Time to value is an important metric because it allows product teams, executives, and investors to gauge how quickly they can expect a project or product initiative to pay off. It can be used to decide which projects should be prioritized or resources to maximize ROI over the long term.
In this article, we will examine the details of time to value, how the business world has adopted it, the factors that affect it, and how to improve it for your operation.
Skip ahead:
- What is Time to Value?
- Different Types of Time to Value
- Importance of TTV
- Factors Affecting Time to Value
- How to Improve Time to Value
- How to Calculate Time to Value
- How to Track Time to Value
- Time to Value Warning Signs
- TTV Case Studies
What is Time to Value?
Time to value is a metric that measures how long an investment takes to yield returns. It is measured from the time of purchase or launch to when revenue or value exceeds costs.
Let’s consider it from two different perspectives, as the time to value is essential for all stakeholders.
Company perspective
For a business, TTV can help measure the investment – both time and money – in a new project or product and how long it will take to start seeing returns on that investment.
For example, suppose a company launches a new software product. In that case, TTV can help them measure the time from the initial launch until they start gaining subscribers or customers who are actively using and paying for the software.
It can also be measured from the moment of project inception or when key stakeholders sign off on resource allocation.
This doesn’t necessarily have to focus on monetary returns, either. Value can be derived in other ways, like:
- Increased customer satisfaction
- Improved brand recognition
- Higher employee engagement
A sustainability initiative, for instance, can build your reputation and attract new customers without an immediate monetary return.
Consumer perspective
Businesses must also consider the consumer perspective, as time to value is a factor in purchasing decisions – especially in B2B sales.
To secure a sale, you must prove that the product or service you offer will start providing value to a customer in a reasonable amount of time. They may look elsewhere if they have to wait too long to see returns on their investment.
Different Types of Time to Value
There are a few different classifications for time to value that can provide a more nuanced understanding of the concept.
Time to Productivity (TTP)
Time to productivity measures how long a product, service, or business process takes to produce the desired result. If a new employee is hired, how long does it take them to start being productive? When a customer buys a product, how before it starts providing the expected benefit?
Time to Conversion (TTC)
For products offered on a trial or subscription basis, time to conversion measures how long it takes for a customer to decide to purchase. It can also refer to the time it takes for a visitor to your website to become a paying customer.
Time to First Value (TTFV)
Time to first value measures the time it takes for a customer to see tangible results from using your product. It could be how long until they start seeing a meaningful return on investment, or when they access the product’s primary benefit.
Time to Exceed Value (TTEV)
On the other hand, time to exceed value measures the time it takes for a customer to see returns beyond their initial expectations. This could be when they start using features of your product that go beyond what they initially purchased or when someone starts saving more money than expected with a subscription service.
Time to Market (TTM)
Time to market measures how quickly a product or service can be launched. It’s typically used for products, but it can also be applied to services and processes. The goal is to get the product out as soon as possible so that you can start seeing returns on your investment sooner.
Time to Revenue (TTR)
Time to revenue measures how long it takes for a product or service to start generating revenue. This is usually a calculation from the moment a project is started, not when it is available for purchase.
Importance of TTV
While a new product feature may project a 300% ROI, that doesn’t necessarily mean it is a good business decision. If the time to value is five years, for example, the company may miss out on other opportunities or be overtaken by competitors.
On the other hand, a project with a lower return on investment but quicker TTV may be more beneficial if it can open up new markets or increase customer satisfaction in an area where you have been lagging behind competitors.
TTV is also important when considering how to allocate resources and prioritize projects within your organization. It helps executives decide which initiatives are most likely to provide returns quickly enough to justify their investment of time and money.
Factors Affecting Time to Value
It can be challenging to accurately predict time to value, as there are many factors that can influence it.
Complexity of product/service
The first significant factor is complexity. If a product or service is complicated and requires extensive setup, training and/or integration, it will take longer for customers to see value in it. If you are selling an online academy, for instance, students need to start learning actionable skills quickly, or they may become frustrated and give up.
User adoption and engagement
Developing a service that isn’t going to be adopted by users is a waste of time and money. If your product isn’t user-friendly, it may take users longer to understand how to use it and get value from the product. If users don’t stay engaged with your product, they won’t become repeat customers and provide an adequate lifetime value.
Integration with existing systems
Will the product immediately integrate with existing systems and processes? Or will it require additional resources to set up the integration?
These can be significant factors for businesses, especially those that use legacy systems. If a product requires extensive integration work, its TTV can skyrocket, making it less attractive to potential customers.
Quality of customer support
Certain customers will still need support, no matter how intuitive a product is. If your customer service team isn’t fast and efficient, it could delay the TTV for a particular customer.
In fact, adequate support systems can make or break a product launch altogether. An early reputation of poor support can have a profound impact on customer adoption and the success of the product in general.
How to Improve Time to Value
Once you understand the factors that influence time to value, there are several actions you can take to improve it. These include:
Identifying bottlenecks
A bottleneck is any process or resource that restricts the rate of work from being completed. The first step to improving time to value is identifying these bottlenecks, so you can reduce or eliminate them.
This can also be viewed through the lens of the customer journey. If there are any steps from the moment of purchase that slow down your customer’s adoption or usage of the product or service, it can increase their time to value.
Identifying and removing these obstacles will ensure customers get the most out of your offering quickly without having to go through a lengthy onboarding process.
