VLIFT Methodology (Procedure Guide)
Maximize The Profitable Revenue Potential Of Your Existing Services
VLIFT enables a company to increase the perceived customer value of a service while also reducing its cost structure. The aim of VLIFT is to increase the profitable revenue generated from existing customers and to attract new customers who are using competitive solutions. Continual application of VLIFT enables a company to maintain a competitive value position for its services throughout the service lifecycles.
STEP 1: Delineate the Logic of Progress
- Define the customers’ job to be done (job execution and context).
- Conduct job story interviews to understand the job customers are hiring — the service to get done, where they struggle to get this job done and the job circumstance that surrounds execution.
- Create a Progress Map (not a customer journey map) that delineates all the job action steps that must be accomplished to obtain or achieve the customer’s success outcomes.
- Define the customer job segment that will be targeted for VLIFT (current customers or customers using a competitive solution).
STEP 2: Perform Value Target Analysis
Querying a sufficient number of customers:
- Ask customers to rate all customer value metrics (job action and success outcome metrics) for importance and satisfaction.
- Prioritize the customer value metrics (CVMs) and categorize as undershot value targets, overshot value targets, must-be value targets and indifferent value.
STEP 3: Set Future State Target Values
- Connect the moments of struggle with undershot value targets (use method). That is, make explicit how job circumstance creates or triggers each undershot CVM condition.
- Ascertain the current value for each CVM using a solution-in-use as the benchmark (your solution or a competitive solution).
- Select the value targets that will be scaled up, down or left alone.
- Set a future state target measure (a number, range, frequency, percentage, etc.) for each CVM with the aim of maximizing the perceived value of the service vis-à-vis a competitive solution(s) while minimizing the cost structure of the service.
STEP 4: Delineate the Service-Process Engine (Provider Side)
Querying a sufficient number of process performers:
- Create a provision narrative that describes how the service-process engine works on the front-stage side. Describe the front stage process(s), service interface(s) and the customer touch points (moments of truth), performer roles, human and IT activities, work flows, decision points, workaround subroutines, and exceptions (service failures).
- Using BPMN (Business Process Modeling Notation), create a provision process model from the provision narrative that delineates how the service-process engine works now — the good, the bad, and the ugly. Note the customers’ priorities on associated moment of truth.
STEP 5: Create a Current State Job Service Model (Customer Side)
- Using BPMN, create a customer process model inside the customer pool using the job story developed in step 1 (like a customer journey map but in the language of BPMN).
- Split the customer pool into two lanes; keep the customer process model in the lower lane and place the Progress Map steps in the top lane. Connect the Progress Map steps in the top lane to the appropriate customer process activities in the bottom lane using normal work flow arrows (use the color red for these arrows). Note: customer activities that are not connected to the logic of progress may represent service solution gaps, workarounds, and compensating behaviors.
- Connect the customer process model above to the provision process model (the S-P engine) from step 4 (thereby creating a job service model). To do this, connect the appropriate customer activities (lower lane of the customer pool) to specific provision activities (or to the provision pool itself as the case may be) within the service-process engine.
STEP 6: Identify VLIFT Opportunities
- Address job solution gaps: Address service gaps via a combination of information technology and lean work design; enable customers to get the entire job done. This may involve adding additional activities and resources to the service-process engine (although many times existing activities and resources can be re-purposed). Another option is to integrate a partner organization that can address the service gaps.
- Tailor job solution to segments: provide service features that are valuable to the customer group and eliminate service features that have little value and add costs; increase perceived customer value while lowering the cost to serve these customers.
- Shift customer-side complexity: reduce customer work by shifting customer-side complexity to the service-process engine via process automation; increase ease of use for customers while lowering provider costs.
- Remove slack rope: remove the Time and variation in the service-process engine that creates dissatisfactions via a combination of Lean, Six Sigma and information technology; scale prioritized CVMs (thereby lifting perceived customer value) while simultaneously lowering the cost structure of the service. Note: Slack rope opportunities are informed via the concepts, methods, tools of Lean and Six Sigma.
- Break unsatisfactory trade-offs: reduce the dissatisfactions involving the time, effort, sacrifice, risk, quality, and performance that customers are reluctantly willing to trade-off to the obtain the service at the current price and/or pricing model.
- Eliminate job constraints: eliminate obstacles and barriers that prevent a job from being done well or at all. Compensating behaviors and anxieties associated with these job constraints will also be eliminated.
NOTE: Consider the effect of each VLIFT opportunity on the cost structure of the service. Avoid analyzing which VLIFT opportunities will be implemented at this stage. The important thing here is to get an unconstrained/unbiased view of all the possible VLIFT opportunities.
STEP 7: Create a Future State Job Service Model
- Rationalize the best combination of VLIFT opportunities identified in step 6 that can hit the priority CVM targets set in step 3. The aim is to satisfy the customers’ job priorities better than competing solutions. Implementing VLIFT opportunities makes a service significantly easier, more consistent/reliable, faster, and more complete as a job solution while simultaneously lowering the cost structure of the service.
- Determine the time, effort, risk, and investment required to implement the proposed VLIFT opportunities from step 7a. Revise as needed to reflect available resources and risk limits.
- Create a future state job service model that depicts the service after all proposed VLIFT opportunities are implemented (hypothetical). The future state model is the operational blueprint for VLIFT implementation.
STEP 8: Position the Service as the Best Value
- Determine the value surplus of the next best solution for the target customers. This is the benchmark for the demand creation trigger.
- Determine the selling price that positions the service as the best value for the target customers vis-à-vis the next best solution. NOTE: the value surplus of the service must be sufficiently greater than the next best solution to avoid potentially losing current customers to a competitive solution (aka: demand destruction). Likewise, the value surplus of the service must be sufficiently high enough to motivate new customers using a competitive solution to switch to your service.
- Create a revenue model for target customers and any micro segments that minimizes purchase constraints — ability to pay, available time, access to service, license requirements, bundling complementary solutions, etc.
- Focus the marketing message around the priority needs that the service satisfies better than the next best solution for each customer group.
- Prepare a complete VLIFT implementation plan.