheel and the interactions. The best overall metric is net aggregate customer lifetime value.

The power of customer journey mapping is well understood in the service design world. Ibbaka has introduced swimlanes for value and price into the customer journey. It is important to remember that the customer journey is not a given, it is designed. Value mapping is the key tool to design the customer journey experience.

Choosing a pricing metric is the most important pricing decision you will make. It is what frames all of your pricing decisions. The pricing metric should track the value metric so that you can frame your pricing in terms of the value you deliver. Here is a simple process to help you choose your pricing metric.

Pricing challenges come in all shapes and sizes. In some cases, the pricing challenge is a symptom of some other underlying issue, not something that can be solved with a quick pricing fix. Understand the five major types of pricing challenges. Then use the Ibbaka Pricing Diagnostic to answer some questions on the type of pricing challenge that you have. Ibbaka will respond with a preliminary diagnosis.

Prices cannot be left static. Differentiation value changes as your customers change their own business and as new competitive alternatives enter the market. There are several different reasons to reconsider your pricing. Explore these with the Ibbaka Pricing Diagnostic.

Ibbaka speaks with a lot of people about value and pricing. Sometimes, when people hear that we are pricing experts, they assume that we are out to gouge buyers. This could not be more wrong. Good pricing aligns the interests of the buyer and seller.

Value-based pricing emerged from the need to price differentiated products and services in the B2B context. Price optimization models based on simplistic economic theories proved inadequate for complex solutions with multiple stakeholders in the decision making unit. But over the past two decades, applications have expanded, first to sales and marketing, then to product management and marketing and most recently to customer success.

Value-based pricing and the customer journey are coming together as a the new discipline of customer value management. How would you like to go about activating and embedding this capability in your organization?

People come to Ibbaka with many different pricing challenges. Sometimes these are symptoms for deeper problems. How can we organize the many different types of pricing challenge and diagnose the root causes?

Service-led growth offers a compelling alternative to product-led growth. It requires less investment capital and builds stronger and more durable relationships with customers. These relationships drive the insights needed for meaningful innovation. But is service-led growth relevant to manufacturing?

Sometimes we think of price as a number, the number, often ending in a 9 or 7 or 5, that we see on the pricing page. But to price effectively one needs to think of a price in the context of what is priced and how the price is presented. Price is a lot more than just the number on the price tag. It is how we frame value communicate differentiation.

Service-led growth (SLG) is a new approach to growing resilient, adaptive and sustainable companies. It is based on a growth flywheel that is kicked off with services, that lead to subscriptions, data is gathered to generate insights, that lead to new services. It is an alternative to product-led growth that is less dependent on external financing.

Customer value management (CVM) is the most important business discipline. It helps companies across the value cycle of create, communicate, deliver, document and capture value. The result is that companies can track V2C (Value to Customer) and make sure that V2C and LTV (Lifetime Value of a Customer) are aligned. This requires methods from value-based pricing.

Many organizations struggle to adjust prices for local markets. Price setting in these markets is often arbitrary but it does not have to be. One can adjust pricing for international markets in a way that is fair, consistent and transparent. The Service Design Network provides a recent example.

Value-based pricing is much more than way to set prices, or even as a tool to justify prices in the sales conversation.

Inflation is raising its head. This will lead to pressure on pricing leaders to increase prices. Before making a knee jerk response, find out how inflation impacts your customers and the differentiated value you provide them. Ask what impact inflation will have on demand for your solutions.

Usage-based pricing is one part of value-based pricing but it is not the whole story. Recent research from the Subscribed Institute finds that usage-based pricing has the biggest impact on revenue growth when combined with other pricing metrics. Why is this? We look at why usage-based pricing drives higher growth up to a point, and why an excessive reliance on usage-based pricing can slow growth.

Value based pricing is widely misunderstood. Some people think it can be reduced to willingness to pay (WTP). It cannot. In a recent LinkedIn post Robert Ribciuc asked nine rhetorical questions about value based pricing. We answer them here.