June 15, 2024

Demystifying Time-To-Value In Digital Commerce

Evgeny Grigul is the cofounder of Virto Commerce, a B2B-first ecommerce innovation platform for enterprises.

In the digital era of commerce, enterprises must constantly adapt to changes. As businesses progress further on their digital transformation journey, “time-to-value” becomes increasingly prominent in their minds and strategic planning.

This is no surprise; digitally mature businesses understand that features and functions, although undoubtedly important as a tactical approach, can no longer be the main strategic weapon on the customer experience (CX) battlefield. Today, the speed at which companies enhance customer experience and deliver value is everything. For example, McKinsey demonstrated that companies with faster CX development had double the revenue growth of their peers after five years.

Your business’s ability to outrun your competitors in the arena of CX development grants you a huge competitive advantage.

The first way to do this is to experiment faster: Test new hypotheses and bring the most successful ones into production. This way, you can leave competitors behind and win the market share. This approach requires resources and effort, but it brings market leadership.

In modern digital commerce, “the fast eat the slow” rather than “the big eat the small.” Speed and innovation enable smaller, digital-first startups to disrupt well-known market giants.

At the same time, the ability to change quickly can create a temptation to simply follow the market leader, quickly copying their successful digital commerce innovations at no significant cost.

However, simply trying to replicate competitors’ innovations without creating your own value is a bad strategy. According to research, 94% of customers claim that positive CX will make them purchase again from the same vendor. This means that every time the CX innovation leader gets ahead, it takes customers away from the pursuing companies, but those customers don’t come back when the innovations are copied by the pursuers.

The Challenging Interpretation Of The Time-To-Value Concept

Time-to-value is usually defined as the time it takes for a customer to gain value from goods, services or any enhancements.

Even though most successful companies recognize the priority of offering fast time-to-value, we still don’t have a clear and transparent understanding of exactly what this looks like for different products and which key performance indicators (KPIs) can reflect and affect it.

Intuitively, we understand that time-to-value indicates the speed of delivering value to the client, but how can this be calculated and assessed? Does time-to-value always mean the same thing, or can its definition vary?

Though we cannot easily calculate time-to-value using clear and established formulas, we can gain a better understanding of the concept to analyze our innovational efficiency.

Time-To-Value In The Context Of Business Initiatives And Ongoing Improvements

Time-to-value reflects the company’s ability to change and adapt quickly, responding to market challenges.

An essential but often ignored aspect is the speed with which business initiatives and improvements deliver value to stakeholders.

For example, let’s suppose we are planning a business initiative to go from standard to individual pricing, enabling account managers to create an individual price list for client representatives and ensuring optimal revenue and margins for each client.

Implementing such an initiative would require several changes on both the organizational and technical levels.

At the organizational level, we would need to develop new business practices for building individual price lists, including restrictions, approvals and control capabilities.

At the technical level, we would need to enable the creation of individual price lists in an enterprise resource planning and ERP and eCommerce system, approval procedures in appropriate systems and new prices in digital sales channels.

While we can do all this, making it organizationally and technically possible to apply individual prices doesn’t mean that the value has been delivered.

The final and most important step is incorporating the innovation into everyday practice. This step (let’s call it “adoption”) is often ignored. Business owners commonly believe that if the company offers the technical and organizational capabilities for innovation, a positive result will be achieved automatically. But in this example, the value will be delivered only when account managers and clients start negotiating individual prices.

Adapting to changes takes time, and each participant may require additional motivation. It’s crucial to remember that nobody reaps value from the innovation until all necessary changes have been implemented and the new practices have become systematic.

In this context, time-to-value is the interval between deciding to implement the change and getting the value to the consumer. Making changes to people’s daily routines becomes easier when we have already achieved a positive result—McKinsey claims that making transformation a routine is up to twice as likely to be successful if the company has implemented innovations already—so this interval becomes shorter with every successful innovation.

Digital Commerce Platform Implementation

Vendors in the eCommerce space often use the term time-to-value to mean the period from the idea to the project launch. In reality, the period between the idea and the realization of value is much more important, and this can sometimes be before the project launch or much later.

For example, if a new platform implementation took two years and customers began to reap value from the solution at its launch, the time-to-value is two years.

But suppose the company launched small services in batches, and the customers first gained value after two weeks while the implementation was still ongoing. Now, the time-to-value is two weeks.

When it comes to digital commerce platform implementation, the time-to-value period is the time between choosing a vendor and receiving their first value from a new solution.

Although it can be difficult to precisely determine time-to-value, it can be described as the first principle of the Agile Manifesto: “Satisfy the customer through early and continuous delivery of valuable software.”

In the modern world, the fast eat the slow, so the importance of time-to-value keeps growing. Instead of delivering a multitude of features, we need to become fast enough to outrun the competition.

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