Increasing online education
By investing in customer education, you can reduce the time it takes customers to understand and utilize your product. This could be through webinars, video tutorials, online courses or even an online academy that helps them quickly come up to speed with the features and functionality of your offering.
Streamlining processes
There shouldn’t be any hesitation when customers are purchasing your product or service. Streamlining processes such as entering payment details or shipping information can reduce the time it takes for them to receive the product and start using it.
Otherwise, the TTV will continue to be extended as customers wait for their product, install it, and set up their environment.
Improving customer support
The moment a customer has an issue, the TTV clock starts ticking. The longer it takes to resolve their issue, the more time they spend not being able to use the product or service.
Providing timely and effective customer support can drastically improve your TTV and lead to better customer loyalty over time.
Investing in technologies
To accomplish this, investing in the right technologies can be critical. Automation, artificial intelligence (AI), and machine learning can help streamline processes, improve customer support, and even provide insights into how customers are using your product to better optimize for TTV.
How to Calculate Time to Value
Once again, this can be examined through both company and consumer perspectives.
Company perspective
The most common way to calculate time to value is by tracking the amount of revenue generated each month and comparing it with the cost of creating, launching,marketing and maintaining the product or service. The goal is to identify at what point in time that revenue exceeds costs.
For example, if you spent $1,000 developing a new website, but it took three months for it to generate $1,001 in revenue, then your TTV would be three months.
Consumer perspective
On the other hand, the TTV calculation for an individual product is based on the customer journey. By reaching milestones like first value, productivity, excess value, and loyalty, you can measure how long it takes for a customer to realize the value of your product.
To calculate your average TTV, follow these steps:
- Compile a list of all the customers who have used your product or service in the last month.
- Track each customer’s journey from purchase to the realization of value, and log how long it took them to reach each milestone.
- Calculate an average TTV based on these results, which can then be used as a benchmark for future purchases or initiatives.
If this number is too high, consider the factors that could be influencing it and adjust your strategy accordingly.
How to Track Time to Value
There are a handful of different ways to track time to value, including using standard software tools and custom-built solutions.
Traditional analytics
Many companies use traditional analytics tools like Google Analytics to track user behavior on their product or website. These can be used to analyze customer journeys and calculate TTV for individual customers.
Heatmaps
Heatmaps are visualizations of user activity that provide insight into how users interact with a particular page or product feature over a set period of time. They can be used to measure the time it takes for customers to complete tasks, providing an indication of when they start seeing value from your product or service.
User surveys
Surveys are another way to track time to value. You can use them to ask users about their satisfaction with the product and how long it took for them to see results. This will provide valuable insight into customer experience and can help you identify areas that need improvement.
A/B testing
A/B testing is an effective way to measure the impact of changes over time. By running experiments and comparing different versions of a product, you can quickly identify which features help customers see value faster.
Support tickets
Support tickets can also be used to measure time to value. By tracking the average resolution time for customer issues, you can determine how quickly customers are receiving assistance and seeing results from your product or service.
Other ways, like customer interviews and focus groups, can provide further insight into the customer experience.
Time to Value Warning Signs
When tracking time to value, it’s important to look out for warning signs that suggest something isn’t quite right.
- High churn rates: If customers aren’t seeing the results they expect from your product or service and are leaving or “churning” in droves, it could be a sign that TTV is too long.
- Low customer satisfaction scores: Poor ratings on surveys or reviews can also indicate that customers are not getting what they expect from your product or service in a timely manner.
- Long onboarding process: A lengthy onboarding process can be a sign that customers are having difficulty understanding how to use your product or service, which can lead to a long TTV.
Any of these should send up a red flag and prompt you to look into what is causing the issue.
Time To Value Case Studies
Let’s look at a couple of case studies to see how time to value principles can be applied in the real world.
Later
If you’ve ever spent time on Instagram, you’ve probably noticed Later. It’s a tool that helps brands and influencers manage their Instagram accounts more efficiently, by scheduling posts in advance and tracking the performance of each post.
The company was able to reduce the time it took customers to realize the value of its product through a combination of improved onboarding processes and education resources.
With the help of Thinkific Plus, they created an extensive library of video tutorials, webinars, case studies, and blog posts that allowed users to quickly understand how to use the platform effectively.
Suddenly, the time to value for users was considerably shortened, and customer retention went through the roof.
After converting a traditional onboarding webinar to an online course, they saw a 320% increase in retention, and a 467% increase in feature adoption. Their paid subscription plans also were purchased more often, as customers saw the value in Later more quickly.
Keap
An all-in-one customer relationship management, marketing automation, e-commerce, payments, and analytics platform, Keap’s mission is to help small businesses achieve rapid growth.
It has a partner program that helps drive sales, but a long onboarding process was causing delays and preventing potential partners from reaching any value.
To reduce this time to value, Keap made a conscious effort to streamline the onboarding process. By investing in an online education platform with Thinkific, they reduced onboarding times by 30%, allowing them to certify partners quicker, who could then start generating value.
Not only did it reduce the TTV for Keap and each partner, it added excess value by more thoroughly training and educating partners on the platform.
Conclusion
For both companies and consumers, TTV is a critical metric to understand. Without a reasonable time to value, companies risk leaving money on the table, and customers may not realize their goals.
By creating a plan to identify bottlenecks and invest in online education, you can ensure that your product or service is ready for use as quickly as possible. This will enable you to maximize ROI and create lasting value for all stakeholders involved.
Request a call with the Thinkific Plus team to receive guidance on how your business can leverage online education to reduce time to value today.
