What are value drivers in market research?
Value drivers are key factors that significantly influence overall business performance. These drivers can include aspects such as product quality, pricing, customer service, and brand reputation. Market research uses quantitative surveys and data analytics to determine the absolute and relative significance of each value driver.
Value drivers help organizations to prioritize resources and focus on where to improve. They are also used to enhance the customer experience (CX), which results in better customer satisfaction, advocacy, retention, and spending.
This article explains how to find value drivers, gives value drivers examples, and shows how to measure their effect on business performance and customer experience metrics.
Identifying business value drivers
A B2B market research agency might use a number of methods to identify what drives value for B2B customers:
Qualitative research: qualitative research helps find out which factors are most important to key performance metrics, such as sales or customer retention. This often takes the form of in-depth telephone interviews, in-person interviews or focus groups.
Operational metrics audit: a review of operational data and metrics across an organization. It includes call center statistics, CRM data, and service-level agreements.
Verbatim data: open-ended customer feedback that can come from website forms, customer support chats, or social media monitoring.
Workshops with a cross-functional team: these workshops are used to develop customer personas or for customer journey mapping.
Stakeholder engagement: talking to people in customer support or sales who have direct interaction with customers.
External thought leadership: research on what customers want and need in a specific industry. This research is often published by business consultancies and academic thought-leaders.
Image: How to identify business value drivers
Common pitfalls
When assessing value drivers, it is important that there is no overlap or gaps in what is measured , as that can affect the reliability of the data. In accordance with the MECE principle, each driver must be mutually exclusive and collectively exhaustive. This makes sure that the full customer experience is assessed.
Image: The MECE principle (Mutually Exclusive, Collectively Exhaustive)
Often, value drivers fail to provide actionable direction for organizations because they are too general. For instance, a survey might track “the website” or “quality of the website”. This helps to identify where improvement is needed in an organization. However, it provides little guidance on what action to take next.
This is also a common challenge when incorporating best-in-class metrics from external thought-leadership sources. It can be hard to adapt them to the organization’s specific customer relationship.
B2B qualitative research using customer interviews or focus groups helps to make value drivers more specific and actionable; for instance, “ease of navigating the website” or “accessing the website on a mobile device”.
Value drivers examples
There are a wide range of factors that can influence customer experience, and therefore business performance. Some examples include:
Product Quality: The overall quality and reliability of the product offered.
Customer Service: The responsiveness and effectiveness of customer support.
Brand Reputation: The perception of the brand in the market and among consumers.
Pricing Strategy: The competitiveness and fairness of pricing compared to competitors.
Ease of Use: How user-friendly the product or service is for customers.
Delivery Speed: The time taken to deliver products or services to customers.
Customization Options: The ability for customers to personalize products or services.
Accessibility: How easily customers can access the product or service, including mobile compatibility.
Innovation: The introduction of new features or improvements that enhance customer experience.
Social Responsibility: The company's commitment to ethical practices and sustainability.
Value areas
Value drivers are usually grouped thematically into value areas for the purpose of attribution and reporting. Value areas can help organizations to understand which pain points are best solved by which areas of their organization. For instance, an "easy to navigate website" could be a factor in the "Website" or "IT department" value area.
Common thematic groupings of value areas are:
Operational: by department (e.g., IT, Customer Support, Billing) responsible for an element of the customer experience.
Journey-based: by stage in the customer journey (e.g., sales, onboarding, customer success).
Touchpoint-based: by touchpoint with customers (e.g., website, portal, in-store).
Image: The relationship between value areas, value drivers and core metrics
Measuring drivers of business performance
B2B market research companies conduct quantitative surveys to determine the significance of each business value driver to the customer. For instance, by asking customers to rate the importance of a specific driver on a scale from 1 to 10. This determines an absolute measurement of what factors influence customer satisfaction.
Quantitative analytics is then used to determine the relative importance of each driver. Market researchers analyze the survey data using trade-off techniques, such as MaxDiff analysis, and analytical techniques, like regression analysis, to identify underlying relationships between drivers and business performance metrics. This helps to identify the best value drivers for an organization.
Stated value drivers
Stated value drivers are the simplest method for calculating the importance of different factors. To determine this, a survey asks customers to state the importance of certain factors on a numerical scale. The customers are then asked their level of satisfaction with those factors.
While stated value drivers are helpful, it can be time-consuming for customers to first rate how important each driver is and then how satisfied they are with a company’s performance based on that driver. It is important for market researchers to consider survey length and respondent fatigue, which can limit the number of value drivers that are included.
Latent value drivers
Latent value drivers are a more complex method for understanding the importance of business value drivers. Market researchers use data analytics to determine the importance of any given factor, without directly asking the customer how they value it.
The primary advantage of latent value drivers is that it reduces research bias. When asked directly, customers may overstate the importance of certain factors. For instance, customers may say that low prices are important to pressure the organization to reduce its pricing.
Latent value is also less taxing on customer respondents, which improves the survey response rate.
Determining the best value drivers
To find the best value drivers to improve business performance, organizations should conduct a quantitative survey with their customers to identify the latent value drivers.
Latent value drivers are calculated using linear regressions or correlation analyses to assess the relationship between each value driver and key customer experience metrics, like customer satisfaction, likelihood to renew, and likelihood to recommend. This tells an organization how influential each driver is in affecting these metrics to a specific degree.
For instance, take a core metric like "ease of navigating the website”. That core metric may have an average customer satisfaction score of 5.8/10 and correlation score of 0.63 with the net promoter score (NPS) for an organization. Latent value analysis determines how much impact improvements to website navigation will have on the company's net promoter score.
By establishing the relationship between latent value drivers and core metrics, organizations can identify the best value drivers for boosting business performance. This provides a framework for prioritizing key business and marketing initiatives based on clear key performance indicators (KPIs).